Cautionary Note: Although I have published in the Washington Post, the New York Times, and or major papers, this article was rejected by them plus the Los Angeles Times and others. So read at your peril.
The fall of Communism left Capitalist nations feeling “triumphant,” yet America seems to be fulfilling the prophecy of Karl Marx by “immiserating” the working class.
Middle-class incomes have been flat for decades, the Great Recession left 7 million unemployed, and now cutting food stamps and long-term unemployment benefits will devastate millions who can’t earn a living income — at a time when the rich enjoy gains unheard of since the Roaring Twenties that preceded the Great Depression. And this extreme concentration of wealth has dried up the markets that are slow to revive because people have little to spend.
I think this means the ideological focus on self-interest and money that marks American Capitalism may not be unsustainable. As a business professor and a business owner as well, I understand the merits of markets and free enterprise. But I have come to see that the prevailing business culture cannot survive the difficult world ahead without fundamental change. Nobel economist Joseph Stiglitz said the 2008 “financial collapse may be to Capitalism what the Berlin Wall was to Communism.”
Pope Francis has it right – the basic problem is “the idolatry of money.” Yet the very thought of applying Christian principles to business seems such a radical idea precisely because prevailing practices are so far removed from our democratic values. The challenge is enormous. I study crises like this, and my experience suggests the following three possible outcomes along with their associated probabilities:
FURTHER DECLINE – 30% Americans are unlikely to change unless forced by events, which could easily continue the present slow decline. Absent some dramatic twist, look for more government gridlock, financial crises and swooning markets, continuing pressure on the poor, and increasingly hot and extreme weather.
MUDDLE THROUGH – 50% Palliative measures could ease the pain, like raising minimum wages. And the economy seems likely to grow modestly, so we can easily imagine Americans muddling through. Government approaches to reduce inequality as highlighted by Mayor de Blasio in New York City will not help much unless the business community undertakes fundamental change.
DEMOCRATIC BUSINESS – 20% Americans are revolutionary people, basically, and it’s possible they could reject the ideology of money. Progressive corporations have long developed quasi-democratic business practices that include social responsibility, ethics, the triple bottom line, employee participation, corporate community, and recently the idea of conscious capitalism. This broad trend suffers from the taint of “doing good,” but it could evolve into a legitimate model of the 21st century corporation that is both socially responsive and more productive as well.
The Muddling Through scenario seems most likely because people don’t expect much today. But I think we could be surprised to see the Democratic Business scenario emerge — not to be moral but because it will prove a competitive advantage. Studies show managers in 17 nations realized higher financial gains focusing on stakeholders rather than profit alone, and companies that have a social purpose, high customer satisfaction, and strong employee involvement outperform others by 10 to 1. Even Jack Welch, the former CEO of General Electric who gained fame for his strong focus on profits, recently acknowledged “Shareholder profit is a result, not the goal. Your main constituencies are your employees and customers.”
Americans are facing a moment of truth. We could sink further into apathy relieved by our good lives, or we could respond to the growing immiseration of our fellow citizens and our own decline as a nation. The stakes are high because business is the most powerful of our institutions and it largely defines our social character. The shift to more equitable and more productive business culture would transform our economy and society itself, and Americans could lead the world again.
We’re running a forecast on “Democratic Enterprise” at TechCastGlobal.com, and I expect to have results soon. Stay tuned.
William E. Halal is professor at George Washington University and president of TechCast Global. His most recent book is Technology’s Promise: Expert Knowledge on the Transformation of Business and Society.