Capitalism at Risk: Rethinking the Role of Business

By Joseph L. Bower, Herman B. Leonard, and Lynn S. Paine

What does the future hold for the global market?

The spread of capitalism worldwide has made people wealthier than ever before. But capitalism’s future is far from assured. The global financial meltdown of 2008 nearly produced a great depression. 

Economies in Europe are still teetering. Income inequality, resource depletion, mass migrations from poor to rich countries, religious fundamentalism—these are just a few of the threats to continuing prosperity.

How can capitalism be sustained? And who should spearhead the effort? Critics turn to government. In Capitalism at Risk, Harvard Business School professors Joseph Bower, Herman Leonard, and Lynn Paine argue that while governments must play a role, businesses should take the lead. For enterprising companies—whether large multinationals, established regional players, or small start-ups—the current threats to market capitalism present important opportunities.

Capitalism at Risk draws on discussions with business leaders around the world to identify ten potential disruptors of the global market system. Presenting examples of companies already making a difference, the authors explain how business must serve both as innovator and activist—developing corporate strategies that effect change at the community, national, and international levels.

Filled with rich insights, Capitalism at Risk presents a compelling and constructive vision for the future of market capitalism.

Simply put, market capitalism is the most successful engine of wealth creation for society. In the last quarter of the 20th century, more than 97 percent of the world’s countries experienced increased wealth.  According to the World Bank, more than 450 million people have been lifted out of extreme poverty since 1990.

The global financial meltdown of 2008 has threatened to reverse what capitalism has created over recent decades. After moving on from the blame game and deciding who should fix the system’s ills, many will point to government as being responsible for saving capitalism.

But Harvard Business School professors Joseph L. Bower, Herman B. Leonard, and Lynn S. Paine, authors of the compelling new book, Capitalism at Risk: Rethinking the Role of Business (Harvard Business Review Press, October 3rd, 2011) put the responsibility squarely on business.

In Capitalism at Risk, Bower, Leonard, and Paine draw on discussions with business leaders around the world to identify ten potential disruptors of the global market system and diagnose the causes behind existing institutions inability to combat them effectively. While the authors certainly recognize that the government will play a role in restoring capitalism, they maintain that all businesses, whether small, large or global, should lead the way by taking advantage of the vital opportunities fruited by the current threats to market capitalism.

“Business has a crucial role to play in addressing these threats,” says Paine.  “Some say that these issues are best left to governments. We disagree. Good government is very, very important, but if business stands on the sidelines waiting for governments to act, it may well be too late.”

“An important book. The authors argue that the future of market-driven capitalism is at risk unless business leaders develop new strategies that reduce the negative fallouts of the system, such as growing income disparity and environmental degradation. A clarion call for business to take the lead in saving the system of market capitalism.”

-Barbara Hackman Franklin, President and CEO, Barbara Franklin Enterprises; former U.S. Secretary of Commerce

Capitalism at Risk: Rethinking the Role of Business will be available on Amazon.com and major book retail websites in October. 

About the authors:

Joseph L. Bower is the Baker Foundation Professor of Business Administration at Harvard Business School. Over the past four decades, his research has focused on the challenges involved in leading companies as they deal with important changes in the economic, social, and political environment.

Herman B. Leonard is the Eliot I. Snider and Family Professor of Business Administration at Harvard Business School and George F. Baker, Jr., Professor of Public Management at Harvard’s Kennedy School of Government. His work at HBS has focused on corporate social responsibility and the leadership of socially oriented components of business organizations.

Lynn S. Paine is the John G. McLean Professor of Business Administration at Harvard Business School. She has written widely on the leadership and governance of companies that meld high ethical standards with outstanding financial results.