- Rebecca Henderson, a Harvard economist and author of “Reimagining Capitalism,” said the coronavirus pandemic is a turning point in the conversation surrounding capitalism.
- More leaders are talking about inequality and climate change than ever before.
- The coronavirus pandemic presents a “silver lining” because it’s an opportunity to completely reimagine capitalism.
- Business leaders should reconsider their own policies and work together to address income inequality and climate change, Henderson said.
- This post is part of Business Insider’s ongoing series on Better Capitalism.
- Visit Business Insider’s homepage for more stories.
The coronavirus pandemic has amped up the pressure on business leaders to address rampant inequality in the US.
That’s according to Harvard economist and self-described capitalist Rebecca Henderson, who said now is the time to reform the economic system. She said the virus has exposed the downfalls of free market capitalism: income inequity and environmental degradation.
Henderson has been studying corporate innovation for 3o years, and has worked with hundreds of companies seeking new ways to be more sustainable and fairer to their customers and employees. Over the past few years, she’s seen a gradual shift in business leaders talking more about inequality, climate change, and the threat of political divisiveness in the US. But she’s never seen the conversation take on such urgency.
“Business leaders can see inequality in a way they couldn’t see before. You know, many of the leaders of large corporations, they work unbelievably hard, but they live in bubbles. And I think that the pandemic shattered that bubble,” Henderson told Business Insider.
Indeed, the coronavirus pandemic is sparking new conversations around the role businesses have in combatting inequality. Billionaires like investor Ray Dalio, JPMorgan Chase CEO Jamie Dimon, and NBA Dallas Mavericks owner Mark Cuban have recently spoken out about income inequality. All, in one way or another, are calling on business leaders to help usher in change.
Inequality was already humming in the background, Henderson said, and the coronavirus pandemic simply turned up the volume. A laissez-faire approach to fixing the problem won’t work, she said.
“The possible silver lining of this pandemic is that it’s an opportunity to change. Everything’s on the table. People can see the need for change. We really need to grab this,” she said.
Henderson, a self-identifying capitalist, recently published a book titled “Reimagining Capitalism In a World on Fire.” She argues that free market capitalism has been one of the greatest inventions in the history of mankind, but it’s come at a great cost – rising inequality and vast environmental damage. Now, she argues, is the time for business leaders to reimagine what the role of business should be in society.
“Leaders are seeing the huge number of essential workers who didn’t have healthcare, who didn’t have paid sick leave, who didn’t have enough savings to allow them to stay home if they were feeling sick or felt their workplace was unsafe,” she said.
“I think capitalism is amazing as a driver of efficiency, and innovation, and productivity. But if you don’t have a level playing field for how you treat people, and if it’s legal to dump huge amounts of pollution, I mean planet altering amounts of pollution at no cost, then the market’s not going to do what you want it to do.
So what should concerned business leaders do?
“It’s all about seeing the opportunities where doing the right thing overlaps with doing the profitable thing,” Henderson said.
She listed some possible opportunities, including small changes, such as a business leader deciding to change to energy efficient light bulbs in a company headquarters and thus saving thousands of dollars in electricity costs over the years, while reducing the company’s CO2 footprint.
There are also larger opportunities for change, for example business leaders coming together to agree to only buy from fair trade suppliers, or a company increasing the number of paid sick leave days it offers employees.
“If we don’t grab this opportunity, we risk getting stuck back in our old patterns of behaviour,'” she said. “And that I’m afraid will take us to a radically destabilized society.”