There has been a running theme in the presidential election -- going back to the early days of the GOP primaries--that has been reflected, more than any other, in my blog entries: Coming out of the Great Recession of 2008, what kind of Capitalism do we want to promote and sustain as the economic foundation for the United States.
My thoughts on the varieties of Capitalism, including whether or not we can truly call the current U.S. system "Capitalism" at all, have been covered in a number of blog entries on HuffPost Politics as well as on other websites for which I am a contributor, going back almost four years.
Approximately one month after candidate Barack Obama was elected president, I wrote "Is the U.S. Capitalist, Socialist or Something In-Between" for The New Geography. In that article, I argued that
Capitalism [as contrasted with Socialism] is a much more vague idea but essentially reverses priorities, putting the predominant role in the hands of private interests such as investors and corporations. State power in a capitalist country usually focuses on the creation of standards, public health, safety, and welfare, such things as regulating the currency, protecting the environment, and assuring the health of the populace.
Bailing out a completely broken mortgage finance system that rewarded handsomely (some would say shamelessly) myriad private-sector entities and the mortgage industry represents a shift towards socialism. Providing over $100 billion in taxpayer support for AIG is socialism, not capitalism. Providing $200 billion of taxpayer support to prop up consumer credit, so that Americans can return to a false economy predicated upon unbridled, conspicuous consumption, is socialism not capitalism.
The fact that these and other extraordinary moves by the federal government are undertaken in the name of saving our capitalistic economy and staving off a severe economic depression does not change the fact that we are experiencing - first under Bush and soon under Obama - a powerful drift towards extended state control of the economy. Free-wheeling and unfettered profit-making and corporate greed on the way up, backstopped by enormous government bailouts on the way down, represents in some ways the worst of both worlds .
During the GOP presidential debates, I wrote a series of blog posts about statements made by the candidates on the subject of Capitalism and a "free-market economy." In "Finally Newt Gingrich Gets Two Things Right," I offered the following observations about our capitalistic system:
So here are the facts: The GOP holds up the concept of Capitalism as the bulwark of our economic freedoms, providing opportunity for all in a free-market system where anyone can aspire to and achieve greatness and financial success; where merit is the sole arbiter of the economic fruits of one's labor. Of course, if the complete meltdown of our financial markets, leading to the largest economic collapse since the Great Depression, has taught us anything it should be that this Pollyanna view of Capitalism is antithetical to the way things actually work in America today.
There is no "level playing field" because the largest corporations -- not the small businesses that account for the majority of jobs created in this country -- have an unfair competitive advantage over everyone else; only they can afford to pay hundreds of millions of dollars annually to lobbyists who write laws worth billions of dollars to them in revenue, and then get them passed through a corrupt legislative system where money talks. The "Capitalism" that's practiced in this country is more like crony capitalism on the way up (where those with money, power or some combination of both reap the largest rewards through their undue influence over legislation and regulation), and Socialism on the way down (where the rich and powerful get the elected leaders in their back pockets to foist losses off onto the American people through bail-outs, new tax loopholes, and less regulation).
Much more-recently, in my blog series "A Better Form of Capitalism," I posited that if the 99 percent want to make a positive impact on the 1 percent -- if they, indeed, are interested in creating a better form of Capitalism in the U.S. -- they need to make much more well-informed consumer choices about with whom to spend their money. In the third entry in that series, "'If 'Corporations Are People, Too [My Friend],' Shouldn't They Behave Ethically," I discuss both Paul Hawken's 1993 book The Ecology of Commerce: A Declaration of Sustainability, and David Jones' 2012 book Who Cares Wins: Why Good Business Is Better Business, which argues that corporate principles providing a solid foundation for becoming a good corporate citizen will differentiate the successful corporations from their mediocre competition over the next few decades.
In August, management consultants David Bowles and Cary Cooper, following up on their 2009 book Employee Morale: Driving Performance in Challenging Times, published The High Engagement Work Culture: Balancing Me and We. The fact that this book exists at all, in this stubbornly pro-employer environment, may be remarkable in-and-of itself. However, perhaps much more to the book's credit is how compellingly the authors make their argument that work cultures that favor "the lone hero" have led to an overall indictment of Capitalism, increasing exposure to corporate risk and constraining long-term profitability.
Employers wringing out incrementally more productivity from the workforce -- not through positive motivation and reinforcement but through every employee's deepest, darkest fears that their next paycheck may be their last if they don't "toe the line" -- has become the new normal in the "post-apocalyptic" economy. Consequently, I mistakenly thought The High Engagement Work Culture would be a management primer focused principally, if not exclusively, on how managers and H.R. directors can create work environments that maximize worker satisfaction with their lot, through some form of "participation" in the bigger picture (employing that old workplace meme: "A happy worker is a productive worker").
