By Liz Mellon, chairman of LID’s editorial board.
When the Berlin Wall fell, we concluded that communism didn’t work as a system. But in 2008, we experienced a dive in the world’s economy comparable with that of the 1930s, exposing significant problems with capitalism. Where does that leave us, if both our dominant economic systems are deeply flawed? As a senior banker said to me of capitalism: “governance works on paper, but not when human beings are added”. It doesn’t look like a good model to export to developing economies.
In Capitalism’s Toxic Assumptions, Eve Poole suggests improvements to future-proof capitalism. Hers is no polemic against capitalism, but a treatise for reform. She also highlights examples of uncoordinated reform, such as peer-to-peer lending platforms such as Zopa and new currencies like the bitcoin.
As a psychologist, I have long known that collaboration works better than competition for creating collective wealth and that humans make decisions based on emotion. I believe in holding shares for the long term to support my favourite enterprises, unlike spread-betters who hold for an average of 11 seconds. As a woman, I know business models based on competition will remain male-driven.
Poole offers explanations for why such concerns about capitalism are valid. The foreword alone is a splendid summary of why the dated assumptions underpinning capitalism must be changed. I enjoyed Chapter 6, questioning the hegemony of the shareholder and Chapter 7, exploring alternative forms of organization to that of the limited liability company.
The book is engagingly well written. The one area I would have liked better explored is business today being as much a global phenomenon as a national one. International institutions struggle to regulateglobal business. While she looks at imbalances between developed and developing nations in Chapter 2 and, in Chapter 6, considers the role of the UN in encouraging triple bottom-line accounting, there is scope for more. Still, this leaves room for a sequel.
Capitalism’s Toxic Assumptions
Redefining Next Generation Economics