"We have an opportunity to change the future"
Chris Meyer
At Constellation Research's Connected Enterprise 2013 author, businessman, and futurist Christopher Meyer compared modern U.S. capitalism to a peacock. To signal their superior genetic quality peacocks erect long trains of eye-spotted feathers to form shimmering fans of plumage. Such a extravagant displays limit the survival of the birds making them easier for predators to find. One species of peacocks already ornaments the IUCN list of endangered species.
Photo Credit: Jean Mottershead
How could an animal evolve in such way? One explaination is that peacocks are following an evolutionary path called Fisherian runaway which is a theory of sexual selection that helps to explain traits that do not obviously increase survival. Meyer thinks, like the peacock, our particular model of capitalism in the United States is following a similar path towards decline and eventual extinction.
Since the fall of the Soviet Union the United States has sat at the center of an international trade, labor, and currency system which has dominated the world economy. Yet this is changing. Low income economies in countries like China, India, and Brazil are growing much faster than the US and other countries at the center of this system. They are also beginning to are take the overall lead in other repects.
Meyers believes that the excessive emphasis on growth of corporate profits to the exclusion of all other measures is creating the runaway economic effect in the United States. Signs of this he identified as:
Pseudocompetition
Companies look like they are competing when really they are not. Between the two of them AT&T and Verizon spend billions of dollars on advertising. But they do this not to attract customers from one another, but to raise the barrier to entry to new potential competitor.
Seeing in Black and White
Indexing executive compensation to share price and putting pensions into the stock and bond market is blinding the well off to the true state of the society. They forget that bonds and equities are simply a promise that someone will have to be make good on someday to have any value.
Wealth Inequality in America
Its no surprise the gap between rich and poor is widening in the US. What is surprising is how Americans think income is actually distributed (much less how they think it should be distributed) is actually much better than the reality.
It is hard to argue that the US not would be a more successful society than these things were not true. Competition from companies in other parts of the world not sheltered by oligopoly is now threatening US business. Inequity is getting worse and even contains the potential of a social revolution and proves yet again it is not for nothing that economics has traditionally been called the "dismal science".
Yet Meyer is not discouraged. We solve most problems based on many constraints and if money doesn't buy happiness then why to we optimize our economy for profit anyway? He points to the Legatum Institute's prosperity index as another statistically significant way way to view our economy and cites examples of companies like Microsoft and General Electric using metics other than profit to benchmark their success.
Meyer's talk was based on a book he co-authored with Julia Kirby called Standing on the Sun. Their work was short listed last year by the Financial Times as one of the best books of 2012, and can be read by anyone who want to learn more about his thinking.
At the end of his talk Meyer predicted that new types of businesses – networked enterprises, hybrids, not-for-profit, and emerging market newcomers – will usher in a new and very possibly better form of capitalism that replaces the runaway capitalism of today by becoming less obsessed with return on equity and using broad-based measurements of success. He described how Adam Smith's invisible hand of the market could be replaced by the "invisible handshake" of collaborative networks where businesses take responsibility of what they now call "externalities" such as pollution.
He also predicts the economy will be divided into two interdependent but distinct segments. A chaotic artistic generative sector that feeds a utility distributive sector (that owns the sales/marketing/distribution channels). The question is, when this happens where do you want to be?