By Henry Mintzberg
(Berrett-Koehler, 151 pages, $20.95)
In 1989, when the Berlin Wall fell and the communist regimes of Eastern Europe collapsed in its wake, the notion was that capitalism had triumphed. McGill University Professor of Management Henry Mintzberg, visiting Prague a couple of years later, balked at that notion, which he found not only sanctimonious but wrong and even dangerous.
He published an article debunking the premise and over the remaining two decades has continued to chip away at the idea. His latest book mourns the imbalance that this belief has encouraged by placing the private sector on a pedestal.
Prof. Mintzberg is best known for his writings on strategic planning and in-the-trenches management. But even as he has been writing and teaching about management, this political issue has captured his attention and at times almost seemed to dominate him. He repeatedly refers to the book as a "rant," but it's a cri de coeur for a society gone wrong.
Capitalism never triumphed, he insists. Balance triumphed. Whereas communism had fallen into the maw of government, the Western world in 1989 had a good balance between the private sector, the public sector, and what he calls the plural sector of voluntary associations, clubs, non-profits, non-governmental institutions, co-operatives, unions, religious institutions, social movements and the like.
These days, however, the private sector is exalted at the expense of the other two. Politicians proclaim the glories of the private sector and the importance of reducing the influence of government. And the third sector has similarly withered, as captured by Harvard sociologist Richard Putnam's book, Bowling Alone, about our increasing disconnection from the communities in which we live.
"Adam Smith's invisible hand in the American marketplace has become a visible claw in the American Congress. De Tocqueville identified the genius of American society as 'self-interest rightly understood.' Now the country finds itself overwhelmed by self-interest fatefully misunderstood," he writes in Rebalancing Society.
He notes that in the mid-1980s, former U.S. president Ronald Reagan overhauled the tax system after learning that General Electric was not paying taxes. From 2008 to 2012, 26 major American corporations, including General Electric and Boeing, paid no taxes at all. In 1987, with the Montreal Protocol, countries from around the world came together to protect the ozone layer. These days, we can't gain similar collective action on global warming.
"It is telling that the word socialism has become a dirty word in America, leaving the impression that there is something wrong with things social, while capitalism has come to represent all things right. In fact, we are seeing all sorts of proposals for adjectival capitalism – sustainable capitalism, caring capitalism, breakthrough capitalism, democratic capitalism, regenerative capitalism, inclusive capitalism. The impression is that, if only we can get capitalism right, all will be well again," he writes.
And it's not just America. He notes that Canada, long known for its balance and benevolence, has become another cheerleader for this one-sided view of development. He is alarmed by "a creeping meanness" in Canada, not restricted, he stresses, to our current federal government.
But he's not urging that the private sector be torn down in favour of government. He feels a country will suffer if any one of the three sectors is given too much power. Too much emphasis on capitalism becomes the predatory capitalism we increasingly see. Too much government, and we can end up with state despotism. If the plural sector becomes too influential, society is at risk of being dominated by a single populist movement, such as the Muslim Brotherhood in Egypt.
A major contribution to our understanding comes from his apt naming of the non-business, non-government part of our society. It has previously been inadequately labelled the non-profit sector, the third sector, and even civil society, but plural captures its breadth, the impetus it receives from people, and neatly starts with a letter P to match the other two sectors.
The plural sector comprises all associations of people that are owned neither by the state nor by private investors. Some are owned by members; others are owned by nobody, like universities. "By virtue of being owned by their members or by no one, plural sector associations can be more egalitarian and flexible," he observes.
The plural sector is not "a third way" between the two other sectors. It is part of a balanced society, something that triumphed in 1989 but is shakier today. His calls for renewal would start with the social movements and social initiatives of the plural sector and would include ending the legal notion of corporations as persons, instead holding the leaders within them responsible for their actions.
This is a short book, and not what managers expect Prof. Mintzberg to write about. But it will help them to understand the broader milieu in which they operate, and where they may need to temper their private sector enthusiasm, for the greater good.
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Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column, Balance. E-mail Harvey Schachter