Capitalism and the Era of Self
Updated: Jun 25, 2020
“Sears, in its glory days, was the opposite of financial engineering. It was run by real people; and it sold real stuff to real people. To make the American economy great again, get rid of the financial engineers and make America real again.” – The American Prospect, October, 2018
In the fall of 2018, I posted an article on LinkedIn about the impending bankruptcy of the vaunted America retailer, Sears. At the time my intent was to highlight – or perhaps lament – the demise of a company that represented “good management” for most of its early life, and contrast that with the rise of what has been termed “vulture capitalism"; the use of financial engineering, most often under hedge fund-management, to wring every bit of value from a company without regard for the larger societal context in which it exists. Several people responded to that post with fond memories of Sears as not only a store - a place to exchange cash for goods - but an institution that was an enriching part of mid-twentieth century culture and community life.
So, what happened? The answer depends on one’s view of the purpose of capitalism. To parse it very broadly there exists two competing views. That of Milton Friedman and the so-called “Chicago School” that [the] “social responsibility of business is to increase its profits” or the view held by William and Kenneth Hopper set forth in their 2009 book, The Puritan Gift: Triumph, Collapse and Revival of the AmericanDream, that corporations not only have a responsibility to produce goods and services to the public at fair prices, to earn profits, provide jobs, and build the economy, but also to be responsible to the broader society and communities of which they are a part.
In their book, the Hopper brothers write about four principles that informed and led to the zenith of a mid-20th century ethos that good management practice meant that companies should not only do well for themselves, but do good for their employees, communities and, often as a tertiary stakeholder, shareholders. While we can argue about the moral purity of the society at that time in our history, the Hoppers leave that for others to explore. They concern themselves with the flight from a capitalist orientation that saw organizations as contributing to the greater good, to a current view of organizations as practicing individual enrichment embodied by the phrase “maximizing shareholder value.”
They posit that traditional American society, beginning with early migrations of freedom-seeking European religious groups to the US, notably the Puritans, held to four general beliefs that informed early efforts to organize and run enterprises of various types. The Hoppers contend that this mindset instilled a guiding philosophy of doing business that led organizations to contribute in ways that went far beyond profit making. The four tenets are broadly described as:
A conviction that the purpose of life is to establish the Kingdom of Heaven on Earth;
An aptitude for the exercise of mechanical skills;
A moral outlook that subordinated the interest of the individual to that of the group; and,
An ability to assemble, galvanize and marshal financial, material and human resources to a single purpose and on a massive or lesser scale.
The Hoppers do a far better job of explicating how these seemingly outdated and “quaint” principles can still inform capitalism today, I will not try to better them on that score. But it is not a stretch to view these principles through a contemporary lens.
Should not an organization's existence, at least in part, be to further a moral and just society in the way in which it conducts business? Are not organizations always evolving and improving through the adoption of emerging technologies? Have we not seen the downside of arrogant celebrity leaders and the upside of those who practice leadership that is subordinated to the good of the collective? And, virtually nothing has changed as it relates to the acumen required to envision, assemble, run and sustain a large complex system. These four principles are as relevant today as they were in Puritan times. Perhaps we need only redefine them for the age in which we now live. But rather than looking to redefine them into a new, unifying message we seem to have fallen victim to changing organizations from the outside in, rather than the inside out.
There are many well-intended movements: Corporate Social Responsibility; Sustainability; Sunshine laws; Whistleblower provisions, Human Rights; and, Privacy laws to name a few, that attempt to hold organizations accountable. But as the saying goes, you cannot legislate virtue. These efforts in and of themselves have not brought about a sea change in the way organizations behave. It is unlikely that regulation and oversight alone can accomplish such a change.
As customers, shareholders and employees we can be a collective force to demand more from the organizations with which we engage and transact but this is made far more complex in a global economy where it is almost impossible to define the local community that is being served. Depending on one’s perspective, Amazon either abandoned New York City or, was shunned from doing business there. It is not as simple as saying that providing jobs and paying taxes – albeit with a sweetened deal – means contributing to the local community any longer.
And perhaps the biggest obstacle to bottom up, grass roots change is that we are mired down in tribal politics and exist in a sharply divided nation on issues of values, fairness, community and shared vision. The problem is larger than just capitalist philosophy. The problem is that rather than a movement to adopt a unifying ethos to contemporary capitalism, we have fallen victim to the divisions of our times and me-first capitalism is just one of the many manifestations of that condition.
In a recent Op Ed in the New York Times, columnist David Brooks talks about our society as one that is now almost fully centered on the self. He writes:
“We are now living the era of Self. The right and left now offer two different magnetic ideas. The Trumpian right offers Tribe. “Our” kind of people are under threat from “their” kind of people. We need to erect walls, build barriers and fight. The earlier American nationalism was about frontier; this is about the fortress. Tribalism is a magnetic idea that has mobilized people from time immemorial.
The left offers the idea of Social Justice. The left tells stories of oppression. The story of America is the story of class, racial and gender oppression. The mission now is to rise up and destroy the systems of oppression. This, too, is an electric idea.”
Organizations have a self-identity as well, whether that of founders and charismatic owners or that of carefully researched and constructed brand images. That self-identity is often reflected through the lens of the ideological left-right schism that Brooks writes about; Hobby Lobby and Chick-fil-a on one side, Apple and Target on the other. Whether it is Eddie Lampert running Sears into the ground to enrich himself, or Wells Fargo tacitly institutionalizing fraud to fatten its coffers, the examples of the me-first ethos of our era is on full display in many recent organizational transgressions.
Beyond glossily marketed displays of corporate philanthropy our capitalist institutions have ceased to demonstrate their commitment to the greater good imbued in the early days of enterprise when there was a deep and abiding recognition that no one person, company or institution exists solely to serve itself. And as a result we have lost faith in institutions. Is our government really “for the people”?; do companies exist for any reason other than to enrich themselves and destroy their competition?
It is hard to draw a straight line between the condition of contemporary capitalism and our current societal division, but it is not a stretch to see some relationship. A return to the four tenets so elegantly described by the Hopper brothers cannot be any worse of a prescription than staying on our current course. One only hopes that the impetus for addressing this dilemma will be a collective awakening and not a cataclysmic coming apart.
It Was Vulture Capitalism that Killed Sears, The American Prospect, Robert Kuttner, October 16, 2018
The Social Responsibility of Business Is to Increase Its Profits, Milton Friedman, The New York Times Magazine, September 13, 1970
“The Puritan Gift: Triumph, Collapse and Revival of the AmericanDream,” Kenneth Hopper, William Hopper and Russell L. Ackoff, I. B. Tauris, 2009
Ibid. Page 3, Kindle edition.
An Agenda for Moderates: The policy implications of love your neighbor, David Brooks, the New York Times, February 25, 2019