In an article in Vanity Fair by Michael Lewis on the Irish experience of the financial crisis, one biting comment particularly caught my attention: “Even in an era when capitalists went out of their way to destroy capitalism, the Irish bankers set some kind of record for destruction.” What struck me about Ireland in Lewis’ analysis is that it expressed in starker terms what has been happening throughout the West. The capitalist system is apparently going the way of its communist nemesis, collapsing under the consequences of its own incompetence and bad will.
This is a time of disillusionment—a good thing if you believe in the healing effects of reality. Those of us who grew up with Milton Friedman were taught to believe that greed did good through the mechanism of the market, which would perform the alchemical wonder of transforming baser human strivings into collective benefit through the vitality of self-regulating economic life. The destructive behaviors of business leaders were punished by the markets, but the system itself was never seen to be at risk. Capitalism was too big to be destroyed—and for a while that belief seemed to hold true. But what has been unthinkable since the 50’s is taking on a disturbing reality. The bankers continue unheeded, and the consequences of the socialization of costs of a bankrupt business ideology continue to unfold in the sovereign debt crisis.
One of the most eloquent and passionate critics of the assumptions upon which business is based that I have found these days is Umair Haque.
Haque’s style has much in common with that of a prophet, and his mission is not to bury capitalism, but to save it. The problem, he argues in his book, The New Capitalist Manifesto, lies not in the functioning of markets, but in the “addiction” of business and politics to what he calls “thin value,” which is based on maximizing profits by outsourcing costs to people, society and the environment. According to his guiding metaphor, 20th century capitalism lived the life of the explorer in the wilderness, taking from nature’s bounty to satisfy its needs, and leaving it to the planet to clean up the mess it had made in the process. Life in the 21st century is fundamentally different. The planet now resembles less an endless wilderness than an ark, where resources are finite, interdependencies between those inhabiting the ark absolute, and the consequences of bad behavior an immediate threat to the survival of all on board. What capitalism needs, Haque argues, is an update of its strivings to the constraints of the modern context. His solution lies in business creating what he calls “thick value,” or profits that result from giving back to the collective more than one takes away. The implementation of his recommendations requires nothing less than a complete rethinking of what capitalism is about and how it needs to work if we are to survive its continued operation. Businesses that get it, like those he features in his analysis, will thrive. Those that don’t will be eliminated by the demands of the changing market.
Haque’s writing is brilliant and charismatic, and what gives his arguments their extraordinary vitality is their focus on “purpose” in a way which until recently has been conspicuously absent in any business thinking that was taken seriously by the mainstream. At the heart of capitalism’s failure, Haque argues, is a gaping void of purposelessness, a strategic striving empty of content other than money and power, whose defining characteristic is the very absence of any philosophical commitments which could create sustainable meaning. Salvation, it would seem, lies in a change of mindset about what it is that capitalism is about. Ultimately, it lies in putting business in the service of humanity and the environment, and Haque provides us with a serious model of what the success factors of the new business paradigm should be.
What is striking about the movement of which Haque is a strong representative is that the malaise he describes is nothing new. Dilbert has been around for decades as a bitter mirror to the suffering masses of cubicle workers. The three things people hate most in their lives in a classical capitalist system are going to work, being at work, and traveling back from work. Managerial success has been guided by incentives which maximize thin value at the expense of employees, society and nature. Where capitalism once lifted masses out of starvation, today it has for a growing majority of people become a living hell, destroying the basis of our collective existence, fulfillment and happiness for the sake of the wealth of a privileged few.
What is new is that people in positions of influence in the old system are beginning to take arguments like Haque’s seriously. Perhaps most importantly, I suspect that his lucid style and argument from a standpoint of purpose might strike a chord in the conservative heartland of the old order, whose conversion from a frontier mentality to one of a sustainable common and collective purpose will be key to mastering the challenges we face in the new century.
What I miss in his writings is a discussion of how to deal with the interests of power. Capitalism works today the way it does not through any self-regulating dynamics inherent in its nature, but through its systematic and purposeful distortion to serve the intentions of a small group at the top. Where the rule of law once helped to level the playing field so that excellence and commitment could be rewarded in a meritocratic competition of competence, today influence on the law serves to strengthen forces that diminish competition, support businesses that drain the health and wealth of society, and threaten the biological foundations of our existence.
In the past, as long as things remained fair enough for a broad middle class to live hopeful lives, the power games at the top were tolerable to the majority. But on an ark which faces the hunters at the top with diminishing returns, the middle class has turned to prey. Hunters have traditionally not been very open to changing job descriptions, and, for example, to feel motivated to take up a life of farming. As in Egypt, we may find it increasingly necessary to force destructive actors (which often suffer from master of the universe delusions) to walk the plank. For that we will need more than the markets. This is what Haque sees us experiencing as the “age of dilemma,” in which we only have the option of making bad choices within the context of the institiutions which sustain the old system. The biggest challenge we will have to master before 21st century businesses can take off will take an act of collective purpose and political will. We need to create some losers among established business interests so that all of us can win on a larger scale. Creative destruction is not just an economic process, but one we must also confront politically.