“ Make no mistake: Capitalism has no challengers. Like democracy, it’s the worst sort of system except for all the others- and that’s exactly why we all have a stake in making it better.” The above quote from the foreword written by Gary Hamel sets the premise of the book. This book is about reinventing capitalism, questioning and challenging old beliefs, and adapting to the needs and environment of the 21st century, what is referred to as constructive capitalism as opposed to industrial era capitalism.
The author, Umair Haque compares the industrial era to a game reserve, where resources were multiple, and the fastest hunter won. Noone needed to worry about the resources they’re utilising, “if you kill off this kind of fish, there’s another in the next pond.” Extending that metaphor, today we are in an ark, where every resource is invaluable, where you cannot afford to accumulate more ‘deep debt’ as that will lead to an inevitable collapse. But how have we accumulated this ‘deep debt’? The answer lies at the very core of capitalism. Using the example of a burger, Haque explains that while a consumer might pay $3 for the burger, it’s real cost would be closer to $30. This includes environmental and healthcare costs. Thus, the burger has not created any true value, it has only led to a deficit of $27, which has been shifted to the society. While this model worked when we were on a game reserve, in today’s ark, this model is fatal. The solution for this would be to be able to reduce that true cost of the burger from $30 to $3 or less, through more efficient processes and increasing the true value of that burger by possibly making it healthier. Years of unsustainable industrial age capitalism have brought us to this point where the debt we’ve created has caught up with us and we need to make some radical changes.
Haque further lays down a blueprint for constructive capitalists, and gives several examples of companies that have achieved that. These companies, the “insurgents”, are doing much better financially than their competitors, the “incumbents”. These cornerstones lead to the creation of thick value. Thin value is unsustainable and meaningless, it is created at the expense of tomorrow, thick value on the other hand, is authentic value, not just measured financially, but by overall benefit, and therefore economically sustainable. This can be achieved by creating Value cycles in stead of Value chains( Nike, Interface), value conversations in stead of propositions( Threadless), creating new markets in stead of protecting old ones( Grameen) and so on.
What was striking about this book is how it is so relevant given the crises and protests off late. The financial crisis in 2008 ( the book was written after this crisis) and the more recent occupy movements in the country can be well explained by the arguments made in the book. The credit crisis was not just a passing recession phase in the economy, it was because capitalism is economically unsustainable given the deep debt that is inherently built into the very principles of capitalism. The crisis was due to the revealing of this debt. Similarly, if capitalism was constructive, and focused on creation of thick value which was shared between all the stakeholders, we wouldn’t have created the stark inequities that lie at the heart of current agitation.
-Ankita