Insigniam Logo
MENU
  • Strategy
  • Managing Change
  • Leadership
  • Transformation
  • Innovation
  • Corporate Culture

Why CEOs Must Defend Capitalism

  • Email
  • PDF
  • Facebook
  • Tweet
  • LinkedIn
Free enterprise has elevated human well-being, longevity, happiness and prosperity through the power of free markets. Business executives need to tell this story loudly and clearly.

Free enterprise has elevated human well-being, longevity, happiness and prosperity through the power of free markets. Business executives need to tell this story loudly and clearly.

  • Email
  • PDF
  • Facebook
  • Tweet
  • LinkedIn
subscribe today
Get the magazine
related content

Related Content

  • Reinventing The Patient ExperienceReinventing The Patient Experience
  • Why Corporate Executives Need Coaches, TooWhy Corporate Executives Need Coaches, Too
  • The Three Horizons of Strategic FrontiersThe Three Horizons of Strategic Frontiers
by Nathan Owen Rosenberg Read more from the Evolving Role of the CEO issue

Call it a midlife crisis.

It could be argued that, since its birth some 400 years ago in Western Europe, capitalism—a term popularized by Karl Marx—has done more to elevate the human condition than any other single institution. Arthur Brooks, the head of the American Enterprise Institute, says capitalism is responsible for pulling 2 billion people out of poverty.

Beginning in the 19th century and with Adam Smith’s The Wealth of Nations, moves to private ownership of property and enterprise, open markets and economic freedom accelerated. In the next two centuries, free enterprise (my preferred term) increased the standard of living in virtually every country around the world.

Fewer people engage in dull, repetitive, dangerous, backbreaking work. Many more babies survive to adulthood. Many more adults live to old age and maintain their quality of life to an older age. More people than ever are fed, clothed and housed. Many people who work for a living enjoy significant amounts of leisure time. A good portion of the world’s population can take a big piece of the first two or three decades of their lives to be educated.

“The fact is that prosperity and innovation continue to spread around the world, fueled by free enterprise.”

“The fact is that prosperity and innovation continue to spread around the world, fueled by free enterprise.”

Social activist and U2 frontman Bono said in 2014: “As a person who’s spent nearly 30 years fighting to get people out of poverty, it was somewhat humbling to realize that commerce played a bigger job than development. I’d say that’s my biggest transformation in 10 years: understanding the power of commerce to make or break lives.” It is not an exaggeration to say that free enterprise has lifted more people out of poverty than governments, communism, socialism, NGOs, religions or charities.

Since the 2008 financial crisis, capitalism has seen growing criticism. According to a 2018 Gallup survey, more Americans ages 18 to 29 are positive about socialism (51%) than about capitalism (45%). Even executives are joining the Greek chorus. “American capitalism is at a crossroads: decline or renewal,” wrote the Committee for Economic Development’s Joe Minarik and his colleague Steve Odland, former CEO of Office Depot and now head of the Conference Board. And this year Salesforce CEO Marc Benioff declared to those in attendance at the World Economic Forum in Davos, Switzerland that “capitalism as we know it is dead.”

The backdrop to all of this is a parade of headlines about corporate and executive misdeeds. The evening news has reported CEO resignations for everything from self-dealing (WeWork’s Adam Neumann) to accounting fraud (Under Armour’s Kevin Plank) to lying to regulators (Volkwagen’s Martin Winterkorn) to consumer scams (Wells Fargo’s John Stumpf and Tim Sloan) to sexual harassment and abuse (CBS’s Leslie Moonves).

As CNBC’s Jim Cramer said, “Bad news gets better ratings than good news.” At last year’s meeting of the Fortune CEO Initiative, I noted it seemed that for every positive article about capitalism, there are 11 negative ones.

The fact is that prosperity and innovation continue to spread around the world, fueled by free enterprise. Click To Tweet Even as levels of economic inequality have risen in recent decades, so, too, have the standards of living for billions of people. The percentage of the planet’s population living on $2 per day or less dropped by 75% between 1981 and today. Rates of global violence have decreased to the lowest levels in human history—believed to be the byproduct of the connections that commerce requires. Flawed as it may be, capitalism is the greatest engine of innovation and prosperity in the history of humanity. Whole Foods co-founder and CEO John Mackey’s view is that capitalism is “the greatest value creator in the world” and “the greatest creation that humanity has done.”

“As a person who’s spent nearly 30 years fighting to get people out of poverty, it was somewhat humbling to realize that commerce played a bigger job than development.” —Bono, frontman and social activist, U2

“As a person who’s spent nearly 30 years fighting to get people out of poverty, it was somewhat humbling to realize that commerce played a bigger job than development.” —Bono, frontman and social activist, U2

According to 2019 research, the American public has greater trust that business is more likely to do what is right than government or the media. People increasingly expect CEOs to speak out publicly and candidly on many divisive yet urgent issues.

At this point, capitalism itself is an urgent issue. New York Times columnist David Brooks penned, “Business leaders have been inept when writers, intellectuals and politicians attacked capitalism.” The onus is on executive leaders to step up and make the case—authentically and compassionately—that the profit incentives of the market will continue to power the world’s ever-growing prosperity.

Each semester, I spend a day or two teaching at the United States Air Force Academy, my alma mater. Like many of their age group, the cadets are distrustful of big business. I make it a point to share the value of free enterprise and the benefits that business generates not only for customers, employees and shareholders but also for society.

As Mr. Odland and Mr. Minarik wrote in Sustaining Capitalism, “Business leaders must make the case for the free enterprise system and for its contribution to the nation’s standard of living as well as its standards of transparency and accountability.”

My stand is that this accountability for speaking up and out on the value of free enterprise is constitutive to the executive function.

This article appeared in the Spring 2020 issue of IQ Insigniam Quarterly, with the headline “Speak Up. Speak Out.” To begin receiving IQ, go here.

Nathan Owen Rosenberg is a co-founder of Insigniam, board member of the Boy Scouts of America and a trustee of the Committee for Economic Development.

  • Email
  • PDF
  • Facebook
  • Tweet
  • LinkedIn
comments
Click here to cancel reply.

You must be logged in to post a comment.


subscribe today
Get the magazine

Related Content

  • Reinventing The Patient ExperienceReinventing The Patient Experience
  • Why Corporate Executives Need Coaches, TooWhy Corporate Executives Need Coaches, Too
  • The Three Horizons of Strategic FrontiersThe Three Horizons of Strategic Frontiers
read the latest

  • American flags fly in front of the U.S. Capitol building.President Biden’s First 100 Days Read More
  • Executive meet around a boardroom tableBoardroom Basics Read More
  • Photo of the Earth from space.Beyond Sustainability: A Paradigm Shift Is Overdue Read More
  • The Art and Science of Leading Turnarounds Read More
  • Strategy
  • Managing Change
  • Leadership
  • Transformation
  • Innovation
  • Corporate Culture


Insigniam  |  Enterprise Transformation Results
Copyright © 2021 by Insigniam Holding LLC | aws edition

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

SAVE & ACCEPT