Reimagining Capitalism in a World on Fire by Rebecca Henderson

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“WHEN THE FACTS CHANGE, I CHANGE MY
MIND. WHAT DO YOU DO, SIR?”
Shareholder Value as Yesterday’s Idea
The real problem of humanity is the following: we have Paleolithic emotions;
medieval institutions; and god-like technology.
—E. O. WILSON
What is capitalism?
One of humanity’s greatest inventions, and the greatest source of
prosperity the world has ever seen?
A menace on the verge of destroying the planet and destabilizing
society?
Or some combination that needs to be reimagined?
We need a systemic way to think through these questions. The best place
to start is with the three great problems of our time—problems that grow
more important by the day: massive environmental degradation, economic
inequality, and institutional collapse.
The world is on fire. The burning of fossil fuels—the driving force of
modern industrialization—is killing hundreds of thousands of people, while
simultaneously destabilizing the earth’s climate, acidifying the oceans, and
raising sea levels. Much of the world’s topsoil is degraded, and demand for
fresh water is outstripping supply. Left unchecked, climate change will
substantially reduce GDP, flood the great coastal cities, and force millions
of people to migrate in search of food.
Insect populations are crashing and
no one knows why—or what the consequences will be. We are running the
risk of destroying the viability of the natural systems on which we all
depend.
Wealth is rushing to the top. The fifty richest people among them own
more than the poorer half of humanity, while more than six billion live on
less than $16 a day.
Billions of people lack access to adequate education,
health care, and the chance for a decent job, while advances in robotics and
artificial intelligence (AI) threaten to throw millions out of work.
The institutions that have historically held the market in balance—
families, local communities, the great faith traditions, government, and even
our shared sense of ourselves as a human community—are crumbling or
even vilified. In many countries the increasing belief that there is no
guarantee that one’s children will be better off than oneself has helped to
fuel violent waves of anti-minority and anti-immigrant sentiment that
threaten to destabilize governments across the world. Institutions
everywhere are under pressure. A new generation of authoritarian populists
is taking advantage of a toxic mix of rage and alienation to consolidate
power.
You may wonder what these problems have to do with capitalism. After
all, hasn’t the world’s GDP quintupled in the last fifty years, even as
population has doubled? Isn’t average GDP per capita now over $10,000—
enough to provide every person on the planet with food, shelter, electricity,
and education? And, even if you think business should play an active role
in attempting to solve these problems, doesn’t it seem, at first glance, an
unlikely idea? In the majority of our boardrooms and our MBA classrooms,
the first mission of the firm is to maximize profits. This is regarded as self-

evidently true. Many managers are persuaded that to claim any other goal is
to risk not only betraying their fiduciary duty but also losing their job. They
view issues such as climate change, inequality, and institutional collapse as
“externalities,” best left to governments and civil society. As a result, we
have created a system in which many of the world’s companies believe that
it is their moral duty to do nothing for the public good.
But this mind-set is changing, and changing very fast. Partly this is
because millennials are insisting that the firms they work for embrace
sustainability and inclusion. When I first launched the MBA course that
became “Reimagining Capitalism,” there were twenty-eight students in the

Reimagining Capitalism in a World on Fire by Rebecca Henderson