However, Bowles and Cooper's approach is much broader than that, tying the book's premise into the Great Recession, and suggesting that what is at least partly to blame for the events leading up to the free-fall of financial, mortgage, and residential markets nationwide is not simply Wall St. greed but a larger problem of toxic corporate cultures, particularly in the worldwide financial services industry. This summer's LIBOR rate-setting and Standard Chartered Iran money-laundering scandals, on top of revelations about J.P. Morgan's potentially $9 billion loss in bad proprietary trades on credit derivatives (initially mischaracterized by Wall Street rock star and JPM CEO, Jamie Dimon, as unfortunate but nonetheless garden-variety interest-rate hedging transactions), would seem to support the book's thesis.
The High Engagement Work Culture may be worth reading just for the opening chapter, in which the authors summarize the causes of the collapse of the financial services, residential mortgage, and housing markets in the U.S. To my knowledge, no one has taken a look at the symptomatology leading up to the 2008 crash from the perspective of Wall Street's prevailing corporate culture, with the insights only these two authors can provide.
In the financial services industry, it is generally accepted that cultures of the member firms are hard driving, individual ("hero," "star") oriented, always on the knife-edge, much like the businesses they are in. Firms like Morgan Stanley and Goldman Sachs make their money from trading, from being brokers for others who trade, from advising companies on mergers/acquisitions and from listing new companies on stock exchanges, among other things... The low tide of the Crash exposed the dark side of the culture of these companies.
The book, quoting Nobel-prize winning economist Joseph Stiglitz, goes on to state:
Too little has been written about the underlying moral deficit that has been exposed--a deficit that is larger, and harder to correct... We have created a society in which materialism overwhelms moral commitment, in which the rapid growth that we have achieved is not sustainable environmentally or socially, in which we do not act together to address our common needs... There has been an erosion of trust -- and not just in our financial institutions. It is no too late to close these fissures.
After identifying fundamental flaws in the overall corporate culture of U.S. financial services companies as a significant, contributing factor leading up to the Great Recession, the authors set out a complex framework for understanding all work cultures, offering a hierarchy of factors, among which "external factors" such as national culture, norms, values, and practices, form the base. For anyone interested in what kinds of paradigm shifts might need to take place within our capitalist system in order to avoid another crash of the size and magnitude of the one from which we're still digging out, this book is worth what is perhaps the less-engaging technical sections in which the authors lay out this framework.
The section describing what comprises "worker engagement" is particularly enlightening as well. There is also a very interesting discussion in the technical section of the book about the *role of ego* in work cultures generally. The book concludes with two, extensive case studies -- BMW Group and Whole Foods Market -- to elucidate the authors' theories about how a high-engagement work culture contributes, among other things, to a stronger brand, increasing market share, and higher capital values, all things generally lauded in a capitalistic system.
In addressing how this high-engagement work culture improves the bottom line at BMW group, co-authors Bowles and Cooper state:
[N]ot only is [BMW Group] one of the largest and most successful industrial companies in the world, but it has a distinct philosophy that favors its overall workforce, and not just those at the top. It values people, and rewards them based on that value. The benefits of this flowed to BMW after the Crash in spectacular fashion, when the "rebound" effect caused by unprecedented demand from Asia required a level of teamwork that would not have existed at those companies that had 'slashed and burned' between 2007 and 2009.
Regarding Whole Foods, Bowles and Cooper state:
Like BMW, Whole Foods takes a stand in favor of its workers, and caps the rewards of its top management in order to balance things across the whole organization. But both companies go much, much further than the area of pay in the respect they pay to their workforce. Like BMW, Whole Foods benefits from this with everything from high engagement to the ultimate recognition that the market can confer: a high share price.
The Right has framed the discussions about the U.S. and Capitalism, disjointed as such discussions have been in this election cycle, as a zero-sum game: You're either in favor of unbridled, unregulated Capitalism (because this is, indeed, the only way to grow the economy, or so goes their meme) or you're a Socialist bent on transforming America into a complete Nanny State, where an extremely small minority of "makers" prop up an increasingly larger group of "takers" (what Romney claimed in his $50,000-a-plate Boca Raton fundraiser is comprised of 47 percent of Americans; the lazy freeloaders who refuse to be accountable for their own economic and social circumstances).
Regrettably, the Left has repeatedly failed to explain how, by restoring the fundamentals of a truly free-market form of Capitalism -- one in which the special interests with the most buying power no longer get to game the system to their advantage and everyone else's detriment -- the U.S. economy will return to a more robust pace of growth.
The High Engagement Work Culture perhaps bridges these two extremes, offering a fascinating and important perspective into how organizational and industry cultures can benefit greatly -- or, in the case of the Great Recession, bring to its knees -- an economic super-power such as the United States. The authors have done an excellent job of laying the foundation for their thesis. There's much here that can and should be applied to the larger debate about what kind of Capitalism the U.S. should practice in the future.