By Rebecca Henderson
Free market capitalism is one of humanity’s greatest inventions and the greatest source of prosperity the world has ever seen. But this success has been costly. Capitalism is on the verge of destroying the planet and destabilizing society as wealth rushes to the top. The time for action is running short.
Rebecca Henderson’s rigorous research in economics, psychology, and organizational behavior, as well as her many years of work with companies around the world, gives us a path forward. In Reimagining Capitalism she debunks the worldview that the only purpose of business is to make money and maximize shareholder value. She shows that we have failed to reimagine capitalism so that it is not only an engine of prosperity but also a system that is in harmony with environmental realities, striving for social justice and the demands of truly democratic institutions.
Henderson’s deep understanding of how change takes place, combined with fascinating in-depth stories of companies that have made the first steps towards reimagining capitalism, provides inspiring insight into what capitalism can be. With rich discussions of how the worlds of finance, governance, and leadership must also evolve, Henderson provides the pragmatic foundation for navigating a world faced with unprecedented challenge, but also with extraordinary opportunity for those who can get it right.
Andrew Hill on Financial Times wrote:
"In engaging and refreshingly candid writing, Henderson sets out her vision of equitable and sustainable capitalism and enumerates the changes needed to get us there. Companies need to embrace a sense of purpose beyond maximizing profits, find new business opportunities to meet society’s needs, and consider the welfare of all stakeholders. Investors need to focus on the long term and consider social and environmental impact. Governments need to regulate the market more strictly and impose a tax on carbon. Finally, all sectors need to work together to address global challenges through collective action. Not only would these changes create a better world, Henderson asserts, but also they would lead to more profitable companies and a stronger economy. Her blueprint may sound impossible, yet Henderson’s optimism is founded on deep expertise as a scholar who has worked closely with corporate leaders. [...] But if all these recommendations are good for business, why do so many companies strenuously resist change? Henderson’s early work is relevant, here. She is an expert on how companies confront radical change. [...] Skeptics of capitalism will identify with Henderson’s sharp criticism, while supporters will appreciate the future vision she paints of a noble and more constructive capitalism. The book’s promise is to move beyond the shallow and reductive debates about whether capitalism is good or evil to a deeper discussion of what it would take to redirect its undeniable power toward equity and sustainability. [...] Unlike other recent critiques of capitalism, such as Anand Giridharadas’ Winners Take All, Henderson focuses on the solutions. Drawing from the HBS case method, she teaches through complex real-life stories. [...] The final chapter, 'Pebbles in an Avalanche,' offers six simple things that each of us can do to contribute to the effort: discover your own purpose; collaborate with those who share your goals; bring your values to work; work for an NGO to shame companies into action or for an impact investor to finance change; and remember that you can’t change the world by yourself."
Tor W. Andreassen on Digital Transformation Hub wrote:
"Henderson is adamant that purpose-driven companies are at the heart of systemic rethinking of capitalism. (She has worked with Blueprint for Better Business, a UK charity I chair, which challenges and encourages companies to be a force for good in society.) Such faith in well-run, purpose-led, self-regulating businesses will invite some scepticism. To many, purpose seems like motherhood and apple pie [...]. But she is clear-eyed enough to acknowledge where and why well-meaning efforts, such as a Unilever-led drive to make palm oil a sustainable ingredient, have fallen short. [...] Henderson, discussing the pre-Covid global challenges for free-market democracies, frames it this way: 'Business must become an active partner in shoring up the inclusive institutions that we have and in building the new ones that we need.' 'This is not a question of supporting specific policies or of pushing a particular set of political values. This is about supporting the foundations of our society.' The question, she adds, should not be: ‘Would this particular policy benefit me?’ but, ‘How do we protect the institutions that have made us rich and free?’ To that question, she might now add: 'and ensured our survival'. The scale of government intervention is likely to rebalance the forces of capitalism for the better, offsetting corporate self-interest with what Henderson calls a 'shared sense of the right thing' and an inevitably larger role for the state."
Eric Daniels on The Objective Standard wrote:
"To combat 'massive environmental degradation, economic inequality, and institutional collapse,' Henderson identifies five key areas of reform: (1) creating shared value between businesses and consumers, (2) building 'purpose-driven' organizations, (3) establishing financial metrics to measure the environmental and social impact of business practices, (4) cooperating on sustainable, self-regulatory standards across whole industries, (5) private sector support for democratic reforms. What makes Henderson’s arguments convincing is that she backs her claims that such changes are possible by citing numerous examples. The left impression is that it is possible. [...] In closing, Henderson asks and answers the question: What will a reimagined capitalism look like? Without providing the answer, I encourage the reader to read the book. For me, the book was a revelation. A book I have been looking for. A book that confirmed and advanced my thinking on the future role of the modern corporation."
