Review of Reimagining Capitalism in a World on Fire
Book Link: https://www.amazon.com/Reimagining-Capitalism-World-Rebecca-Henderson-ebook/dp/B07W54CKFG/
This book contained a lot of great anecdotes and historical references paired with a good vision for how things could/should be in a world that successfully combatted climate change. That is a lot of value and it never hurts to have more evidence when making claims or lobbying for changes to the status quo. My main issue was that it's not clear who this book was written for. The title and set up makes it seem like the author is laying out a blueprint for how things need to change and not just what needs to change. My guess is that the bulk of the audience interested in reading this will already be familiar with climate change and its impact and risks as well as the vision for the future where these risks are mitigated. Only speaking to the what and why here and not the how is a huge gap that makes me feel like I spent time reinforcing my own beliefs or collecting a few more data points. I think it is a missed opportunity with a captive and supportive audience to layout a blueprint for these changes. Even more, given a clear connection between the what, why, and how you may even be able to sway some initially skeptical people to your viewpoint and vision.
All that said, I do think the author spelled out a framework at the end that resonated with me and my own journey through being involved and working on climate change. It was called the "Six Steps to Making a Difference":
- Discover your own purpose
- Do something now
- Bring your values to work
- Work in government
- Get political
- Take care of yourself and remember to find joy
I am currenly somewhere between 4 and 5 even though I don't work directly for government but more in the regulatory reporting space. I think step six should really be seen as step 1b, 2b, 3b, 4b, and 5b though as I see a lot of people in this space seeing the reality of the data and lack of motiviation and action from those with the power to change and falling into sad, depressed, and hopeless states (raises my own hand). It's hard to stay positive and find joy so reinforcing it at every step feels like a framing that would reinforce the step that helps us continue on in the framework.
Some highlights from my reading: 1. embracing a pro-social purpose beyond profit maximization and taking responsibility for the health of the natural and social systems on which we all rely not only makes good business sense but is also morally required by the same commitments to freedom and prosperity that drove our original embrace of shareholder value. 2. Taken literally, a single-minded focus on profit maximization would seem to require that firms not only jack up drug prices but also fish out the oceans, destabilize the climate, fight against anything that might raise labor costs—including public funding of education and health care, and (my personal favorite) attempt to rig the political process in their own favor. In the words of the cartoon: “Yes, the planet got destroyed, but for a beautiful moment in time we created a lot of value for shareholders.” 3. Free markets only work their magic when prices reflect all available information, when there is genuine freedom of opportunity, and when the rules of the game support genuine competition. In today’s world many prices are wildly out of whack, freedom of opportunity is increasingly confined to the well connected, and firms are rewriting the rules of the game in ways that maximize their own profits while simultaneously distorting the market. 4. the real cost of a kilowatt-hour of coal-fired electricity is thus not 5¢ but something more like 13¢. This means we are only paying about 40 percent of the real costs of burning coal. Fossil fuel energy looks cheap—but only because we’re not counting the costs we are imposing on our neighbors and on the future. 5. As long as investors care only about maximizing their own returns, and focus only on the short term and on what can be easily measured, firms will be reluctant to take the risks inherent in seeking to exploit shared value and to embrace high road labor practices. 6. nearly three-quarters of consumers claimed that they would change their consumption habits to reduce their impact on the environment.15 Nearly half claimed to be willing to forgo a popular brand name for an environmentally friendly product.16 7. By 2017 Walmart had met its goal of doubling the transportation fleet’s efficiency and was saving more than a billion dollars a year in transportation costs—around 4 percent of net income. Walmart doesn’t release detailed investment figures, but in 2007 and 2009 we know that it was spending about $500 million on increasing energy efficiency and reducing GHG emissions. If it continued to spend at about this rate—and if the only benefits from this spending were the increased trucking efficiency—then my back-of-the-envelope calculations suggest that it received at least a 13 percent rate of return on its capital—at a time when many retail companies scramble to make 5 or 6 percent. Over the same period, Walmart has also increased the energy efficiency of its stores by 12 percent, which—again by my back-of-the-envelope conversion—is currently saving them about $250 million a year. 8. organizational purpose is the key to change. Those firms that have a clearly defined purpose beyond profit maximization, where it is clearly understood that the purpose of the firm is not to make shareholders rich, but to build great products in the service of the social good—these are the firms that have the courage and the skills to navigate transformation. 9. Some people think greed is good. But over and over it’s proven that ultimately generosity is better. —PAUL POLMAN, RETIRED CEO OF UNILEVER1 10. The widespread adoption of authentic purpose—a clear, collective sense of a company’s goals that reaches beyond simply making money and is rooted in deeply held common values and embedded in the firm’s strategy and organization—is an essential step toward reimagining capitalism. 11. Employees who are deeply identified with the firm’s purpose share a common set of goals. They are also likely to be significantly more “pro-social”—that is, to be temperamentally inclined to trust others and to enjoy working with them. Teams that share common goals and that are composed of individuals who are truly authentic, fundamentally prosocial, and intrinsically motivated find it easier to communicate and align their activities, to trust each other, and to create a sense of “psychological safety”—all attributes that drive high performance, and the ability to take risks and to learn from each other. 12. The contrast between the gleaming white structures of the fair and the filth of downtown Chicago has been credited with helping to start the civic improvement movement that emerged in the last decade of the century—a movement inspired by the idea that cities could be as clean and healthy as the White City. But Chicago didn’t effectively address its air pollution problems until the 1960s. 13. Energy demand is projected to double over the next fifty years.2 Stopping global warming means ensuring that every new plant that’s built is carbon-free. It also means shutting down or decarbonizing the world’s existing fossil fuel infrastructure. These are tasks that only government action—whether it’s in the form of a carbon tax or simple regulation—can achieve. Business was able to make real progress in slowing the deforestation of the Amazon—but only with government help. Now that the Brazilian government has changed its policies, rates of deforestation have skyrocketed.3 The businessmen who built the White City were only able to curb Chicago’s pollution as long as they could use the threat of legal sanction to shut down polluters. Once they lost political support and juries refused to convict, the pollution returned. 14. Human history is a history not only of cruelty, but also of compassion, sacrifice, courage, kindness. What we choose to emphasize in this complex history will determine our lives. If we see only the worst, it destroys our capacity to do something. If we remember those times and places—and there are so many—where people have behaved magnificently, this gives us the energy to act, and at least the possibility of sending this spinning top of a world in a different direction. And if we do act, in however small a way, we don’t have to wait for some grand utopian future. The future is an infinite succession of presents, and to live now as we think human beings should live, in defiance of all that is bad around us, is itself a marvelous victory. —HOWARD ZINN, YOU CAN’T BE NEUTRAL ON A MOVING TRAIN, 1994