The year 2018 is ending with the most volatile stock market rise and fall in recent memory. The precipitous drop of market prices in recent weeks seems to confirm for many that some kind of crash is imminent. Maybe, maybe not, but all of it serves as a reminder that corporatism itself is going through some kind of identity crisis. Donald Trump sees the economy contained within the stock market bubble, but most people don’t live there and most businesses have little to do with Wall Street since they are privately run and don’t have shares. The fabulously wealthy elite focus on stock market behaviours because that where they build their fortunes. To the rest of the world, capitalism is about products, jobs, wages, trade, rising fortunes for the middle-class or the failure of all these.
So much money runs through our world, like some kind of cloud floating above us, out of reach to most and quite capable of casting shade on the hopes and dreams of billions. It drives the new corporatism that emerged in the wake of the series of collapses of publicly traded companies that fell like dominoes in our recent past. Think Enron squared and you get the idea. Capitalism took a hit, though not as serious as the one the emerged following the crash of 2007.
Corporate leaders understood quickly enough that they had to clean up their act to avoid government intervention and shareholder backlash and what emerged was the idea of corporate social responsibility (CSR) so often touted by the new giants, like Facebook, Google, Apple (Twitter isn’t even close in wealth) and other tech mega-companies.
At least that’s the way it looked. In reality, there were two competing visions of corporatism that have been duking it out in recent years – CSR and the older “shareholder primacy.” The latter was the darling of business schools, economists and corporate boards for a century and held to the tenet that whatever was best for the shareholder of stock was best for business and the broader society. Overall it worked because other large institutions, especially governments, oversaw that “broader” society that was frequently disrupted by capitalism’s ups and downs.
Those days are gone. It was always the belief of capitalism’s chief guru, Milton Friedman, that corporatism’s success would ultimately raise all boats and result in a new era of wealth and prosperity, but only if government kept out of its way by lowering corporate taxes and erasing regulations. He was wrong. He got his wealth and he got the diminution of government in advanced nations, but he also got joblessness, poverty, monopolies, corruption, and ultimately a world divided between the haves and have nots.
For too long now we have rested on the belief that companies would solve our ills and to prove it, we voted for governments that would give Friedman what he wanted. Just as cities debased themselves in going after Amazon’s search for a second headquarters, citizens and their governments eventually did the same and our struggling communities are evidence of how corporatism didn’t live up to its end of the bargain – even those promising Corporate Social Responsibility.
In the process of this bad deal, we have permitted the ransacking of government to the degree that it can no longer act as an effective partner of capitalism because its power and wealth have reduced government to cheerleaders rather than effective policy watchers. The days of the strong civic-minded corporations are gone, just as are the days of effective government oversight of economic markets.
So, here at the dawn of 2019, what do we have? A volatile corporatism, a volatile democracy, and a volatile job market. And we have a raft of books, documentaries, research and studies that talk about the “end of capitalism,” a “post-democratic world,” and “people without jobs” and “jobs without people.”
We need a new capitalism, one based on human benefit and no longer shareholder primacy. In every community we have small and medium-sized businesses who aren’t on some ledger in Wall Street but are based in the surroundings where we live. They are sensitive to their surroundings and seek to work out their future in a community context. If capitalism is to be renewed, it will be through these establishments. And the key to that renewal will depend on the wages they pay their workers.
We’ve seen how the present arrangement has stripped us of our vitality as workers, of government resources to fix the infrastructure needs that ail us, and ultimately our hope in the future. The lack of money in a world of wealth is an aberration and speaks poorly of our collective decision-making abilities, of government’s ability to deliver on its promises, and capitalism’s ability to spread the prosperity.
So, yes, one of great yearnings for 2019 should be for a beneficial economic arrangement that puts wealth and prosperity back into our civic and family lives while at the same time supporting the companies that seek the overall good of the world instead of merely their investors. The latter won’t happen without the former; maybe this coming twelve months can begin the change.