How Businesses can help Capitalism Repair Its Bruised Image...

Three suggestions from Lynn Forester de Rothschild, E.L. Rothschild  and Adam S. Posen of PIIE.

There is a sharp decline in believing capitalism is useful:

One of the alarming effects of the global financial crisis has been the widespread erosion of confidence in capitalism itself. Doubt has grown that capitalist societies offer everyone as much chance of success as risk of failure. Better government policies might help accelerate economic recovery, but only business itself can restore faith in capitalism.

The need is acute, because the general public’s sense of disenfranchisement goes well beyond the Occupy Wall Street movement or protesters on the streets of Athens and Madrid. A recent poll by the Public Religion Research Institute found that 70 percent of white working-class Americans, 78 percent of blacks, and 69 percent of Hispanics believe that the US economic system “unfairly favors the wealthy.” And according to the latest Pew Research Center Global Attitudes Project survey, support for capitalism since the 2007–08 financial crisis is down in nine of the 16 countries surveyed, and in none—not even in thriving China or Brazil—has support risen.

Businesses can help:

Businesses can help combat such views—and help themselves in the process—by taking specific steps to make capitalism more inclusive. Yes, “inclusiveness” has been invoked in pursuit of dubious social-engineering ends, but in this case it is appropriate to describe what businesses can do to better share the fruits of capitalism with those who have been excluded.

Companies should invest in workers and business relationships, just as they did a century ago in response to mounting inequality and public dissatisfaction. Back then, Robert Bosch in Germany, William Hesketh Lever in Britain, and the Houghton family of Corning Glass in the United States, among many other leaders of large companies, took initiatives in this direction. At Corning Glass, for instance, the company in the 1920s took initiatives internally and led a broader business movement to improve worker safety, provide employee health insurance, and establish on-site cafeterias and clinics.

Three lines of action:

Today, there are three areas where companies would do well to turn their attention. First, big business can do more to support smaller enterprises in their supply and distribution chains.

Second, big business can do a better job of matching workers with available jobs. This is particularly necessary for younger workers, for whom time out of work does lasting damage. Conversely, a well-targeted training program or apprenticeship can nurture employees for long-term work with their companies, as well as motivate continuing learning.

Third, public corporations should be reoriented to the longer-term, with the power of investors and boards strengthened over management insiders. Recent years’ fixation on “shareholder value” proved to be a misnomer—if anything, that phrase often became a cloak behind which top managers enriched themselves at the expense of shareholders, as well as suppliers and employees.

Not really sure…Capitalism has come under scanner as it has been as crony capitalism and pro-business. Capitalism is seen as pro-market where there is a level playing field for all. This has been tarnished as big businesses have dominated and political parties have become equity holders..

All the above suggestions are welcome…But perhaps it will take much more time for the polls to show higher faith in capitalism system. It needs to do away with the idea that capitalism is all about greed and money. People do not think that way and do value human values much more than econs want to make us believe.

Having said that, not much has changed…We need a bigger crisis perhaps..

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