The reason the article is of note is that one of the authors is Michal E. Porter, author of books on strategy that was seized upon to drive much of the "Greed is Good" Wall Street culture since the 80s. He is a Harvard Business School professor who just authored an article that I would characterize as essentially advocating Socialism.

Capitalism does not need to be fixed. We need to ACTUALLY have capitalism.

The above article seems to claim that we can fix capitalism by adding socialism to capitalism.

socialism != capitalism

They are mutually exclusive for the most part.

First it is important to note that we do not live in a pure capitalist system. I would estimate it as 25% capitalism, 25% socialism, and 50% kleptocracy (special interests / corruption).

To blame capitalism for all the problems is akin to taking an Olympic gold metalist, tying him up in iron chains, throwing him in a pool and then blaming swimming as the cause of drowning.

Capitalism is by far the most efficient system for increasing the wealth of an ENTIRE society. History has shown that societies prosper in direct proportion to how much they embrace capitalism.

We are currently moving from capitalism towards socialism and kleptocracy (think klepto as in stealing).

The common complaints against capitalism are not actually complaints against capitalism; they are usually against corporatism (regulation that favors corporations) or kleptocracy. Why do corporations have tax breaks employees can't take even though their situations are similar?

Bank bailouts were not a failure of capitalism. Capitalism would say that no company can get money for free. All money must be traded from other individuals wishing to purchase from you. The fact that the banks knew they were most likely to be bailed out created a moral hazard that encouraged them to take risks. "Privitized gains, socialized losses". Under pure capitalism a bank would not take such foolish action because they would know they would have a high probability of going out of business.

Monopolies are often created by government policy, not by free markets. For instance, why do lots of communities only have 1 ISP even though there are competitors that would love to do business there? It is because the city grants a license to that one company for a long period of time. DNS registration was granted a monopoly by the government. Why can't we have other DNS authorities? Surely the vast majority of people on here can still make a profit and charge cheaper for domain names. Why does GoDaddy have to pay a fee to another company that doesn't actually provide any real value?

In capitalism, if I was able to invest at 30% each year I could open my own bank and give out 10% in interest to all my depositors. Instead we are stuck with abusive banks.

The only semi-rational (emphasis on semi) argument that I have heard against capitalism is that those with capital have a higher chance of getting more capital and that this would lead to a concentration of power. It may in fact do this, but the moment the power is abused, others with capital will combine their resources to take the place of the exploitative company, or there will be revolts and people will boycott that company.

The system is set up so that businesses are fettered with regulations such as minimum wage and hiring ethnically diverse people (as opposed to the most qualified). Under global capitalism, the companies in countries that do not have those laws will drive the US companies out of business. Businesses that can will be forced to move to those countries if they wish to survive. It is no shock to me that unemployment is on the rise.

Single-page view: http://hbr.org/2011/01/the-big-idea-creating-shared-value/ar...

Since when is capitalism is broken? Seems like during great recessions everyone wants Keynesian systems and when things are going great we want a classical economy.

This article espouses a topic popular in most business schools today: they want to quantify (or simply pay lip service to) the idea of social responsibility. You will see all sorts of attention paid to this in most MBA programs today.

The idea isn't a new one and can trace its roots back to Marx and probably beyond. Marx argued that the workers should own the means of production [1]. That's simply a different take on creating "shared value".

But this article, as you'd expect from Harvard, is high on naive ideals. For example:

Not all profit is equal...

The premise is that corporations have a social responsibility. I view this as being like the idea of keeping tigers as house pets. You can change the purpose of a tiger to be a domesticated animal but at some point that tiger is going to snap your neck because, hey, that's what tigers do.

Of course tigers aren't inherently bad. The point is that tigers are really not suited for the purpose you have in mind.

Trying to colour corporations with morality is I think much the same. Capitalism works because corporations are amoral entities that simply respond to their environment. Add warm water to dry yeast and it grows. Add salt and it dies.

You control the actions of corporations not by making them feel something. You control them by treating them as yeast and adding warm water, salt or whatever is required.

To put it another way: you control corporations by controlling their environment.

Unless you're a pure capitalist you will recognize that there is some place for government intervention and regulation, not only for the good of the people but for the good of the corporations themselves.

Antitrust for example came about because companies were too successful. You can get an algae bloom in a river. The algae will eventually die out but only after killing virtually everything in the river and then starving.

In England the road system was nationalized (many years ago). In the US, the railroads were.

The difficulty lies in deciding exactly how much intervention is required.

Our current woes I think boil down to one thing: there is a mismatch between the interests of people and corporations and the interests of the politicians who decide what the intervention is. Corporations and people have to deal with consequences for a very long time. Politicians are often only concerned about what happens between now and the next election.

Of the things broken with the current system at the top would be (IMHO) the financial system. By this I primarily mean the Federal Reserve, the IMF and the World Bank.

The IMF and the Federal Reserve now have a role where they are basically welfare for investment bankers. You have seen crisis after crisis in recent years that largely stem from financial institutions having almost no aversion to risk. Why? Because we've trained them that way. If they ever get in any serious trouble, don't worry, we'll bail you out!

Likewise the IMF/World Bank continue to throw money at developing nations because, basically, they can never lose that money. A country can't declare bankruptcy like a person or corporation can.

Initiatives like HIPC [2] are misguided. The country already can't pay. All you're doing is paying bank the organizations that never should've lent them money to begin with.

It should also be noted that some of these loans end up funding war, revolution and even genocide as well as funding the personal fortune of corrupt dictators.

Back to capitalism: capitalism has been the engine that in less than 200 years has turned us from a largely agrarian existence to computers and putting man on the Moon, while increasing the standard of living of billions of people to levels unprecedented in human history.

So when I read something like this, I think it's just the latest fad from Ivory Tower MBA academics who seek to justify their existence in a world that is largely coming to the conclusion that the MBA itself is a destructive fad.

[1]: http://en.wikipedia.org/wiki/Means_of_production#Marxist_ana...

[2]: http://en.wikipedia.org/wiki/Heavily_Indebted_Poor_Countries

undefined

A company creates "shared value" simply by making a product that people want to pay for: they get your product, you get their money. Its really that simple, do we really need a 15 page mckinsey consulting article to explain this? "rethinking capitalism" is bull shit.