Capitalism, from Bart Madden
There are hugely important issues concerning firms' culture and overall purpose, management's core responsibilities, and the future of capitalism. Related to this, here is a video of a presentation I have been making to business students at DePaul University titled "Capitalism and Management's Core Responsibilities."
Key Points:
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We are increasingly following a path of crony capitalism which eventually leads to a social environment like Italy or Greece. In contrast, free-market capitalism enables consumer choice and competition to work to the benefit of all, especially the least well off.
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There is a wall of miscommunication, with words having strikingly different meanings, between those in favor of maximizing shareholder value and those opposed—better to shift attention to management's core responsibilities.
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Running their businesses in ways consistent with the recommended five core responsibilities would enable management to both create wealth and earn the moral high ground.
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Analysis of firms' historical track records provides a lens to understand capitalism from the ground up; i.e., customers, employees, and shareholders have mutual, long-term interests. This is illustrated via three company examples using Credit Suisse/HOLT company data used by worldwide money management firms and by Barron's for the annual Barron's 500 Scorecard.
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The public's low level of trust in corporations results in a lack of faith in capitalism. Who can lead in moving the corporate world to better deliver on their core responsibilities—one of which is to promote free-market capitalism? Large asset owners (pension funds, sovereign wealth funds, endowment funds, and the like) have a vested interest in the long-term success of free-market capitalism and are in a unique position to reorient how firms are managed to create long-term wealth that benefits all stakeholders.