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Harvard Business School produces a lot of high quality research, frequently distributed through their own publications such as Harvard Business Review. Some of it is thought provoking and some of it is seminal work in the field. Examples of seminal work would include the early work of Michael Porter and Clayton Christensen.
Global Capitalism at Risk by HBS professors Joseph L. Bower, Herman B. Leonard, and Lynn S. Paine may at first appear as just thought provoking, but there is an idea here that may prove to be the foundation for a change in thinking on the scale of Christensen and Porter.
The article states that market capitalism may breakdown within the next 25 years and become disfunctional for the following reasons:
- Increasing inequality in wealth distribution
- Increasing immigration to rich countries
- Fragile financial systems
- Climate change and environmental degradation
- Continuing degradation in education and healthcare
- Increasing government corruption that disrupts free markets
- The traditional protectors--business, government and international institutions--can no longer manage the problems
While this analysis may appear to just be the liberal thinking of a few academics, the near collapse of world financial markets in 2008 suggests to me that the professors should not be ignored.
The proposed solution is "the creation of entities that can organize large-scale collective action" that disrupt markets through innovative solutions. Implicit in this proposal is rejection of the idea that only governments are responsible for collective action. The historical black and white distinction between government and businesses in determining the "public interest" must be loosened. According to the article, many business leaders are afraid to wade into the area of the public interest, perhaps more comfortable operating only on the basis of self-interest. The authors conclude that capitalism may be lost if business leaders cannot change to take a more active role in the "public interest".
The seminal idea is to develop a framework that facilitates this change in business thinking to embrace the public good without abandoning responsibilities to shareholders. Some may think of Porter's "shared value" as a solution, but I think his approach is merely incrementalism. Rather than starting from Porter's perspective of competitive advantage, the framework needs to start by defining the public good. Economists have argued about the definition of public good for centuries, but businesses rarely discuss the theme. We do not need to reconcile the views of Hayek, Friedman and Keynes. Perhaps all we need is a definition that businesses can accept and an HBS framework that helps CEOs to understand the issues and act to solve the wide ranging problems before it is too late. A thoughtful discussion of the public good would also probably lead to a re-definition of the role of government and a more effective and smaller style of government. That would be a daunting task but maybe business could frame the issue in terms of the public good. My thoughts on public good are here.
Note: Porter's "shared value", the article discussed above and the work of Christensen and others at HBS in education indicate a new trend at HBS which has not been much in evidence in HBS publications for the 30 years I have been a reader. Simply put, I think the professors at HBS are encouraging capitalists to take over many of the traditional roles of government or at least to pursue profitable opportunities that previously were government responsibilities. I very much like that idea if my interpretation is correct.
