Capitalism 2.0 Part 3

Debugging the System

As we have examined, the shareholder-centric model removes any sense of moral responsibility from the actions taken by corporate executives, and reduces the purpose of corporations down to the indiscriminate pursuit of market share and value capture.

One option that could help to alleviate this problem, is to create a series of industry specific funds that source their capital from private investors interested in responsible earnings on a tax exempt basis. These funds would offer corporations access to capital at an interest rate that is inversely related to the company’s consumer satisfaction rating.

Measuring consumer satisfaction is an interesting challenge though. Traditional economic wisdom suggests that revenue is the best measure of consumer satisfaction, but in practice advertising corrupts those results. A better solution would be to agree on a set of principles that corporations are expected to strive for, to identify the key activities where these principles come into play, and to form a panel of experts that would rate the performance of each company on each of these key activities, in accordance to the agreed upon principles.

The current economic model is certainly not perfect but it has served us well. However, capitalism or rather market fundamentalism is facing an increasingly eye-opening existential dilemma that will be central to the 21th Century.

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