The Sunday Review: The New Capitalist Manifesto, by Umair Haque

by Anthony Painter

Something is going seriously wrong with capitalism.

Yeah, we’ve heard all this before from you green nuts, socialists, idealists. Why don’t you tell us how mean, corrupt, selfish and deluded we all are again? Whatever.

No, really, something is going wrong with capitalism.

I’ve just said, walk on by – do your recycling, save some workers, sell some Marxist newspapers.

No really…

And this time it really is different. It’s no longer just the fringe that says so. It is the mainstream. And not just the political mainstream. The business and academic mainstream. What’s more, politics, even social democratic politics is light years behind. The new radicals are to be found within the temple of capitalism itself.

Take this:

“There is growing concern that if the fundamental issues revealed in the crisis remain unaddressed and the system fails again, the social contract between the capitalist system and the citizenry may truly rupture, with unpredictable but severely damaging results”.

Who is this dangerous revolutionary? Well, it’s none other than Dominic Barton, global managing director of Mckinsey & Co. Yes, McKinsey & Co.

OK, so some management consultant has a conversion on the road to Damascus and we’re expected to worship at his altar.

So what about this:

“At a very basic level, the competitiveness of a company and the health of the communities around it are closely intertwined. A business needs a successful community, not only to create demand for its products but also to provide critical public assets and a supportive environment”.

Friends of the earth? The new economics foundation? Funnily enough, not. That is Michael Porter, high priest of competitiveness theory. In his long essay on “shared value” – the search for economic value rooted in social and environmental values – he washes Milton Friedman down the drain. Friedmanite economics is becoming a thirty year nightmare.

It still captures the dull imagination of the likes of London’s Mayor, Boris Johnson, who keeps on prattling on about bankers bunking off to Switzerland if we ask them to meet their costs and contribute to the society in which they operate. And it still grips this Tory-Lib Dem government, which seems so intent on depleting the critical public assets on which Michael Porter sees business as being so reliant. They are behind the curve of the new capitalism.

And what is the journal of this new capitalism? Well, it is none other than the Harvard Business Review. (I promise that I am stone-cold sober and of sound mind).

Right on the tail of Barton and Porter comes Umair Haque – another Harvard Business Review contributor. A business consultant, a management theorist and now an institutional economist all hurling warnings, ideas, argument, pleas, and despair towards the anarchic capitalism of the Friedmanite era. Haque is a number of things, but it is mainly as an institutional economist that he has written The New Capitalist Manifesto. What he has come up with is a scintillating tour of what he describes as constructive capitalism; which is similar to Barton’s long-term capitalism; and also bears a strong resemblance to Porter’s shared value capitalism.

Haque’s core argument is that modern capitalism peaked in 1970 in terms of both wealth creation and well-being. It’s been downhill since and we reached the cliff edge in 2008. The institutional structures of capitalism – which, according to Douglas North are the “humanly devised constraints that shape interaction” – are geared towards “thin” rather than “thick” value. We behave as if we are living on a rich, infinite and bountiful prairie; whereas, in fact, we are on a highly resource-constrained ark. For this reason, our institutions, or cornerstones as Haque terms them, understate the costs of business and overstate the short term benefits. We are all paying the social, environmental, physical, and long-term economic price as a result.

All is not lost. There are constructive capitalist pioneers – the likes of Apple, Nike, Whole Foods (which nonetheless remain shamefully anti-union), Tata, Lego, threadless.com, Nintendo, and Starbucks – who are recrafting the institutions that underpin modern business. Just take Starbucks and its democratic online community mystarbucksidea.com, or Nike Plus or Nike’s “considered index” which makes its latest shoes 83% recyclable, or the Tata Nano which brings car ownership to the masses – the modern Ford Model T.

These companies aren’t just innovating new products, they are changing the whole way they do business and creating “thick”, i.e. long-term economic, social, and environmental, value in the process.

There is a deeper point here and, though Haque leaves many of these questions unanswered, this is a political challenge challenge also. What are we to do as a community and as a society to re-gear political and civic institutions towards longer-term shared value? It is clear that austerity is not the answer (follow Haque’s twitter feed to see how scathing of that approach he is). Why actively and ideologically destroy public value unnecessarily? It is clear, though, that we need to re-engineer education, public institutions, democratic structures, the rules and regulations of the market place, the rules that govern capital, and consider the long-term nature of public and social value more carefully.

These are the things that the public realm is meant to be good at. But there are business pioneers who are doing it better. The new capitalist manifesto is a wake up call. Both the left and the right are stuck in the tired debates of the “thin” capitalist age. It is difficult for us all to move on; Haque himself has a habit of adopting the breathless and hyperbolic rhetorical style of the “thin” capitalist management book. He can be forgiven, because the movement he is part of is far more intellectually exciting and important than the already tired big society discussion with its meddling and micro behaviorialism. It’s global, it’s happening, and we need to catch up.

An unbalanced capitalism is ruptured. Out of the rupture will emerge strange new alliances. Most excitingly, this new common cause between reformed and astute insiders and the long-term critics of capitalism’s short-termism is the most intriguing – with the former in the vanguard. Long may it last and intellectually develop. And politics had better catch up. This time it is different. Perhaps.

Anthony Painter‘s new report on far-right identity politics, Fear and Hope, is published tomorrow.


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