This past August I had the opportunity to attend the annual meeting of the Academy of Management, probably the most important of its kind in the world, with more than 8,000 participants distributed across multiple divisions. The overall theme for this year lends the title of this post: Capitalism in Question, certainly an expressive title, and one which gave rise to a great variety of presentations and sessions.
Capitalism as an economic system seemed unquestionable after the failure of the centralized economy, symbolized by the fall of the Berlin Wall and the economic success of China on adopting a free market – though maintaining a communist regime – apart from the development experienced in countries where a free market exists. But this is not the case. The conference organizers had noted that the recent economic and financial crisis, the austerity adopted in many places and the unemployment in so many countries, as well as the emergence of many protest movements around the world have put some big questions concerning the capitalist system on the agenda. They remembered three major characteristics that distinguish capitalism from previous economic systems: a) market competition between for-profit companies, b) salaried employment in these companies and c) Limited government intervention in the market and employment. They noted that each of these features produce significant benefits, but also significant economic, social and environmental costs.
Questions were asked, such as what kind of economic system is best suited to build a better world? Is it still the capitalist system? If so, what kind of capitalism? If not, what are the alternatives? Although these questions are not usually asked in business management, the answers that they elicit may influence business approaches, starting with the end of profit as the engine of the company and followed by consideration for the employees and business pressure to increase or diminish government action related to economic activity.
Voices were heard coming from many directions, but none questioning the free market. Some defended the current situation arguing its efficiency for economic growth and the respect for individual freedom it entails. At the other extreme, there were those who emphasized cooperation and greater government intervention in economic activity, even with certain financial planning. Between these poles were those who suggested reforms with a broader view of the firm, seeing it as an institution that has to pursue economic, social and environmental objectives. There was mention of familiar models such as employee-owners, along with more recent ideas such as “hybrid” firms with both social and profit objectives. Other ideas come from the so-called “conscious capitalism” which incorporates the social responsibility of business in each and every business decision and practice. All of this without forgetting the need to deepen employee participation in the management of decision-making and various proposals on the regulatory role of governments.
All of these proposals are welcome, but it must also be said that, although well-intentioned, they rarely get to the crux of the matter, trying to think about the ultimate meaning of economic activity as a service to persons, the personal nature of work that gives it dignity and makes it worthy of special, or the contribution to the common good that gives moral legitimacy to the company and to governmental action. In general, In general, functions assigned to the business firm have little anthropological foundation. The worker is still seen in purely economic terms (employee, producer) and managing people a how to deal with conflicts. I think that more philosophy of the firm is required, first in research and then in teaching. Certain of us have been thinking of this for some time now, but much work remains until it fully makes it into the “Academy”.
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