Capitalism at the Crossroads by Stuart Hart

February 18, 2010

In the second edition of “Capitalism at the Crossroads” Stuart Hart makes a very strong case for MNCs to start thinking about the bottom of the pyramid (BoP) and environmentalism as opportunities.  The book, which is subtitled “Aligning business, earth and humanity”, manages to cover the most significant global issues of our time – global warming, global poverty and terrorism – in a way that is comprehensive and insightful.  Hart argues, in a very compelling manner, that to be successful tomorrow, the businesses of today need to embrace green practices and target the world’s poor.  As if that weren’t enough, Hart goes on to provide unique guidelines for how businesses can go about transforming themselves.  The title reflects Stuart’s argument that businesses have a choice to make; they can invest to become the leaders of tomorrow, or they can continue to operate under the status quo and miss the next big wave of growth.

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In my opinion, “Capitalism at the Crossroads” stands out because it specifically makes the case that current market leading MNCs (rather than just small corps) actually stand to benefit from both embracing the green movement and finding ways to serve the BoP.  In fact, the book goes further and says that large corporations who do not follow this trend will lose in the long run.  Hart firmly believes that environmental sustainability and profits are not trade offs, but rather that sustainability will beget profits.   There have been a number of books that point to reasons social entrepreneurs and disruptive thinkers should serve the BoP, but this is the first that I’ve seen that clearly articulates why it is in the best interest of large corporations.

To demonstrate his point, Hart has created a framework called the “Sustainable Value Portfolio”, which does an excellent job of showing how pursuing sustainable product development can lead to greater profits.  Essentially, Hart argues that whether or not you believe in global warming, creating sustainable products is necessary for success due to the fact that developing countries are continuing to increase consumption levels.  As this occurs, resources will only grow scarcer and companies that have developed sustainable solutions will be the only ones positioned to grow in this new global marketplace.

Finally, Hart provides guidance that companies who choose to pursue his strategy must build the inherent capability to serve the BoP.  In other words, managers must go into the BoP to experience it first hand; they should live in slums and experience the way of life of the poor before they can really understand how to create lasting solutions.

Ironically, my primary criticism of Hart’s novel is also one of its strengths.  By tailoring the book toward large MNCs , Hart does not explictly encourage small entrepreneurs and disruptors to innovate and create brand new solutions.

All told, I would give this book an A+, Stuart Hart kept me captivated and left me in deep thought each time after I put the book down.

- Bryan

2 Responses to Capitalism at the Crossroads by Stuart Hart

  1. [...] argue that a book like Capitalism at the Crossroads by Stuart Hart is a better contrast (see review here).  Still, Philanthrocapitalism is perhaps the best account of the current philanthropy [...]

  2. Brutal Truth on April 17, 2011 at 11:45 am

    The goal for the 21st Century shouldn’t be how best to reform capitalism into something that works for more people than the billionaire elite class. The goal needs to be to abolish capitalism altogether and REPLACE it with an economic model based around the betterment of the average non-wealthy person, the end state being one in which nobody is born into poverty and nobody is born into wealth but every baby is born into the same good opportunity for success in life. What they do with it is up to them but everyone at least needs to start out from a level playing field.

    Because let’s face it: Capitalism is not amenable to be reformed as its whole purpose is to make gobs of money for a tiny amount of people off of the sweat, labor and misery of the vast majority of us. If you try to change that into a goal of shared prosperity for all then what you’re talking about is not capitalism. Barack Obama is a perfect example of the impossibility of reforming capitalism if one considers the very timid reforms he was campaigning on in 2008 and then considers how he has since consistently backed away from even THEM. The reason is because Obama never intended to be a reformer but rather a new, charismatic happy face on the same old exploitation. That’s why Goldman Sachs was his biggest donor. No, what is needed is not reforms to shave more of the sharp corners off of capitalist wage slavery so that it isn’t such a bitter pill for the enslaved millions but rather a complete break with present notions of bourgeois property relations. A transition to worker ownership of the means of production and exchange is what is desperately needed and a government that accurately represents the hopes and aspirations and needs of the average non-wealthy American. Because the government we have now with its two practically identical parties is nothing but a two-headed sock puppet of the billionaires trying to convince us that it is a democracy. What is needed is publicly funded elections, local workers councils making decisions that concern their locality and the election of a few members of these councils to go on to a national workers council that acts as a national parliament with the threat of recall elections hanging over their heads at all times.

    If the means of production continue to be owned in the manner in which they are today it is a guarantee that nothing will get better and that the rich will continue to accumulate more wealth than they can spend in several lifetimes while the poor keep getting poorer, sicker, more hopeless with no prospects of bettering their standard of living. Capitalism will always equal prosperity for the priviliged few and varying degrees of wage slavery for the rest of us. You can’t polish a turd and make it into a diamond. Reforming it is not possible. Abolishing such a heartless, satanic, coldblooded economic model and replacing it with a humanist, worker-socialist economy is the only thing that will make this country into anything other than a billionaire’s club for the few and a plantation for the rest. Nobody needs to have millions of dollars a year. Nobody needs to have a mansion and two Rolls Royces and three yachts and a dozen servants. Likewise nobody should be living in a shantytown or in a tent or on a park bench in the so-called “richest country in the world”. If capitalism works (for the average person) there wouldn’t be 25% of America’s kids going to bed hungry and 42 million people on food stamps and 52 million people who can’t afford medical insurance in the “richest country in the world”, there wouldn’t be so many homeless while so many homes sit derelict because they were built during the housing bubble and now nobody wants them. There wouldn’t be people working for Wal-Mart who can only afford to live in their cars. If you thought slavery ended in 1865 you’re mistaken; it simply goes by a different name but one that is equally offensive to anyone who has to deal with the huge end of it that is exploited in the name of buying more diamond-studded collars for some billionaire’s dogs rather than the tiny end of it that is doing the exploiting and indulging in bourgeois decadence. Capitalism is slavery with a different name.

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