There was a surprising development in the past week or so that I still remain skeptical. I’m adopting a stance of I’ll believe it when I see it happens.
But first, before broaching that surprising development, I want to point to an article on capitalism I read back in December. This article describes the problems with the current capitalism we have today. There’s nothing new in the article, but it encapsulates some of the major issues: companies go bad because they, senior executives – especially CEOs, want to make money for their shareholders. (Or in my mind, it’s make money for themselves as they are part of the shareholders.) The article brought up Volkswagon, which tried to get around the environmental testing of their engines, and Turing, the pharmaceutical company that juiced the price of a drug Daraprim from $13.50 to $750 per pill and was led by the infamously smirking Martin Shkreli. The main thrust of the article is that today we have a predatory capitalism and we need something different – something that leads back to the balance we had during the period just after WWII (balance between business, government and unions). But instead of unions, the third leg of the balance would be something called the “plural sector”
"The twisted logic that uses profit motive to justify such crimes against humanity is beyond immoral. It’s downright evil."
(a phrase coined by Henry Mintzberg) composed of not just unions but also NGOs, cooperatives, religious groups and any organization that supports the community.
Now, the surprising development that I opened the post with is the Laurence Fink/BlackRock letter to major corporations that “business leaders need to do more than just make a profit, they need to also contribute to society.” BlackRock is a major investment company and, according to the article I read, has significant clout to propel major philosophical changes in the profit mantra.
My skepticism: BlackRock is a hedge fund company and they are all about making profits. They’ve been around for years and it’s been very profitable for them under this shareholder/profit mantra, so it is hard to believe they changed their spots. Only time will tell if they are sincere.
Let’s take climate change which they seem to back. Are they doing this because climate change will adversely impact them, and not just the poor? Are they going to support tax increases which in turn get fund educational re-training and infrastructure refurbishment? Or is infrastructure going to be a public/private venture where the future revenue goes into the pockets of the private firms? Are they going to support living wage and employment of people or are they going to continue to cheer the layoffs so that the profit margins can increase?
Only time will tell. I will reserve judgement. Laurence Fink et al may be sincere like Nick Hanauer, another hedge fund manager who has talked about the “pitchforks re coming”, and Paul Tudor Jones. Can they convince enough of their peers and Main Street to start thinking about society?