Reimagining Capitalism: Business and Big Problems
Course Number 1524
Associate Professor George Serafeim
Spring; Q3Q4; 3 credits
Growing income inequality, poor or declining educational systems, unequal access to affordable health care and the fear of continuing economic distress are putting stress on political systems worldwide and challenging the credibility of business. At the same time rates of environmental degradation are increasing, sea levels are rising and unchecked emissions of greenhouse gases threaten to destabilize the climate. Robust political responses based on strong social support are crucial to meeting these challenges, but action by the private sector will also be critically important.
This course is designed for students who want to explore the idea that at least some of these "big" problems can be effectively addressed by high performing private firms. Historically these kinds of problems have often been considered to be the responsibility of the state. We'll look at why private firms might be able to play a major role in solving them in today's world, and we will explore the ways in which accomplishing this may require both changes in how firms and leaders consider their obligations and engage with the issues, as well as changes in the "rules of the game" by which capitalism is structured.
The course differs from a number of excellent offerings that explore related issues in at least three respects. First, we explicitly challenge the boundaries of the current system, asking whether there is a different way to run firms and/or a different way to think about and/or shape the system/institutions in which they are embedded (e.g., the notion that shareholder value comes at the expense of stakeholder satisfaction). Second, we explore the degree to which leaders that root their actions in their most deeply held values can act as change agents within the larger system, and we examine how and why your own career might help to accelerate change. Finally, we will rely more on readings than on cases, and more on discussion in small groups than on classical case discussions. Approximately half of the sessions are held in the Hives and there are lots of opportunity to practice using the ideas we discuss.
Note: This course is a renamed version of this year's "Reimaging Capitalism." We believe that the new title much better reflects the actual content of the course - which is not about designing a utopian alternative to the current system, but rather about wrestling with the dilemmas and responsibilities inherent in being a private sector leader in a world increasingly facing intractable problems that are simultaneously economic, social and political.
Course Content and Organization
The course has several parts. We begin by looking at two of the "big problems" in some depth - environmental degradation and inequality - as a first step towards understanding whether and how it may make sense for private sector firms to engage in solving them. We pay particular attention to the moral roots of capitalism and its emergence over the course of the last three hundred years as a solution to the problems of hunger, violence and centralized power, and we contrast the ways in which the relationship between the public and private sectors has taken different forms over the course of history and across geographies.
Linked directly to this is the idea of shareholder value. We explore its different meanings, and what they imply for managerial action. We consider whether delivering value to shareholders is necessarily at odds with satisfying the needs of a broader group of shareholders, or whether attention to these needs can lead to robust value creation. We also look at circumstances where there is a trade-off for private firms between shareholder value and addressing "public goods" problems to understand whether the costs can be reasonable or appropriate and we explore some of the institutional solutions - including industry self-regulation, alternate governance and direct engagement in the political process -- that have emerged to address them.
We then turn to examining various examples of leaders and firms that have reimagined their roles and goals, and the approaches they have taken to engaging with these challenges. Mindful that successful leaders have strong values that inspire and guide their decisions, we explore the moral imperatives or social contract that can motivate business leaders to engage with public goods problems and the degree to which it is appropriate to act on these values. We will look at what has worked well, what has come up short, and consider what lessons can be drawn. We will also look at the implications of these approaches for the broader economic system.
Finally, we explore what these ideas might mean for you and your career. The world is a large place, and the kinds of problems that we face can seem overwhelming. You will have the opportunity to bring together the ideas, issues and models discussed throughout the term to develop and articulate your own view of how the system can work better, the role and responsibilities that firms and their leaders may have in addressing these challenges, and how your own approach to leadership could be affected by these issues.
Course Format and Requirements
Roughly a half of the sessions will use cases while the other half will rely on readings, and the course is explicitly designed for those who would like a change of pace from traditional case based courses. We will read widely, drawing on work in political science, in moral and political philosophy, and in psychology and economics. Our goal is to make the readings eminently practical and actionable. We will not do fine textual analysis - instead we will ask what these ideas mean for you, as a manager, and we will have a number of visitors to class who are attempting to put them into practice in their own firms.