"Rebecca Henderson’s Reimagining Capitalism In a World on Fire sets out to demonstrate how businesses, acting voluntarily, can fix the world by rethinking the purpose of business and its role in society. [...] Throughout the book, she marshals her extensive experience in business—conveyed with anecdotes and narratives—as a kind of case study for her project of prescribing solutions to what she regards as the biggest problems facing the world today. Any book claiming to show how capitalism can (or cannot) solve the world’s problems must, of course, identify what capitalism is. Although Henderson does openly pose the question 'what is capitalism?' at the outset, she fails to provide a single coherent answer. Instead, she lays out political developments over the past eighty years and posits a variety of 'forms' of capitalism such as 'unconstrained,' 'modern,' 'free market,' 'crony,' and 'sustainable.' Henderson’s lack of a clear definition undermines her project of 'reimagining capitalism' and muddies the reader’s understanding of another crucial question: Do we have a system of capitalism now? The simple answer to that question is no, the United States currently has a mixed economy—and has for a long time. [...] Not only does she maintain that free markets cannot solve these alleged problems, but she lays the blame for all of them squarely on the 'beautiful' but supposedly 'mistaken' ideas that she attributes to Milton Friedman and the Chicago School. [...] Throughout the book, she continually blames nonexistent free markets for problems created by government interventions and restrictions on those observably unfree markets. She documents how some businesses behave (some for good and some for ill, in her estimate), but does so without a systematic investigation of the conditions—the laws, regulations, and ultimately the politico-economic system—in which they make these decisions. [...] Although Henderson never explicitly states the moral approach behind her prescriptions, it is altruism—the view that it is immoral to act in one’s own self-interest and that people should sacrifice for others. This leads her to the notion that those who don’t voluntarily choose to sacrifice must be forced to in the name of the 'public good'—that is, it leads her to the same collectivism that undergirded every tyrannical regime of the 20th century. Thus, although Henderson promises to demonstrate how a 'reimagined capitalism' might 'rescue a world on fire,' her book does not correctly identify capitalism, never mind reimagine it. Instead, she attacks its very foundations."
Videos with Henderson about the Book
An interview from March 2020:
You may also want to watch this 15 minute talk + Q&A of 45 minutes of Town Hall Seattle.
Podcasts with Henderson
- The Deep Dive, a Culture & Insights Podcast, episode 32, 30 July 2020
- Episode from Everything Co-Op, July 2020
- "Is Business Ethics An Oxymoron?" by All Ears, season 1 episode 12, 23 July 2020
- "Reimagining Capitalism in a Broken World" by HBR's The Exponential View, season 4 episode 33, 24 June 2020
- Episode from The Library of Economics & Liberty, 8 June 2020
- Episode from HBR After Hours, 13 April 2020
- "Why Capitalists Need to Save Democracy", HBR IdeaCast, episode 728, March 2020
- Official website of the book
- 2018 course syllabus from Henderson's Harvard course on reimaginging capitalism (which led to this book)
- "Reimaginging Capitalism; Ideas Worth Teaching" - interview with Henderson at the website of the Aspen Institute, 6 March 2019
- Harvard's online course by Henderson on how to become a purpose-driven leader
- "Papers and cases to support you in reimaging capitalism" - resources collected by Henderson
Blog Posts & Articles by Henderson
- "Reimagining Capitalism in the Shadow of the Pandemic" - OpEd by Henderson in the Harvard Business Review, 28 July 2020
- "The Unlikely Environmentalists; How the Private Sector Can Combat Climate Change" - OpEd by Henderson in Foreign Affairs, May/June 2020
- "The Business Case for Saving Democracy; Why free markets need free politics" - OpEd by Henderson in the Harvard Business Review, some time in 2020
- "Companies must include environmental and social performance measures" - OpEd by Henderson's close collaborator George Serafeim based on their joint work
- "Sustainability is an innovation problem" - piece by Henderson at the website of the Harvard Business School, 12 September 2019
- "What Would It Take to Get Businesses to Focus Less on Shareholder Value?" - OpEd by Henderson in the Harvard Business Review, 21 August 2018
- Do you have a moral duty to maximize profits?" - blog post by Henderson on her personal website, unknown date
- "Tools for talking to skeptics" - blog post by Henderson on her personal website, unknown date
Table of Contents of Reimagining Capitalism
- "When the facts change, I change my mind. What do you do, sir?" - Shareholder's value as yesterday's idea
- Reimagining Capitalism in Practice - Welcome to the World's Most Important Conversation
- The Business Case for Reimagining Capitalism - Reducing Risk, Increasing Demand, Cutting Costs
- Deeply Rooted Common Values - Revolutionizing the Purpose of the Firm
- Rewiring Finance - Learning to Love the Long Term
- Between a Rock and a Hard Place - Learning to Cooperate
- Protecting What Has Made Us Rich and Free - Markets, Politics, and the Future of the Capitalism System
- Pebbles in an Avalanche of Change - Finding Your Own Path towards Changing the World
About Rebecca Henderson
A prominent economist and influential professor (The John and Natty McArthur University professor at Harvard), Rebecca Henderson is one of the world’s most articulate, insightful and persuasive scholars focused on driving large-scale change. A leading authority in organizational and strategic change for more than thirty years, today her research, teaching and speaking centers on purpose-driven capitalism and the role that business leaders at every level can play in reimagining our current system. In the classroom, Rebecca inspires her students in “Reimagining Capitalism,” the most successful MBA elective course launched at HBS in the last five years. She also teaches in HBS’ Executive Education program. Additionally, she is a Research Fellow at the National Bureau for Economic Research, a sustainability advisor to several of the world’s largest companies, and a board member at Amgen and IDEXX Laboratories, both S&P 500 Companies.