Karl Moore: This is Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail. Today, I am delighted to talk to Stuart Hart, who is a Samuel Johnson professor at the Johnson Business School at Cornell University. Good morning, Stuart.
Stuart Hart: Good morning.
KM: Your latest book, Capitalism at the Crossroads: Aligning Business, Earth, and Humanity, suggests that the world is going in that direction. What are you arguing in your book?
SH: The core message in my book, if we can think what is going on in the business world… In my view, we are in a time period now much like what happened 120, 130 years ago in the 19th century, when capitalism transformed essentially from the free-labour movement – which was the small entrepreneurs, [the] sole proprietorships – into the industrial corporation. That happened in the space of 30 or 40 years after the American Civil War. The concept of a large, limited-liability, joint-stock-owned company just did not exist in the 1830s. That emerged over a period of time through the 1870s, 1890s, through the turn of the century, that became the norm and is what we thought of as capitalism and business.
I think we are going through a similar sort of transformation right now. That model is ending. It is dying because it has to, it is unsustainable. It is unsustainable environmentally and it is also unsustainable socially. The way it has turned out to be practised has benefited relatively only a few and many have not been able to participate. What we are in the midst of is the transformation to what comes next. What is the next variety? What is the 21st-century corporation and [what does] that form of capitalism look like. It's going to be some version of what we think is a sustainable business or a social business. We do not know exactly what that is going to look like.
One of the things we know for sure is that whatever form of business ends up taking root, it will be environmentally sustainable, perhaps even regenerative from a natural capital point of view and it will be more inclusive, it will include all of humanity in the dream, in “the capitalist dream.” And it will figure out how to engage everyone. Now, does that mean everyone is equal? No, but what it means is that capitalism will shrink the differences and will shrink inequity rather than magnify it.
KM: What we have seen in our generation of the boomers, since [the Second World War] particularly, an enormous growth of wealth, particularly [for] those on the top, but for Americans, Canadians, Brits, Western European [countries], but it has been voracious in its use of resources. It has been a great roll, but you are saying it's ending. We have to move to a new form. Why is it ending?
SH: We have hit the wall. This is what it comes down to. I know that people have been saying the sky has been falling going back to the sixties with the Club of Rome, “we are running out of resources.” I am not arguing that so much. If you are looking at it through the environmental lens, we are running out of natural capital, we are running out of nature's ability to absorb our waste. That is perhaps what is going on. If you look at what is happening with the climate crisis, it is not just the climate system, [it] is every natural system that is under assault. Agricultural soils are washing away, marine fisheries are either at maximum or overfished or crashing, coral reefs are being plundered, and natural native forests are in decline everywhere. Every natural system is under assault, and it simply cannot go on this way.
KM: It seems like India and China, understandably wanting to have our lifestyle, that that is a tipping point as well. The world can hardly sustain our lifestyle, let alone a few hundred million people more.
