Can the culture of capitalism itself be transformed?

Organisational culture develops in the context of the wider business culture, which creates a baseline of certain norms that organisations either unconsciously work with or consciously reject. Norms are sustained by two factors: the belief that they are what everyone else does, and the belief that they are somehow ‘right’. Take the traditional nine-to-five office culture. The enforced breaking of this norm during COVID shattered the conviction that this was the only ‘right’ way to work, and the fact that many organisations have continued with hybrid or remote work has made it difficult for those that, for whatever reason, want to enforce a return to the office for all staff. A more significant aspect of business culture that has taken hold over the past 50 years or so is the principle based on the ‘doctrine’ articulated by the economist Milton Friedman: that businesses should focus solely on maximising profits for their shareholders. This has contributed to rising levels of inequality, environmental degradation, social exclusion, political divisiveness, and mistrust. Yet when for decades companies have been structured and individuals rewarded and promoted on the basis of keeping costs as low as possible and profits as high, it seems impossible to go against the grain. The new emphasis on ‘purpose’ gaining traction since the 2008 global financial crisis is an acknowledgement that the principle is flawed, but leaders have struggled to put it into practice. Purpose is either misconstrued as ‘social purpose’, a sort of charitable undertaking, or simply expected to exist within the profit-maximising model. In his latest book, Capitalism and Crises: How to Fix Them, Colin Mayer offers a way to rethink the whole capitalist system, and Friedman’s doctrine with it. He argues for a redefinition of profit, which, he says, should take into account the costs of putting right the harm done to others (the environment, communities, etc.), and a new purpose for business: ‘producing profitable solutions for problems of people and planet, not profiting from producing problems’. Systemic change like this will not happen overnight, and it is not something that even chiefs of staff can expect to lead single-handedly. But with their understanding of how organisations work and how norms can be created and nudged, they are in a position to see how internal beliefs and behaviours can align with changes in the wider environment. Colin Mayer presented some of his ideas during the Chief of Staff Oxford Executive Education Programme in November 2023. We asked two of the participants on that programme to share their reactions to his book.

While there were parts of the book with which I both agreed and disagreed, there were a few overall points that resonated most strongly with me, and with which I agreed:

1. Corporate purpose is, and should be, about solving problems.
2. Public and private sectors should work together to solve problems. In fact, when I worked at the University of Virginia Darden School of Business Institute for Business in Society, we partnered with Concordia and the U.S. State Department to host the global P3 Impact Award, which recognised exemplary public-private partnerships that were improving communities and the world. By working together, the public and private sectors can accomplish so much more than either could individually to solve the world's most intractable problems.
3. I thought the SCORE framework (on page 150) was particularly insightful. By using a memorable acronym, the SCORE framework helps to determine how companies should establish the appropriate internal and external governance controls to fulfil their purpose of producing profitable solutions and not problems: Simplifying, Connecting, Owning, Rewarding and Exemplifying.

In Capitalism and Crises, Colin Mayer offers a refreshing alternative to the conventional understanding of profit. Unlike today's world, where economic landscapes often resemble barren deserts punctuated by a few rare oases of wealth, this book traces a path to a possible transformative golden age of progress. The author's ability to present and connect concepts in a clear, logical, and engaging manner makes the reading experience both enlightening and enjoyable. This is not merely a book of theoretical musings; it serves as a practical guide, pointing towards a sustainable future that humanity would be wise to explore. The historical lessons interwoven throughout the text are particularly compelling. By sharing the wisdom of past generations, the author warns of the dire consequences that arise when business ventures and markets lack common sense and moral grounding. This perspective is not only informative, but also serves as a crucial reminder of the importance of ethics as the conduit to sustained profitability. Overall, this book is a must read for anyone interested in a more equitable and prosperous future. Its insights are not only timely but also deeply necessary, offering hope and direction in an unsustainable economic landscape.