Business operations have far exceeded the planetary boundaries that society can live by. So, what is the role of business in a depleting society? We push the Haas community to question what we assume as status quo: American capitalism. As the locational origin for “wicked problems” and the free speech movement, UC Berkeley must push the business community into the urgent and burning present. Reimagining Capitalism includes systems change in shareholder primacy, democracy and free markets, and corporate sustainable innovation.
Gaps in U.S. Capitalism: Free markets have brought technological innovation, prosperity, and new business models. However, its current version has gaps that need to be addressed for it to be the best and fairest version of capitalism. We believe that:
- Historical Exclusions over the last 50 years were built on outdated ideas of individual liberties and deregulation that have perpetually excluded and devalued people based on their race, class, gender, or disability and also devalued resources by not pricing externalities into total cost.
- Shareholder Primacy, while an important part of one’s fiduciary duty, has focused solely on profit maximization rather than value creation. Most companies fundamentally choose to not focus solely on profits whether for strategic reasons, investing in employees, R&D work, or sustainability efforts. This language does not exist for the shareholder relationship.
- Due to the role of money in politics, we have seen an Increasingly Oligarchical Version of Capitalism. The checks and balances that exist between a democratic government and the free market of business have withered in the U.S.
How We Reimagine It: Most of the work to shift our current landscape requires a systems thinking approach. This includes evaluating the impact of our current structure and its influence on society.
- The Role of Business in Society must be questioned. It’s important to curb concentrated corporate power and monopolies and to counter corporate influence in a democratic government. There are effective models we have seen where business can work in collaboration with the government while fortifying the checks and balances that build a strong relationship.
- Redefining Corporate Success can effectively counter the current focus on quarterly earnings or output. The ultimate goal of a business should be to still exist in the long-term, and science has shown us that the coming decades will be increasingly unpredictable.
- Infrastructure for Finance should be incentivized to create capable democratic governments that are critical to long term economic health. A third of the world’s investing capital is already committed to insisting that firms in their portfolios plan for the challenge of climate change. There needs to be more systems in place to induce this type of accountability.
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