Rasoul: New Capitalism: The People Rising
An unexpected new force has left business, government, and politicos confused — the people. It sounds a bit hippy, but the masses have never been more interconnected, driving dramatic changes in how society approaches business and politics. The most powerful force in capitalism, “the market,” is now organizing like never before. Adam Smith, the father of modern capitalism, would love this.
The Great Depression brought about a seismic populist shift, changing the balance of power from wealthy barons as government took on an increased role in growth and development. The playing field has tilted back to wealthy interests over the past several decades and America is seeing wealth disparity on par with pre-Depression levels. Now, grass-roots forces virtually surround boardrooms and fill town halls demanding prosperity for all stakeholders.
Not having a great record for alleviating income inequality and poverty, capitalism has become the bane of many on the left. Capitalism often gets a bad rap, largely because the system has mostly favored shareholder wealth above all. Michael Porter declared in the Harvard Business Review that “the purpose of the corporation must be redefined … not just profits per se. This will drive the next wave of innovation and productivity in the global economy.”
The untold part of the story is how free markets are great economic engines so long as they are not built on trade deals poisoned by special interests. But perhaps capitalism’s greatest achievement is the relentless push for innovation.
People are demanding challenge to the status quo. The market (filled with the people) is hungry for innovation: new phones, new cures for disease, new ways for handling old problems. Lovers of innovation speak of “Moore’s Law.” The author and businessman Gordon Moore wrote that technological growth doubles every 18 months, but that growth is now accelerating faster.
Ironically, business interests and politicians stymie market-based innovation if they don’t stand to profit from it. This is counter to the core spirit of capitalism.
People are the engine of the market and expect more than just fresh products and services; they want change to the way business is done. Expecting engagement, transparency, and respect, consumers want to be part of the process on a level never seen before. These same consumers are also voters, workers, and business owners themselves.
The new Capitalism is filled with people who desire more from firms than a “volunteer day” or a check cut to the local food bank. These spenders are willing to reward companies who care for their workers, environment, and the prosperity of the communities in which they serve. Costco is one of the many examples of companies benefiting from the new Capitalism as many shoppers take pride in buying groceries from a company that genuinely pushes for higher wages for workers.
Likewise, people are punishing firms who don’t hold true to their values. The recent United Airlines incident, dragging a passenger off the plane because it was overbooked, certainly does not convey values people identify with. United’s stock price has suffered accordingly.
Those interests that only claim to be for the people will likely be bitten by the reality of not being able to hide in such a transparent environment.
However, businesses, political parties, and governments that will thrive in the future are those willing to empower, not overpower, the people rising.