The win-win American capitalism might be skewed towards extremes, leaving the middle exposed. Roger L. Martin, a famous strategy professor, decided to take a new look at this “democratic capitalism” model. More importantly, he takes on a journey on how we can fix it. How well is Martin faring?
“When More Is Not Better – Overcoming America’s Obsession with Economic Efficiency” crosses the border of the WIFM business books. It might even become one of those titles that made famous the Chicago tribune economists – and propelled them in the driving seat of America’s economic policies. For a few decades, the US economy was transformed (at least conceptually) in a money making machine. Well, we all know the problems with the machines, do we?:
– their behavior is deemed predictable;
– they function constantly, based on well-known principles;
– the machines cannot learn and certainly cannot adapt to new ever-changing reality factors.
Roger L. Martin challenges this old, outdated mechanistic view. FED tries to fix a living organism with monetary policy mechanistic tools? Try tweaking and observing the results, in a micro-experimentation mode. Producing more does generate additional costs and less revenue? The income distribution disparities increase, leaving more Americans behind? Try Martin’s book – “When More Is Not Better”.
In his seventh (!) book with Harvard Business Review Press, Martin goes further than ever. He is brave enough to pint at one of the largest issues in America’s touted the comic approach: the ever-rising income distribution inequality. Rest assured, he is not a socialist – and he tries to fix the system from inside. Martin points that US’s ever obsession with Pareto, with increasing the effects of whatever we do whilst minimizing inputs, has led to dramatic discrepancies in the worlds’ largest economy. A more sinister narrative unfolds with regards to the American capitalism. The system, he argues, directs the largest portion of economical growth to a only a small portion of the population – the richest. Thus leaves too little on the table for the cast majority of the others. Does this make the American capitalism less fair? For sure. Unfortunately, it also undermines the very source of its transformation too. With less and less pockets of available capital and knowledge, creative options diminish too. This probably should accelerate the cycle of creative destruction of the economy – except that it will probably do it in a less sustainable way as compare the previous industrial revolutions.
In this brave new pandemic world, the author is even more convinced that we have to change the way the US system works. To be sure, he is not the first economist to hold this view – and not even the first Canadian one. Do you remember “The Shock Doctrine”? The French economists book “Capital in the 21st Century”? Or Schumpeter’s “creative destruction”, so much touted nowadays? Interestingly enough, these economic insights might need leveraging much sooner than their authors thought. Roger L. Martin sees the COVID pandemic not only a major destructive challenge to the world’s economy – but also as a chance to fix some of its most pressing problems.
Time will tell if the balance will tilt towards a more balanced capitalism approach – or if the contemporary pursuits of ever increasing efficiencies will continue. Martin has though launched its challenge. It is the government’s turns to follow it.
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When More Is Not Better A Harvard Business Review Press Book Essentials