The Sunday Edition

Can capitalism reform itself? — Michael's essay

"Things are changing. Nothing terrifies the pilots of Bay Street and Wall Street more than change. Unless they're the ones doing the changing. The early signs are there. The mighty engine of capitalism is sputtering."
"The push for change... is coming from young workers who want more and more to work in a place that reflects their values much more than their parents' generation did," writes Michael Enright. (Spencer Platt/Getty Images)
Listen4:24

The tectonic plates banging around under the walls of the fun-crazy world of high capitalism are becoming a problem for the mighty.

Things are changing. Nothing terrifies the pilots of Bay Street and Wall Street more than change. Unless they're the ones doing the changing. The early signs are there. The mighty engine of capitalism is sputtering.

It began in 2007-08 when the greedheads of high finance brought the world to the verge of economic collapse. After the bailouts and the loans and all the propping up, nobody went to jail.

Instead of spending the next few years eating their meals off a tin tray in a federal facility, the bankers and money men roared back to live another day. And to collect even higher bonuses than before. The bankers got away like bandits. Ordinary people tend to notice things like that.

Capitalism is based on the twin ideas of a free market and a spirit of competition. And it has worked for more than two centuries. But things are in flux. Consolidation, mergers, acquisitions have all but killed the idea of competition.

Milton Friedman, who won the 1976 Nobel Prize for economics, is believed by many to be the architect of free market economics. (Eddie Adams/Associated Press)

In the United States, four airlines control most of the market. Two corporations control 90 percent of the beer Americans drink. Five banks control have of the country's banking assets. Things are a bit better in Canada but not by much, especially when it comes to banking. The system is still driven by its primary engines, fear and greed.

But the winds of change are starting to blow. And they are coming from inside the big money industry itself. In the U.S., the Business Roundtable, the pillar of the corporate galaxy's establishment, suddenly came out with a series of recommendations calling for some pretty serious reform.

For example, the Roundtable said that customer expectations should not only be met, but exceeded; that investing in employees and compensating them fairly should be high in the mission statement of companies. And communities, not just customers, were important.

A cover story in The Economist recently asked What Are Companies For? By even posing the question, The Economist was rejecting the essential philosophy of Milton Friedman, the guru of right-thinking economists everywhere.

Walmart CEO Doug McMillon was recently named chairman of the Business Roundtable. (Danny Johnston/Associated Press)

In 1962, Friedman said any idea of corporate responsibility was nonsense — that the only purpose of a corporation is to make as much money as possible "as long as it stays within the rules of the game." That has certainly worked out well.

The push for change, according to The Economist, is coming from young workers who want more and more to work in a place that reflects their values much more than their parents' generation did. Uppermost on their minds, apparently — climate change and income inequality.

The signs are auspicious. Twenty-five big American firms campaigned against Donald Trump pulling out of the Paris Agreement on climate change. World-wide there are something like 1,400 companies that are aiming for carbon neutrality in their operations.

There is the possibility, of course, that this is all in aid of sand-blasting the tarnish off corporate reputations. On the other hand, maybe the knights of the Business Roundtable are for real.

Adam Smith, the father of capitalism and inventor of 'the invisible hand' didn't just write The Wealth of Nations.

In A Theory of Moral Sentiments he went beyond economic self-interest and talked about conscience, moral judgement and virtue in recognizing the common good.

Could it be CEOs have read it?

Click 'listen' above to hear Michael's essay. 

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