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Capitalism for the Long Term

In: Business and Management

Submitted By floreskarla
Words 4956
Pages 20
84 Harvard Business Review March 2011

HBR.ORG

Dominic Barton is the global managing director of McKinsey & Company.

Long Term
Business leaders face a choice: They can reform the system, or watch as the government exerts control. A call to action from McKinsey & Company’s global managing director by Dominic Barton

Capitalism for the

T
ILLUSTRATION: JAMES JOYCE

he near meltdown of the nancial system and the ensuing Great Recession have been, and will remain, the de ning issue for the current generation of executives. Now that the worst seems to be behind us, it’s tempting to feel deep relief—and a strong desire to return to the comfort of business as usual. But that is simply not an option. In the past three years we’ve already seen a dramatic acceleration in the shifting balance of power between the developed West and the emerging East, a rise in populist politics and social stresses in a number of countries, and significant strains on global governance systems. As the fallout from the crisis continues, we’re likely to see increased geopolitical rivalries, new international security challenges, and rising tensions from trade, migration, and resource competition. For business leaders, however, the most consequential outcome of the crisis is the challenge to capitalism itself.

That challenge did not just arise in the wake of the Great Recession. Recall that trust in business hit historically low levels more than a decade ago. But the crisis and the surge in public antagonism it unleashed have exacerbated the friction between business and society. On top of anxiety about persistent problems such as rising income inequality, we now confront understandable anger over high unemployment, spiraling budget de cits, and a host of other issues. Governments feel pressure to reach ever deeper inside businesses to exert control and prevent another

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