The Future of Market Capitalism
Faculty Response (19 February 2008)
For the foreseeable future, there will be billions of unskilled living in the developing world. An inevitable consequence will be migration from poor regions towards richer ones. Business leaders are more or less comfortable with free flows of goods, technology, and capital. Should there be free flows of labor? If your answer is "yes," how should those populations be integrated into the society of their new homeland? If your answer is "no," how will the need for labor be met in the developed countries with low birthrates? In the U.S. for example, there is a net need for half a million workers.
A number of discussants observed that capitalism will not operate successfully (and generate value for workers, owners, and society) in a vacuum — it has to be embedded in a political governance system (and, most would hope, in a democratic political system). What does this imply about the role that business leaders should play — as individuals, as leaders of their companies, or as groups of leaders within their societies — in supporting, improving, or reforming local, national, and international political institutions? Can they play an active and effective role — and should they? Or would they just be seen as self-interested?
In the Future of Market Capitalism HBS Centennial project, we have been exploring the evolution of capitalism—the value it has generated, and the threats that may be arising that could impede its future value creation. We have interviewed business leaders around the world to get their sense of what some of the potential threats are—and what to do about them. We would now like to get your thoughts on these issues.
In many countries, the gap between the rich and the poor has grown and will continue to widen. Some say growing inequality may be an unfortunate consequence of economic growth, but isn't a real problem as long as everyone's income is improving. Others say the growing inequality will undermine the foundations of our democracies and hence our economies. What is your opinion?
There has been a great deal of discussion recently about environmental degradation, and particularly about global climate change. Some believe that capitalism, by its nature, will seek to reduce or avoid environmental regulation, exacerbating environmental damage and endangering the future health of the planet. Others see for-profit firms as increasingly recognizing the importance of environmental issues, and as working to minimize their negative impacts on the environment and to invent new technologies that will make business more sustainable. How do you see it? Is market capitalism the problem - or the solution?
The Conversation is question- or topic-based dialogue between two conversation leads and our Centennial- site visitors. Every month or so, our conversation leads will pose a question to you, our visitors, to get your thoughts on specific issues in the world of business. The Conversation invites you to join the dialogue, and selections from these responses are made available online.
Joseph L. Bower
Baker Foundation Professor
Herman B. (Dutch) Leonard
Eliot I. Snider and Family Professor of Business Administration
HBS Working Knowledge, an online forum featuring new work from HBS faculty, offers more from Joseph L. Bower. And, if you like The Conversation, you may also enjoy What Do YOU Think?, an ongoing dialogue between Harvard Business School professor Jim Heskett and the readers of HBS Working Knowledge.