Web Exclusives: Bonus Stories

April 21, 2004:

Reinventing Capitalism

by William Greider ’58

When The Soul of Capitalism was published last fall, I was widely accused of optimism — outrageous, incautious optimism — and I pled nolo contendere. Between war and foreign indebtedness, I see America’s immediate future in rather bleak terms. The country, I fear, is headed for hard knocks — a rough comeuppance for American triumphalism. But, if I squint into the middle distance, I see a bright new era of reform approaching — one that reopens old and fundamental questions about the nature of American capitalism. How might the economic system be altered to serve society, our lives and our deeper moral obligations instead of overwhelming them. The Cold War is over (capitalism won). It’s okay now to criticize the system, not simply the scandal and fraud, but its deeper collisions with society and nature and the way we wish to live. At this point in our history, a serious critique of American-style capitalism may even be the patriotic thing to do.

When I suggest that systemic change is possible, I mean altering the institutional structures in which power is closely held and the narrow operating premises that, in pursuit of short-term gain, obliterate so much of what people truly value. But who has the power to accomplish such profound change? People do. People of diverse backgrounds and vocations, acting purposefully to change their circumstances. One reason for my optimism is I have met many people — I call them “pioneers” — who are already engaged in making inventive changes, large and small, often localized, by using their power as workers, investors, consumers, managers, owners, citizens. The book recounts their efforts and describes obstacles they encounter. In a sense, it is a how-to book — how people can find their power, locate the points of leverage to achieve major reforms.

At this point, these efforts are merely intriguing fragments, not a social movement. I do not have an 800-number to call for more information or to enlist in the cause. But, as a reporter who has covered political economy for four decades, I have considerable confidence that these energies are real and growing, that Americans have the nerve and skill to make great changes. Why? Because that is the story of the country — the most profound changes in American society always began with small scattered groups of purposeful citizens, convinced that they did not have to settle with the way things are.

The method of the book is to move across the main realms of U.S. capitalism — work, finance capital, production and consumption, the business organization of corporations, and the ever-present role of government, first critiquing the system that exists and then describing principles of reform and some living examples.

Work, for example, remains organized for most Americans along principles inherited from feudalism — the “master-servant” relationship. Does that sound radical? The phrase lights up the room when I have addressed audiences — not just among blue-collar workers but with business managers and highly educated professionals. The quality and content of work has been widely degraded in the last generation. Ask doctors, they will explain it. So will many engineers, accountants, middle managers, government civil servants.

What I am suggesting is that Americans have reached a point where they can assume greater responsibility over their work lives, that reorganization of power relationships will allow greater participation in decision-making, and this improved collaboration will produce better results, not just for the effectiveness of the firm, but for its responsibilities to society at large. That requires broadened ownership systems so that all of the employees become empowered “insiders,” not just those at the top of the command-and-control pyramid.

To take another example, the financial system as a whole, with rare exceptions, remains organized as a rather small number of “experts” making investment choices for “other people’s money” — following very narrow and somewhat archaic rules for accomplishing gains. The “other people” are treated more or less like hapless “widows and orphans,” whose interests must be decided for them.

Given the results, it is not surprising that a growing number of citizens are trying to get some control over their own money — trying to insure that their savings are not invested in ways that contradict their own values, damage society and the environment. Wall Street disparages “socially responsible investing” as sentimental, yet the accumulating evidence demonstrates that SRI funds actually beat the market returns. In fact, SRI is merely the bow wave of a deep shift in American consciousness — people taking responsibility for the consequences of their own actions. I predict the financial system is likely to change more dramatically than other realms for the simple reason that the center of gravity in finance now belongs to the “collectivized wealth” held by the fiduciary institutions (pension funds, mutual funds and others). As ordinary working people gain an understanding of their potential power, they will ask first why their savings are often invested in ways that injure them or their communities or nature. Next, they will demand a greater voice in how that wealth is invested. In time, the values themselves will be altered as it becomes clear that “true wealth” does not require many of the destructive practices and that the genuine long-term interests of people and the society are best served when business and finance are aligned with the broad moral responsibilities of society itself.

This is a long road, for sure. It sounds quite radical compared to the reigning market orthodoxy. But don't bet against it. American pioneers — people truly dedicated to changing their circumstances — often get what they seek.