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Global Capitalism, Critical Questions
The brute force of global capitalism has lifted many
out of poverty but created urgent situations that
require leadership,” said Merrill Lynch Chairman
and CEO Stan O’Neal in the opening keynote
speech. “When the Berlin Wall fell, many thought
that democracy would become the unifying force in the
world. The force unleashed in 1985 was not democracy but
free-market capitalism.”
While the darker side of capitalism has been the cause of
urgent problems — including environmental threats and economic
inequity — the combined efforts of businesses can
offer solutions. During a Friday keynote lecture, Jeremy J.
Siegel, Wharton’s Russell E. Palmer Professor of Finance,
made the case that free global exchange of goods and wealth
are required for the developed world to maintain its lifestyle
as birth rates continue to decline and populations age. Along
with other speakers, Siegel noted that China and India will
surpass or equal the economies of the United States and the
European Union. But while some observers have interpreted
the rise of other economies and the global flow of assets as a
harbinger of the decline of developed nations, Siegel sees it as
the best hope for the developed world.
Panel sessions — from the concrete to theoretical — drilled down into more specific industries and challenges.
The topics addressed topics were as varied as “Wall Street
Meets Hollywood,” moderated by Nelson Gayton, director
of Wharton’s Media and Entertainment Initiative and
“Succeeding in a Flat World,” moderated by Professor Yoram
(Jerry) Wind and sponsored by the SEI Center for Advanced
Studies in Management.
Common threads ran through the discussions, as each
was colored by challenges facing business and society on a
global level, including corporate responsibility, global governance,
and competition for scarce resources of energy, materials,
and talent.
Corporate Responsibility and Sustainable Business
Rajat Gupta, Senior Partner Worldwide, McKinsey
& Company, broached the topic of corporate responsibility
in his keynote speech. Business
must reinforce constructive contact and dialogue
with society to “earn the right to serve,” he said.
“Corporate responsibility is not a luxury — we must work
with partners to address problems facing society to shape social
contract between business and society.”
Some critical industries, such as the energy sector, face
even more daunting barriers as record profits, declining fossil
reserves, and environmental damage seed distrust among
both end consumers and the citizens of petroleum producing
countries. Mohammed Azam Ali, W’96, E’96, CEO,
Orient & Gulf DMCC, asserted during a panel called
“Dividing the Pie: The Political Debate About Profits in the
Energy Sector,” that increased transparency and accountability
could alleviate distrust.
“Disclosure regimes in U.S. and other capital markets were
put in place 30 years ago,” said Azam Ali. “A lot has changed
in the industry and companies that do not pay attention to
the wider context, including the need for transparency, will
eventually find themselves more vulnerable to negative surprises
and eventually lose credibility with shareholders.”
A challenge common among many industries is that the
tenets of business are not understood. Benefits are not seen
as equitably distributed, but as a skeptical public holds
businesses up to greater scrutiny, corporations must step up
with greater responsibility. Said Gupta, “It’s about whether
we are making our contribution to society, working
with the elements of society creating societal good along
with shareholder value. Businesses that align strategies
with trends will succeed. We should not merely respond to
trends, but shape society.”
He asserted that the public sector will need to rise to the
level of performance as the private sector, and that public/private
partnerships will be key.
Emilio Bassini, W’71, C’71, WG’73, Managing
Principal and Co-Founder, Bassini & Co. LLC, elaborated
on the idea that social value and shareholder value can be
compatible. “A lot of what happens in economies good and
bad depend on social values,” he said during the “Emerging
Markets” panel. “All things being equal, align yourself with
interests of the government. As an example, we’ve been
very successful investing in Mexican low-income housing.
Having a flow of home supply for the many households that
are formed each year is vital to maintaining social peace,
and thus there is professional management, liquidity in
shares, and funding available.”
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