In an interview with Harvard Business School’s Institute for the Study of Business in Global Society (BiGS), Colin Mayer, Professor of Management Studies at the Blavatnik School of Government & Saïd Business School at the University of Oxford, sits down to discuss key concepts from his latest book Capitalism and Crises: How to Fix Them. Colin argues that the driving force behind capitalism has gotten out of line with what we as individuals and societies need. This can be fixed if businesses start existing to solve problems, not cause harm.

Interview highlights:

2:03: Why is capitalism failing us as a society?
Despite its profound impact, the driving force behind capitalism (profit) has yet to get in line with what societies need.

3:33: Capitalism vs. climate change
This generation has the opportunity to leave natural capital in a better state than it was found. This requires businesses to ensure that they sustain and restore the natural capital they use in their business activities.

6:01: What is holding business leaders back?
Companies profit from creating detriment which undermines the functioning of markets.

6:56: What is the role of regulation?
Regulation is important in laying down the accepted conventions by which business should operate however it creates deep controversy politically. Regulations won’t solve the problems. Companies need to have a purpose to profit from creating solutions, not problems.

9:03: Should company boardrooms be accountable?
They are currently not being held accountable however new frameworks will change the way reporting is done and will highlight companies that are profiting from creating problems and not solutions

10:02: What reactions are you hearing from board members?
Board members agree with the idea however they say, “The rest of the industry isn’t doing this”. This is a matter of ensuring the underlying principles are consistent, so companies know this is how they’re playing against each other

10:50: How do we address the issue of business needing to change?
Bring together those who recognize there is a problem, and a change is needed. Government also needs to play a role in this change.

12:37: What is the role of institutional investors?
They are recognizing that it is their responsibility to ensure that the way they are profiting is not through creating detriment to others, otherwise, it undermines the sustainability of the businesses they invest in.

13:37: What is the role of the media and financial analysts?
These are key players. Media and analysts are realizing that not just the investors care, but people like you and I are paying attention to the good and the bad businesses are doing.

14:45: How can we change the narrative?
1. Only a crisis produces real change it is our duty to create new ideas until the politically impossible becomes the politically inevitable.
2. Realize it doesn’t take a revolution to change it is ideas. Ideate a new way of business.

17:08: Did Milton Friedman get it wrong?
No!

18:17: Why did environmental, social, and governance factors (ESG) go wrong?
Most people are confused about ESG. There is the belief it is undermining the way business operates.

For more stories and Q&As on societal topics essential to business and the people working to resolve these issues, visit the BiGS knowledge hub: https://www.hbs.edu/bigs