The Future of History: Is the Next Karl Marx a Management Consultant?

The early word out of Davos this year is that this inequality thing has everyone's attention - and all agree it is really a bummer. There is great relief that we got that settled.

The perfectability of man was such a great concept when there was money to pay for it. Now, people are getting kind of touchy about who owes what to whom. The shareholder value era didnt work out so well so it now looks like someone actually has to pay. And just when there isn't that much to go around.

Not surprisingly, guru-dom is turning its attention to the issue. Apparently many books and articles on how to make capitalism better, or replace it, or reinvent it are in the works. One suspects there are lawyers fighting over who owns the words 'the end of capitalism' as this is being written. Now there's a post-industrial battle we can all get excited about. JL

Justin Fox comments in Harvard Business Review:

Wouldn't it be nice, Francis Fukuyama writes in an article called "The Future of History" in the current issue of Foreign Affairs, if some "obscure scribbler ... in a garret somewhere" would "outline an ideology of the future that could provide a realistic path toward a world with healthy middle-class societies and robust democracies."

But reading his description of the economic side of it, I couldn't help but think to myself: This ideology already exists. Its scribblers aren't in "a garret somewhere." They're in well-appointed offices at business schools and management consulting firms.
I know this because these people are constantly submitting articles to HBR. A brief sampling: Michael Porter and Mark Kramer's "Creating Shared Value;" Christoper Meyer and Julia Kirby's "Runaway Capitalism;" Dominic Barton's "Capitalism for the Long Term;" the collected works of Umair Haque. And it's not just us: I got a press release last night from the World Economic Forum (presumably written in a Davos garret) headlined, "To Serve Society Better, Capitalism Needs a Redesign."

This ideology, Fukuyama goes on:

"could not begin with a denunciation of capitalism as such, as if old-fashioned socialism were still a viable alternative. It is more the variety of capitalism that is at stake and the degree to which governments should help societies adjust to change. Globalization need be seen not as an inexorable fact of life but rather as a challenge and an opportunity that must be carefully controlled politically. The new ideology would not see markets as an end in themselves; instead, it would value global trade and investment to the extent that they contributed to a flourishing middle class, not just to greater aggregate national wealth.
It is not possible to get to that point, however, without providing a serious and sustained critique of much of the edifice of modern neoclassical economics, beginning with fundamental assumptions such as the sovereignty of individual preferences and that aggregate income is an accurate measure of national well-being."

You could say this is just rhetoric and PR meant to stave off those truly radical scribblers in garrets — and that may be partly right. But something more fundamental is going on. People who spend their time studying businesses and trying to make them work better can't help but notice that the fundamental ideology of business over the past 30 years — call it shareholder value — is rife with contradictions and doesn't work all that well.

This is ironic, because the original idea of shareholder value was to take the complex balancing of competing interests that seemed to be paralyzing CEOs in the U.S. in the 1970s and replace it with a simple, decisive credo: Do what benefits shareholders.

The problem is that nobody's ever really been able to answer which shareholders, when? Back when economists and finance scholars believed that stock market prices were a near-perfect representation of the current value and future prospects of corporations, it seemed conceivable that following the movements of the market would steer executives right. But nobody believes that about stock prices anymore, and so executives are back to balancing competing interests — this time short-term traders vs. long-term shareholders. And as Rosabeth Moss Kanter argued in HBR in November, the most durably successful corporations don't seem to focus all that much on shareholder value at all, delivering it instead as a byproduct of a focus on creating value for employees and society.

This battle about corporate purpose parallels the bigger societal battle that Fukuyama is writing about. The measures of economic success we've been using for the past three-plus decades, and the goals we've been striving toward, seem to have led us to a dead-end, he argues. This is a followup to Fukuyama's famous article and book on "The End of History," in which he argued that Western liberal democracy might just be the logical conclusion of human development. (Note to U.S. readers: "liberal" in this context doesn't mean leftist, it means encouraging of individual freedom, especially economic freedom.) Now he's wondering which liberal democracy, and clearly leaning toward one that's more about "a flourishing middle class" than the bottom line. And in that he sounds a lot like Michael Porter, Dominic Barton, Rosabeth Moss Kanter, etc.

Fukuyama's would-be allies in the business world haven't developed what you could call a coherent plan of attack. They have relatively little to say about the political side of the changes they seek. But they do have energy, optimism, and something of the utopian spirit that's at the heart of most successful social movements.

Philosopher John Gray actually complained about this mindset in a 2005 review of Thomas Friedman's The World is Flat:

"In a curious twist, the utopian mind has migrated from left to right, and from the academy to the airport bookshop. In the nineteenth century it was political activists and radical social theorists such as Marx who held out the promise that new technology was creating a new world. Today some business gurus have a similar message."

In the more obviously troubled circumstances of 2012, the business gurus have toned down the technological determinism a little bit. But they're still trying to point the way to a new, better world. You can call this a hopeful sign or a scary one (that Marx stuff didn't work out so well, remember). In any case, it's worth paying attention to.