Can Capitalism Be Both Progressive and Prosperous?

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0:56I've been advocating a form of capitalism that I call progressive capitalism, distinct, for instance, from neoliberal capitalism, the kind of capitalism that we've had for the last 40 years. Neoliberal capitalism emphasized shareholder value maximization, minimizing the role of the state, limiting regulation, paying no attention to inequality, and paying little attention to the environment. Progressive capitalism is almost the antithesis of each of those. It recognizes the objective of our economy is to promote the well-being of society. It's not that we are supposed to serve the economy. The economy is supposed to serve us.

1:43And it asks, how can it do that best? It is about capitalism. Markets are an important part of the success of any economy, any society, but also recognizes there's a more important role of the state. There's a more important role for other forms of collective action. For instance, a central issue that we are facing is climate change. None of us individually can address climate change. Markets, firms, are an important part of the solution, but they have to be motivated either by a carbon price or regulation. So we're going to need collective action if we're going to save the planet. I think good regulation can promote innovation.

2:37Let me give you one example. we've been moving towards more regulation of carbon emissions we've done it in a number of different ways automobile regulation many states California and New York a lot of discussion about carbon prices it's clear that's the direction that we're moving and what has been the response enormous amount of innovation and renewable energy to the point where the price of renewable renewable energy is plummeted. It is plummeted with very little government financial support. It has really been the private sector led innovation that has brought the price of renewables down to the point where it's competitive with old fossil fuel, many areas much cheaper than fossil fuel.

3:31If we have a societal problem and we design regulations to respond to that societal problem, the private sector will innovate to help solve the problem. I don't see these as in conflict at all. Good regulation creates good innovation, and by good innovation, I just mean innovation that actually has the effect of increasing societal well-being. Metrics are part of the move. Just let me give you an example. Is labor just a cost center? And do you want to lower wages, see how much you can exploit them? Or do you think of them as an asset, as part of your social and moral responsibility? How do you empower them and increase their capabilities.

4:32You know, they spend a lot of large fraction of their life in the corporation. And so if you give them some flexibility like family leave, sick leave, if you give them maybe even more responsibility in decision making, that can make a big difference. I think people feel better in general in thinking that they are contributing in a broad way to society. But I also say, you know, I think in the long run, this is going to be profitable. It is better for the organization, for the corporation, and for the leaders themselves. A number of years ago, 1944, Friedrich Hayek wrote this very influential book, The Road to Serfdom.

5:20He worried that the creation of the welfare state, a strong government helping individuals would lead to authoritarianism. We now know that he was wrong. If we look around the world, populism, authoritarianism is associated not with government doing too much, but doing too little. By doing too little, it has given rise to discontent that threatens our democracy and threatens our ability to respond to the major challenges that we face. And one of the reasons I wrote the book, what I call it, The Road to Freedom, was that I wanted to highlight that progressive capitalism is really the vehicle through which we are most likely to be best able to respond to these challenges that we are going to be facing.

6:27If we're going to create an economy that serves society, we have to reform it, change it in fundamental ways.

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