Tuesday, December 9, 2008

Capitalism Do Over - What's Needed Now

Capitalism needs a reboot. Too many people - many of them economists who live in an abstract, theoretical world-- think in terms of absolutes that don't reflect the realities of our increasingly interdependent world. We need a new perspective on capitalism - one that recognizes the crucial role business plays not just as an economic engine, but in all aspects of our lives. What business does, how it behaves, what rules it follows, what social norms it pays attention to has an enormous impact on our quality of life.

Capitalism needs to work better for people, for society, and for the environment. The old system - where the only role of business is to make money - is unsustainable. Why? Because business is amoral and amoral entities do not operate for the public good.

This doesn't mean people who operate businesses are amoral. Some are, some aren't. The key is understanding that there's nothing inherently good or bad about business. People who argue that business will do the right thing naturally don't understand how business works - or they do understand and they want to mislead people.

Business doesn't exist to solve social problems. It exists to make money. And if, along the way, it damages our society in ways that are catastrophic, well, it's just business. Unless reined in, business is going to kill whales, it's going to destroy fisheries, it's going to consume every last bit of old growth trees, it's going to pour toxic waste into our seas and our air, and it's going to throw people out of work.

Business needs checks and balances. It needs scrutiny. It needs watchdogs. It needs regulation. Most importantly, it needs to get better.

We're facing a crisis even bigger than is being described on the news everyday because no one has gotten their arms around the fact that government can't keep up to curb the excesses of business. The pace of change in business and society is just too fast. And yet, if we don't get better at this, if we don't find a new path, we're going to lurch from one crisis to another. Economic crises, environmental crises, social crises.

We're at a critical juncture. We have the opportunity to make things better. It's possible for business to create economic growth and create a positive return for society. It's possible for us all to incent good business behavior and punish behavior that has a negative cost to society. But in order for that to happen, we need to be clear-eyed about what is and isn't working with the current system.

Why am I writing about this?

Because I'm a businesswoman who's concerned about the lack of understanding of business among policymakers, among economists, among media, and among the general public. And also, because I believe that we can expect more from business and from the people who make business decisions everyday.

Business is a powerful driver of change in our society. It's up to us to make sure that business operates in ways that will enhance our quality of life. We need to get off the sidelines by working to create the incentives and disincentives to make business work better for all of us.

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