Capitalism isn’t dead, it is on life support. Industry leaders push their agendas with practices that hurt the public, and they get rewarded. For instance, Boeing’s CEO oversaw the 737 debacle, the company fired him but plans to pay him millions. Donald Trump’s lies and corruption as he presided over failed businesses, a fraudulent foundation and fake university, propelled him to the Oval Office.
Pharmaceutical companies (“Big Pharma”) push medicines that cause deaths. American banks abused their power prior to the Great Recession, hurt millions of people, paid over $100 billion in fines, but nobody went to jail. Wall Street hiked Bank of America’s stock price after the government announced its fine of $17 billion! Trump’s sham university ripped off people, the authorities fined him $25 million but jailed nobody for this scam.
Evidence Support Progressives’ Anti-Capitalism View
Big Pharma, Facebook, banks, Trump, and Wall Street’s leaders present a capitalist’s view that’s abhorrent: make money at any cost. Any wonder progressives want to break up companies, and “strengthen” unenforced regulations? Progressives want to select firms to do their climate change-related projects because they think they can trust those firms. Missing from this debate is that people run businesses—flawed people. Any system we introduce to monitor firms needs people of character as leaders. And neither system nor people will be perfect!
Trump and leaders in these firms are the antitheses of capitalism. They epitomize greed and a lack of integrity. Trump’s behavior today is more visible than the average CEO. But his lies, meanness, narcissism, misogyny, racism, and hate are legendary.
Abusive Bosses Exist Outside Capitalism
Abusive bosses harm people and their firms. Effective leaders know people are their most important asset. They promote decency, kindness, and respect for people. In the book Everybody Matters, authors Bob Chapman and Raj Sisodia say leadership isn’t about fighting fires but lighting fires:
“In our organization, we celebrate those who light fires in others by caring, listening, recognizing, and inspiring. Lighting fires must begin within ourselves, finding the light within who we are as human beings.“
Contrast this view with Donald Trump’s despicable behavior that many celebrate!
Capitalism Isn’t the Issue
The problem isn’t capitalism but people who lead firms and ineffective and corrupt government regulators (“enforcers”). Dedicated people of integrity doing their oversight jobs could have reduced harm from Bernie Madoff’s Ponzi Scheme, Enron’s debacle, and Lehman Brothers’ collapse. Five times Harry Markopolos told incompetent bureaucrats at the Security and Exchange Commission (SEC) about Madoff’s Ponzi scheme, but they ignored him though the evidence was overwhelming. No legitimate investments could or will yield the exceptional, consistent returns Madoff provided. Yet, nobody held the bureaucrats accountable for allowing the scheme to continue.
More rules and enforcers aren’t the answer. SEC rules require firms that offer securities to use independent, certified accountants to sign-off on their publicly available financial statements. Enron had such accountants. But Enron used the same accountants as its internal auditor—an obvious violation of a basic internal control principle.
Capitalism Isn’t Dead
How do we fix this broken capitalist system? A group led by John Mackey, Whole Foods’ CEO, started Conscious Capitalism. Its credo includes:
“… conscious leaders who are driven by service to the company’s purpose, all the people the business touches, and the planet we all share together. Conscious businesses have trusting, authentic, innovative and caring cultures that make working there a source of both personal growth and professional fulfillment.”
Like Enron, the Conscious Capitalism group has noble purposes that people should follow. But many don’t. Authorities caught Mackey’s company cheating in New York, giving credence to the progressives’ view that capitalism‘s focus is to rip-off people.
Firms must redouble efforts to hire people of character and denounce leaders like Donald Trump and others who disrespect stakeholders, show a lack of integrity and distort their firms’ performance for personal gain. We need to publicize firms that put people ahead of profits. Meanwhile, governments should implement these changes:
- Where a corporation such as Pfizer, Boeing, Bank of America, Wells Fargo commit criminal acts, the CEO and others who knew about the offenses must face a jury trial. They should get no severance pay and should return bonuses and stock options’ benefits gained from the criminal offenses.
- Bar CEO’s involved in corrupt acts, like those banks and Big Pharma engaged in, from serving on corporate or charities’ boards of directors.
- Hold a jury trial for criminal negligence for regulators who overlook corporate negligence.
- Routinely, audit regulations to decide their effectiveness in achieving stated purposes. Eliminate ineffective ones.
- Educate the public about the need for good businesses in the economy to create wealth and jobs.
- Make it easier for whistleblowers to report abusive bosses and corrupt business practices.
Should we abolish capitalism for socialism (or democratic socialism)? No. More government ownership in the economy presents different corruption and incompetence challenges. Capitalism is the most effective way to create and distribute wealth in society. But it will never be perfect. Let’s focus on reforming it to reduce abuse and corruption.
Each business leader can make a difference. We must start by treating each person the way we want that person to treat us. And we must heed Jesus’ warning to be on guard against all forms of greed (Luke 12:15).
© 2019 Michel A Bell