The Occupy Wall Street Movement is still out there, but has quieted down in the last few months. I recently read an interesting article in the HBS Working Knowledge blog that concluded the concerns of Occupy Wall Street are not far different from what business leaders have told professors Joseph L. Bower, Herman B. Leonard, and Lynn S. Paine.
Here’s an excerpt from the article:
It’s been easy to dismiss the Occupy Wall Street-and-beyond protesters. To many, they seem disorganized, lack a clear agenda, and advance simple solutions to complex problems. But in reality their concerns are not very different from the concerns we heard when we talked to business leaders around the world about the problems they thought might constitute material threats to the sustainability of market capitalism.
As part of Harvard Business School’s centennial celebration a few years ago, we convened groups of business leaders in Europe, Asia, Latin America, and the United States to consider the future of the global market system. In keeping with the School’s learning model, we provided participants with a “case”—this one consisting of the World Bank’s scenario for global economic progress, looking toward 2030.
While cheered by the prospect of continued economic growth that would triple the middle class from 400 million to 1.2 billion people, these business leaders were concerned about the growing inequality of income within many nations, across nations, and across regions.
Half the world’s poor would be in sub-Saharan Africa living on incomes a small fraction of those in developed countries. Of 4.1 billion workers, 3.3 billion would be unskilled living in developing countries. In developed countries the benefits of growth were increasingly enjoyed only by the top quintile, and mostly by, yes, the top 1 percent.
The business leaders we spoke to were disturbed by the environmental challenges of climate change, scarce water, and depleted fishing stocks as well as by migration driven by both income inequality and the environment. Interestingly (given that we interviewed them in late 2007 and early 2008), they were very concerned about the volatility and fragility of the financial markets. They thought the financial world had become detached from the real economy. And they were upset by the potential for populist reaction to these problems that could lead to damaging legislation.
We classified what we heard as ten potential disruptors of the global market system: the functioning of the global financial system, barriers to world trade, inequality and consequent populism, migration, environmental degradation, failure of the rule of law, failures of education and public health, state capitalism, radical movements and terrorism, and pandemics.
The eleventh disruptor
The business leaders also identified an eleventh disruptor: the inadequacy of existing government and multilateral institutions to deal with these problems. When we stepped back from our discussions and considered what was being said, it was clear that the golden goose—global market capitalism—was at risk from the impact of an interrelated set of forces more powerful than the economic and political capabilities of national governments.
What did these leaders think should be done? Some thought that, quite simply, bad things happen on occasion and that if governments didn’t get in the way too much, things would sort themselves out. Others were worried that governments would intervene with populist remedies that would make matters worse, but were against any intervention by business because business had no legitimacy—”it’s above my pay grade.” Still others thought that business should use its influence to activate government. A final group said that companies were the only ones that had the capability to turn problems into opportunities.
This last group interested us most. They saw the possibility of building businesses using the kinds of innovation and technology that brought millions of rural poor into the market system (as China Mobile did by bringing mobile phone service into the Chinese countryside), that brought medicine where it had been unaffordable (which the pharmaceutical company Cipla did with HIV/AIDS drugs in Africa), and that brought housing to urban poor (one of building materials maker CEMEX’s accomplishments in Mexico).
Based on our research, we believe the time has come for companies to accept the challenge to use their entrepreneurial skills on a broader canvas. Companies complain that their recruits aren’t adequately educated.
In response, they will have to train their workers themselves or go elsewhere to find customers. Bankers bemoan Dodd-Frank, but where is the financial industry’s proposal for adequate capital and an end to predatory lending practices? Organizations lament sky-rocketing health care costs, but why is there such a limited effort to organize preventative care? Cutting Medicare will not stop the epidemic of obesity.
The market system cannot work if its consequences are seen to be unfair, because its benefits are not distributed widely. That is what our business leaders said—and that seems to be what the protesters are saying as well. Rather than dismiss them for not being able to understand or provide solutions for the problems they identify, we might do better to worry about what the consequences might be if the real concerns they identify become the basis for populist political legislation. Defenders of capitalism need to get busy solving the problems the Wall Street occupiers have spotlighted.