Following up on our last blog on Redesigning Capitalism, this second round continues our process of online collective intelligence to flesh out the background analysis with comments from contributors. Results confirm our framing of the issue, and they also raise crucial questions answered below. We then invite readers to estimate the probability that Democratic Enterprise will enter the mainstream and its societal impact.

Below you will find trenchant responses from the following different voices:  

Critical Issues

While our original analysis is confirmed largely, several critical issues are raised by these 12 contributors:

Corporate Transformation is Here
 
Almost all commentators agree that the rising threat of pandemics, climate change, income inequality and other social and environmental problems are so severe that business leaders are being forced to “internalize” these issues by transforming corporate structures. This movement is often called “Environmental, Social and Governance (ESG),” while our analysis shows it is more accurately thought of as “collaborative enterprise” or “democratic enterprise.” 

Here is a sobering conclusion reached by the World Economic Forum:
 
“The bandwagon of stakeholder capitalism and sustainable finance is well and truly in train. As the future unfolds, those not already on it – authentically and materially – risk getting left behind.”

A Broader Form of Free Enterprise Would Be Historic
 
While some are concerned at the passing of “shareholder supremacy,” almost all contributors agree the required changes merely extend principles of markets, enterprise and competition into the social frontier. In short, there seems to be no call for fears of socialism because this is simply a broader form of free enterprise.

The emerging model of the “collaborative/democratic enterprise” changes the economic landscape by introducing democracy at the level of the organization. It is neither capitalism nor socialism but an unusually powerful concept that unifies both left and right.  The practice serves social interests as well as shareholders, so it is no longer focuses primarily on profit — capitalism.  It is led voluntarily by CEOs because it can be a competitive advantage, so it is not required by government — socialism. 

At the national level, governments would collaborate with constituents to serve all interests, including green taxes to limit carbon use, laws that promote equality, rulings to disperse market concentrations, etc. 

Progressive business leaders are embracing this idea in a constructive way that solves strategic problems to add value.  In principle, a collaborative system could solve nagging social problems, provide shareholders greater returns at less risk, minimize government oversight, stave off global crises like climate change and turn business leaders into social heroes. Collectively, it would shift global consciousness from self-interest to collective interest — an historic revolution.

Confusion Could Distort Efforts
 
The greatest danger in this period of institutional change is confusion over terms and methods. For instance, some are fearful that serving social needs will diminish the ability of business to survive a competitive marketplace. This danger stems from the decades-long focus on the older concept of social responsibility, without the concurrent need for obligation to perform financially.

The many examples cited here show that a leading edge of innovative firms have survived the test of competition and thrived. The key is to focus on collaborative strategic problem-solving in order to serve all needs better. As noted in our analysis below, stakeholders are actually resources, much like capital, and the challenge is to integrate social resources into business operations. The theory holds that collaborative enterprise should be more effective economically as well as socially. To survive the test of market competition, any system will have to be more productive.

There are also dangers of getting bogged down in endless wrangling over “who gets what.” This will require charting a new frontier of management that resolves the political issues that are endemic to any organization. Business leaders will have to form working partnerships with all stakeholders that ensure both responsibilities and rewards are equitable for all parties.

There are probably lots of other distortions that we cannot yet imagine, including the obstacles noted below in our trend analysis. Fasten your seat belts because the next decade or two could prove a bumpy ride.