Book review: Reimagining capitalism in a world on fire

This is an optimistic (and personal) prescription for reimagining capitalism and rewiring finance from Harvard teacher Rebecca Henderson, says Marcio Viegas.

Rebecca Henderson is not an anti-capitalist. She teaches at the Harvard Business School MBA programme and was named one of the three Outstanding Directors of 2019 by the Financial Times.

She thinks capitalism is not working well, but instead of a new Bolshevik or Bolivarian revolution, she wants us to “reimagine” capitalism. Not in a John Lennon style (more on this later), but by applying logical ideas she has been teaching for over 10 years at Harvard.

Her thoughts have been summarised in Reimagining capitalism in a world on fire published this year, just before the Covid pandemic, but after last year’s fires in California and Australia – hence the “world on fire”.

Now the book has just been shortlisted as a Financial Times/McKinsey business book of the year! A relief after all the strange – or curious, to say the least – looks you get when reading it in public.

It is a very personal book: “I grew up British”, “I talk regularly with CEOs”, “I’m a Buddhist”, but it is also, and despite the hippie-ish title, paradoxically a very pragmatic book on how capitalism needs to be “reimagined”, with a detailed business case on how to reduce risk, increase demand and cut costs, or how to “rewire finance”.

The 322-page tome is also very well researched with the latest thinking in areas such as climate change, inequality or sustainable finance.

In case the person staring at you still thinks this is a manifesto for communists, tell him that she quotes Frederick Taylor, Milton Friedman or Larry Fink, but there are no references to Karl Marx or even to Keynes! Just a bit of Thomas Piketty and of course the always-inspiring Paul Polman, founder of… Imagine.

Henderson’s ideas are illustrated with cases and examples from obvious sources like Unilever, Triodos Bank, Whole Foods, but also from Peabody Energy, CEMEX, Marathon Oil and other less glorified companies.

Loyal to the title, Henderson does not present any revolutionary ideas, but she does encapsulate what is wrong with the current forms of capitalism and set a recipe involving purpose beyond profit, a shared value strategy, sustainable finance, cooperation, government action, as well as some self-help tips: “Discover your own purpose”; “Do something now”; “Bring your values to work”; and, maybe getting too familiar with Paulo Coelho: “Take care of yourself and remember to find joy”.

Rewiring finance – learning to love the long term is probably the most interesting chapter. After warning that “There’s also reason to believe that while asset owners may be focused on the long term, asset managers may not be”, Henderson tells a bit of history of the ESG phenomenon, asks for better data (praising GRI and SASB), and offers three routes to rewiring finance: reform accounting; rely on impact investors; and “change the rules that govern corporations to shelter managers from investor pressure”.

In a time of Covid, climate emergency, growing inequalities and unilateralism, Henderson’s book is also full of optimism: she tells various stories of inspiring leaders and managers, reminds us how Germany was rebuilt, or how sustainable finance is growing for instance as “there’s a great business case for saving the world”.

You may say she is a dreamer, but she is not the only one.

Reimagining capitalism in a world on fire by Rebecca Henderson, Public Affairs, $16.99 US, 322 pages.