Harvard Business School workshop on future of the market economy

The economic crisis has severely shaken views on the traditional capitalist economy and forced business to envisage how the market economy can regain both its vitality and its credibility, a two-day weekend seminar on the future of capitalism concluded.

The seminar, sponsored by the ICC Research Foundation in conjunction with the Harvard Business School, brought together 50 international business leaders and academics to devise elements of an action plan for business to deal with the fallout from the crisis. Led by Harvard Business School Professor Joseph Bower, an academic team presented data pointing to a world-wide economic recovery in the medium term, but with persistent unemployment and increasing economic inequality.

The experts identified the existence of a longer-term challenge for business – dealing with issues including income inequality, climate change, and the threats of de-globalization and protectionism. Discussions centered on the need for companies to view themselves as “social” enterprises with a responsibility to society, with most participants agreeing that the public believes business has drifted away from this concept in recent years.

ICC Chairman Victor K Fung reminded participants that the founders of ICC viewed themselves as “merchants of peace” with the mission of helping to spread prosperity around the world. “Governments and business are looking for direction because many of our assumptions about the market economy have been shaken,” Mr Fung said. “While action by governments will continue to be necessary, strategic action by companies is necessary to help revive and reshape the global economy.” The vision of a social role for business continues to motivate many successful companies.

Case studies presented by representatives of IBM, General Electric and other firms demonstrated how companies can integrate into their business model activities which provide benefits to society beyond their core role of creating value for shareholders and employees.

Former World Bank President James Wolfensohn told participants that business can’t dissociate itself from the realities of the global economy in which they seek to grow and thrive. Between now and 2050, he said, the poles of the world economy will shift, with Asia entering into a period of political and economic influence it has not known since the 19th century. Per capita incomes in the region will rise close to those existing in today’s developed countries while at the same time millions of people will be left behind, particularly in Africa, generating resentment and anger.

He presented the case for business to engage in the effort to deal with poverty, climate change and other global issues as a practical matter: “If we don’t do something meaningful about poverty we will not be able to leave for our children a world of peace and prosperity,” Mr Wolfensohn said.

The complete results of the Harvard Business School-ICC workshop will be presented by the research leaders at the ICC India regional CEO forum in New Delhi on 4-5 December, 2009. The complete results will be available on this website.

Programme