Mariana Mazzucato

The twin problems I see in modern-day capitalism are the fact that the financial sector is financing itself and industry itself has become financialized, obsessed with short-term quarterly returns. To change that system, you need to debunk the pillars on which those behaviors are based. The problem with the maximization of shareholder value approach is that it has dismissed the role of other actors in … [ Read more ]

Mariana Mazzucato

Value in capitalism has fundamentally been created collectively through different types of actors coming together to solve problems. Workers have contributed. The state has contributed. Of course managers and people on the ground have contributed, but we need a body of thought within economics that really captures that collective value creation.

Maximization of shareholder value is a very narrow approach to understanding value. Indeed, it is … [ Read more ]

Jerry Useem

Trust is to capitalism what alcohol is to wedding receptions: a social lubricant. In low-trust societies (Russia, southern Italy), economic growth is constrained.

Kenneth Arrow

Virtually every commercial transaction has within itself an element of trust.

Reimagining Capitalism

What is capitalism? Is it the greatest source of prosperity and freedom the world has ever seen or a menace on the verge of destroying the planet and our society? Rebecca Henderson argues that capitalism is the only solution to the massive problems that we face and explores the ways in which the private sector can help to reimagine capitalism so that it works for … [ Read more ]

Rebecca Henderson

Scholars came to distinguish between “inclusive” and “extractive” societies. Extractive regimes concentrate both political and economic power in the hands of an elite few. Healthy inclusive societies, by contrast, rest on three foundations: a free market; a strong civil society; and a democratically elected, transparent, capable, and responsive government. Together these three institutions hold each other accountable, balancing the power of the free market with … [ Read more ]

Rebecca Henderson

Markets require adult supervision. Markets only lead to prosperity and freedom when they are genuinely free and fair. Intuitively, if firms can dump toxic waste into rivers, lie to their consumers, and form alliances to fix prices, there is no guarantee that maximizing profits will increase either aggregate wealth or individual freedom.

Rebecca Henderson

The rule of law, well-designed corporate governance, anti-corruption safeguards, democratic government, a free media, and appropriate financial regulations are critical to enabling free markets to stimulate high quality development.

Rebecca Henderson

The deepest moral commitments of capitalism require that they help to sustain the health of the institutions on which the free market relies. If firms exist to maximize prosperity and social welfare, they have a moral duty to act as if there were a price for carbon, for example, even when there is no price in place. If firms exist to maximize freedom of opportunity, … [ Read more ]

James O’Toole

When the purpose of a corporation is seen as only maximizing shareholder profit, enlightened capitalism — even when it is linked to long-term financial success — tends to fall by the wayside.

Mission critical

Economist Mariana Mazzucato explains how solving society’s toughest problems starts with rethinking how value is created and innovation is incentivized.

Bethany McLean

The biggest lesson of all from the crash — one that would resonate in our own time — is that when the financial system cracks, the motto of “free markets for free men” no longer holds, because the government has to step in.

Joan C. Williams, Ro Khanna

The right is starry eyed about the market but coldly realistic about the limitations of government. The left is starry eyed about government but coldly realistic about the limitations of the market. As Churchill once said about democracy, it’s the worst possible system except for all the others. Both the market and the government are deeply flawed tools. But they are all we have.

Joan C. Williams, Ro Khanna

We don’t need to reinvent capitalism. We just need to practice it. That means that corporations that embrace market mechanisms and decry government intervention in the good times should not change the rules when times turn tough. Privatizing profits while socializing risks isn’t capitalism: It’s rigged roulette. Equally important, practicing capitalism does not mean insisting on special treatment from government that benefits shareholders at the … [ Read more ]

Rethinking Capitalism: The Power of Creative Destruction

With the proper safeguards, creative destruction – the process by which the new replaces the old – remains the way to greater economic growth and prosperity.

Jeremy Darroch

Every business takes from the environment. We get access to resources, roads, infrastructure, and education. So it’s only right that we have a mind-set that we give back, we replenish as well as consume. And we use our voice to try to make a difference.

Martin Reeves, Kevin Whitaker

In the current model of corporate capitalism, each company is treated as an economic island to be optimized individually. While this simplifies management and accountability, it masks the extent of economic and social interdependence between different stakeholders. In contrast, resilience is a property of systems: an individual company’s resilience means little if its supply base, customer base, or the social systems upon which it depends … [ Read more ]

Rethinking the Future of American Capitalism

American capitalism has evolved time and again, and we may be poised for another such shift. Will the future of capitalism involve tweaks, reforms, or wholesale change?

Gregory Mankiw

In the presence of externalities, society’s interest in a market outcome extends beyond the well-being of buyers and sellers who participate in the market; it also includes the well-being of bystanders who are affected indirectly…. The market equilibrium is not efficient when there are externalities. That is, the equilibrium fails to maximize the total benefit to society as a whole.

Ginia Bellafante

Modern capitalism’s fundamental myth is that acquiring money is the equivalent of achieving success.