Free market capitalism is the main source of wealth and prosperity across the world. At the same time, its “single-minded pursuit of profit has led to rampant inequality and the looming threat of climate catastrophe” – running the very real risk of destroying society itself.
In Reimagining Capitalism, Rebecca Henderson argues that successfully balancing “the interplay between self-interest and a shared sense of the right thing” has become not only a moral imperative, but also an extraordinary opportunity to drive growth and innovation in an increasingly competitive world.
Pointing out (as many authors have done) that the widely accepted obsession with shareholder value is a relatively recent phenomenon, she draws on lessons from companies already reimagining (and remaking) accepted business models. Examples include Spain-based Mondragon that operates in dozens of industries (from heavy manufacturing to IT), employs more than 80,000 people, and in 2018 had $12.3 billion in revenues – yet it is the largest employee-owned firm in the world. Triodos Bank in the Netherlands is owned by its customers – “a strategy that has allowed it to pursue goals that are explicitly about building a healthy society, rather than about maximising short-term returns”. In 2018 it had more than $16.5 billion in assets under management and $292.6 million in revenues.
Although very positive about purpose-driven capitalism and industry-wide collaboration, Henderson acknowledges just how difficult it can be to drive architectural change in a complex, global system. She is clear-eyed enough to spot where things have gone wrong, and where some of the well-meaning efforts by companies (or governments) did not work. Perhaps most critically, Henderson clearly illustrates how markets, governments, and public institutions all need one another to function properly.
Reimagining Capitalism is a refreshing read. Weaving together thorough research and decades of personal corporate experience, Henderson builds a strong case for harnessing the great power of business as a way of solving big problems – and for the difference that one individual can make.
Review by Lise-Marie Keyser