A Harvard Professor Calling for Us to ‘Reimagine Capitalism’ Says COVID-19 Has Revealed 3 Fault Lines in Our Economy
When Rebecca Henderson began writing “Reimagining Capitalism in a World on Fire” two years ago, she could not have predicted that the second half of its title would feel so relevant upon publication.
Her new book is based upon the principles she’s taught in her popular Harvard Business School class on the subject since 2012. For Henderson, a “reimagined capitalism” is one true to its classical liberal roots, and exists as a balance between government and markets. She said it’s not about some utopia where workers, executives, and politicians come together “singing kumbaya,” but rather, where they recognize that an interplay of these parties, and not a domination of one over another, benefits all of society.
We checked in with Henderson ahead of one of the classes she’s been teaching virtually, and she was eager to speak about the ways the current coronavirus crisis has made her calls to action feel all the more urgent – it’s exactly what we’ve felt at JUST, as well.
She told us there were three aspects of the crisis that have stood out to her.
Government must be able to move quickly.
In her book, Henderson has an illustration that is deceptively simple, given how it’s contextualized by years of partisan battles: “Free Government” and “Free Market” is balanced by “Rule of Law, Free Press, Respect for Minority Rights, Real Democracy, A Voice For Labor.” The primary reason for a new version of capitalism, she believes, is that these two sides have not been balanced, but rather in a struggle, where each is the other’s enemy. And business has had the edge for decades.
As she writes, “The belief that government is actively destructive – that it means unresponsive bureaucrats, high taxes, and endless regulation – has thus been at least partially constructed by a more than 50-year campaign.”
For Henderson, this movement led to a U.S. that was unable to adequately respond to the threat of the virus. “Having the government capacity and the ability to say, ‘Oh my goodness, a pandemic, we need to move. We need to get the tests in place.’ I mean that’s the most obvious piece, right?”
We cannot rely on the market for everything.
“The second thing that jumps out is how a reliance on markets at inappropriate moments is just nuts,” she said. “And here my poster example is asking the states to bid against each other for vital emergency equipment.”
She’s not a socialist, of course – “I’m a professor at Harvard Business School,” she said, laughing, and thinks markets are great. But that we turned first to the markets to allocate resources like personal protective equipment, she said, is “like a fable for what’s wrong in our current moment.”
We can no longer detach the humanity from workers.
“The people we claim are essential are the people we hardly pay,” and are requiring to put their health at risk, Henderson said, noting how so many lack access to paid sick leave or adequate healthcare.
During the 40-year reign of shareholder primacy, workers became another piece of data, Henderson said. “COVID really lays out the limits of thinking of people as solely interchangeable units and not as human beings, treating them with dignity and respect as an integral part of the production enterprise.”
It goes against common sense, she said, and we need a spark that’s essentially, “Wait, wait, the goal of the whole system is to make people prosperous and free!”
More in the Coronavirus Crisis Leadership series:
The Head of the National Urban League Is Calling for Big Banks to Address Racial Inequality During the Coronavirus
Venture Capitalist Nick Hanauer Says the Coronavirus Crisis Has Made It Clearer Than Ever That Shareholder Primacy Is a ‘Scam’
PwC’s U.S. Chairman Shares His Guidelines for Leadership Through the Coronavirus Crisis – Including Putting Workers First
Mark Cuban: ‘Shareholders Come Last’ in the Coronavirus Crisis