By JR on Saturday, December 03, 2011
They blame capitalism for the extraordinarily high incomes received by many big-business chiefs and say it will provoke unrest. But many of the high incomes originate in firms that were bailed out by the government or have a cosy relationship with government.
So the high incomes concerned are not the fault of capitalism but the fault of corporatism -- the intimate connection between government and big business that Mussolini rightly envisaged as dominating the 20th century and beyond. To put it bluntly, it is our present neo-Fascist system that is creating dangerous strains, not capitalism.
If none of the big banks and other financial institutions had been bailed out and gone broke instead, most of those big incomes would have vanished too. Capitalism was not allowed to do its work of creative destruction. It is a turning back to real capitalism that is needed -- JR
A review of Capitalism at Risk: Rethinking the Role of Business
Three professors from the world's pre-eminent business school have co-written a study that at first blush seems to fall more in the genre of horror tale than business text.
Professor Bower and his colleagues note in their study the broad concerns of the 46 business thinkers that they brought together in forums on three continents, but by far the most widely held was "the tendency of capitalism, as it currently functions, to produce extreme disparities of income and wealth".
It took little to conclude that the vast accumulation of wealth by individuals compared with the stagnating fortunes of low- and middle-income workers is fuelling the backlash worldwide.
"Some leaders pointed to what they regard as excessive compensation earned by CEOs [that] strike many people as intrinsically unjustified," the authors write. The reality of growing disparities - one that is the crux of political debate within Western democracies - poses questions about capitalism's very raison d'etre.
One unidentified Asian business leader told the authors: "Herein lies a major challenge, because the world has become very much more prosperous as a result of market capitalism.
"The rich have become richer. The poor in most cases have become richer. But the gap between the rich and the poor has also grown wider … There is the growing sense of being left out, even as people are getting better off."
A European executive said: "What was the good of capitalism? Was it the fact that we were building a very large, very well-off … middle class? We are not doing this any more."
And in the US, a chief executive told the authors: "It's undeniable that in a country like ours, unfettered capitalist impulse on a global basis does seem to exacerbate the problem."
Joining the discussions were executives such as Jeffrey Immelt of General Electric, John Elkann of Fiat and Bertrand Collomb of the French group Lafarge. They included bankers and financiers, as well as the heads of conglomerates and the former US labour secretary, Elaine Chao.
That capitalism has delivered for billions is not at issue: in the last decades of the 20th century, 97per cent of countries enjoyed increased wealth, according to the World Bank. More than 450 million people were lifted out of extreme poverty.
But the executives also cited as potential threats the powerful forces within financial markets, environmental degradation, political populism, terrorism and war, fundamentalism, mass migration and pandemics.
They are quoted anonymously throughout the work.
"History tells us that when an awful lot of people are disenfranchised, they have no incentive to play by the rules, and given today's communications availability, weaponry … that's an issue we have to really think about, probably over a very long period of time," one executive said.
Perhaps unsurprisingly, given that many were the beneficiaries of fabulous remuneration, the business leaders do not appear to offer easy solutions to bridging inequalities. But they back business, not government, largely to ameliorate strains on the system.