From: Issue 31

Clean capitalism: Maybe it does exist?

Management guru Henry Mintzberg is tired of our blind devotion to capitalism

Written by Toby A.A. Heaps, President

A prolific author of 150 articles, 15 books, and a few short stories, Mintzberg has been a professor at his alma mater McGill University for 40 years. He's currently the Cleghorn Professor of Management Studies at the Desautels Faculty of Management, and for much of the past decade has been developing new approaches to management education and development. dubbed a "consistently contrarian Canadian academic" by the Economist in 2009, he's been working for over a decade on an electronic pamphlet called Getting Past Smith and Marx: Toward a Balanced Society. Balance is important to Mintzberg, who spends his leisure time cycling in Europe and canoeing in the Laurentian wilderness. In July 2009, Mintzberg made time to discuss the possibility of clean capitalism with our own Toby Heaps.

CK: Why did the economic meltdown happen?

Mintzberg: Everybody has their own take on it. I am a management person, so I think it is a failure of management. It is the fact that the managers of those companies were just disconnected from what was going on. Senior managers didn't know what was going on and the junior managers didn't care what was going on. The pressures were so great to perform, that anything that came along that let you make a quick buck, they grabbed.

CK: Can you narrow it down to three incentives that you could change to help insure that something like this doesn't happen again?

Mintzberg: I don't think this is a question of incentives, I think it is a question of sheer decency. Either people care about their enterprise or they don't. In fact, I would say that the incentives have been the problem. People have been driven to produce as quickly as possible. I think you solve our economic problems by reconstructing companies as communities.

CK: How to you rebuild companies as communities in a society where the bulk of large corporations are widely held enterprises accountable to short term investors?

Mintzberg: Some chief executives have the guts to stand up to this nonsense and say, "You are not going to push us around. This is not a way to run a company." IT is an illness, it's a disease, and until the Americans wake up to the fact that it is utterly disfunctional, this will keep happening. But you just have to get rid of it.

CK: Do you think one of the downsides to communism's collapse was that it took the competitive edge off capitalist countries to maintain a certain quality of life because there was an alternative to turn to?

Mintzberg: I kind of believe that. One might think communism wasn't a model for the social sphere, but that's not true. You have seen literacy rates in Cuba go up, and healthcare in Cuba improve. I argue that one of the effects of the collapse of communism in Eastern Europe was that we swung totally out of balance on our side. I think that the main factor was not that they were an anchoring force, necessarily, but that the assumption that capitalism has triumphed meant that we could swing totally the other way.

CK: Businesses have gotten a bit smug...

Mintzberg: Actually, that's a major understatement, but go on.

CK: Peter Drucker said that any business can be put out of business within 24 hours if society decides it no longer serves a necessary function.

Mintzberg: You see it happening all the time. Like Pfizer pleading guilty to a criminal charge relating to promotion of its pain medicine and paying a record $2.3 billion in fines and settlement payments. Corporations want to be persons in the eyes of the law, but if a person commits a felony, they go to jail. So if Pfizer wants to be a person, they should go to jail. Going to jail means not being allowed to function in society for several years. If they want to be a person, they can't have it both ways. Wwe have a complete double standard when it comes to crime.

CK: So, what do you think it would take to make clean capitalism happen?

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Interview by Toby A. A. Heaps; Edited by Melissa Shin.

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