Notes – Capitalism at Risk, Updated and Expanded


Preface to the Expanded Edition

1. See, for example, various reports by the Intergovernmental Panel on Climate Change (IPCC), especially “Global Warming of 1.5° C,” 2018, See also Global Carbon Project, “Global Carbon Atlas” (online platform for visualizing the level and impact of carbon emissions), updated to 2019,

2. See, for example, the following four reports that assess the risk to financial system stability today as moderate and that identify current specific risk factors: Financial Stability Oversight Council, 2018 Annual Report (Washington, DC: Financial Stability Oversight Council, June 20, 2019),; Board of Governors of the Federal Reserve System, Financial Stability Report (Washington, DC: Federal Reserve Board, May 2019),; Office of Financial Research, Annual Report to Congress, 2018,; and International Monetary Fund, Global Financial Stability Report: Vulnerabilities in a Maturing Credit Cycle (Washington, DC: International Monetary Fund Publication Services, April 2019),

3. Facebook, Inc., September 30, 2019, Form 10-Q filing with the U.S. Securities and Exchange Commission, filed October 30, 2019,

4. Elizabeth Dwoskin and Karla Adam, “More Than 150 Countries Affected by Massive Cyberattack, Europol Says,” Washington Post, May 14, 2017,

5. Verizon, “2019 Verizon Data Breach Investigations Report,”, 7.

6. For the U.S. intelligence community’s assessment of Russia’s efforts to undermine the 2016 U.S. presidential election, see Office of the Director of National Intelligence, Intelligence Community Assessment, “Assessing Russian Activities and Intentions in Recent US Elections,” ICA 2017-01D, January 6, 2017,

7. Carole Cadwalladr, “Fresh Cambridge Analytica Leak ‘Shows Global Manipulation Is Out of Control,’ ” Guardian, January 4, 2020,

8. Financial Stability Oversight Council, 2018 Annual Report, 7, 107.

9. Aaron Smith and Janna Anderson, “AI, Robotics, and the Future of Jobs,” Pew Research Center, Internet and Technology, August 6, 2014,

10. James Manyika et al., “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation,” executive summary, McKinsey & Company, December 2017, 11, exhibit E6,

11. McKinsey & Company, “Economic Conditions Snapshot, June 2019: McKinsey Global Survey Results,” June 2019,

12. Quentin Fottrell, “Coronavirus Infections Just Surpassed the Total Number of Cases during the 2002–2003 SARS Epidemic,” MarketWatch, January 31, 2020,

13. Details of these publications are as follows: Ray Dalio, “Why and How Capitalism Needs to Be Reformed,” Economic Principles, April 5, 2019,; Joseph E. Stiglitz, People, Power, and Profits: Progressive Capitalism for an Age of Discontent (New York: W. W. Norton & Company, 2019); Paul Collier, The Future of Capitalism: Facing the New Anxieties (New York: HarperCollins, 2018); Steven Pearlstein, Can American Capitalism Survive? Why Greed Is Not Good, Opportunity Is Not Equal, and Fairness Won’t Make Us Poor (New York: St. Martin’s Press, 2018); Martin Wolf, “The Crisis of Democratic Capitalism,” podcast, Financial Times, June 12, 2018,; Peter Georgescu, with David Dorsey, Capitalists, Arise!: End Economic Inequality, Grow the Middle Class, Heal the Nation (Oakland, CA: Berrett-Koehler Publishers, 2017); Robert B. Reich, Saving Capitalism: For the Many, Not the Few (New York: Alfred A. Knopf, 2015).

Chapter 1

1. Howard Stevenson, “Who Are the Self-Employed?” monograph, Harvard Business School, Boston, January 1983.

2. Robert Kagan, Dangerous Nation: America’s Place in the World, from Its Earliest Days to the Dawn of the 20th Century (New York: Alfred A. Knopf, 2006).

3. This case is based on Nancy Barry, founder of Enterprise Solutions to Poverty, “Agribusiness and Distribution Systems in China and India,” presentation at HBS-ICC (Harvard Business School and International Chamber of Commerce) Workshop on The Future of the Market System, Harvard Business School, Boston, October 9–10, 2009; and press accounts of ITC and e-Choupal. See also “ITC,” a case study prepared under the supervision of Nancy Barry by MBA interns Sandeep Mukherjee, Vikash Patwari, Tarakeshwar Dhurjati, Ed Al-Hussainy, Dhyanesh Shah, and Katie Leonberger, 2008.

Chapter 2

1. As of January 2011, the Organisation for Economic Co-operation and Development (OECD) comprised thirty-four countries, including the United States, Canada, Mexico, and Chile, the countries of Western Europe, Iceland, Israel, Turkey, Japan, Korea, Australia, and New Zealand.

2. For average growth in annual per-capita incomes for developing countries from the 1960s through 2006, see Andrew Burns et al., Global Economic Prospects 2008: Technology Diffusion in the Developing World (Washington, DC: The World Bank, 2008), 134, fig. 3.14.

3. Derived from the World Bank, World Development Indicators, Calculations based on 123 countries with data on real U.S. dollar GDP for both 1975 and 2002.

4. Richard Newfarmer et al., Global Economic Prospects 2007: Managing the Next Wave of Globalization (Washington, DC: The World Bank, 2007), 29.

5. Andrew Burns et al., Global Economic Prospects 2009: Commodities at the Crossroads (Washington, DC: The World Bank, 2009), 46.

6. Ibid., ch. 1, esp. pp. 46–47.

7. Newfarmer et al., Global Economic Prospects 2007, 57, fig. 2.15.

8. Ibid., 30.

9. Ibid., xiii.

10. Ibid., xiii, fig. 2.

11. Statistics Bureau, Japan, “Population,” in The Statistical Handbook of Japan 2010 (Japan: Statistics Bureau, Ministry of Internal Affairs and Communications, 2001), ch. 2, pp. 10–12,

12. Newfarmer et al., Global Economic Prospects 2007, 45–46.

13. The Gini coefficient is a measure of the inequality in a distribution, with a value of zero representing total equality and a value of 1, maximal inequality. Commonly used as a measure of inequality in the distribution of wealth or income in a country, the Gini coefficients for income distributions in countries that have been assessed range from approximately 0.25 (Sweden) to 0.74 (Namibia). For data, see the United Nations Development Programme, Human Development Report 2010, 20th Anniversary Edition: The Real Wealth of Nations; Pathways to Human Development (New York: Palgrave Macmillan, 2010), 153–154.

14. Noel Maurer, The Power and the Money (Palo Alto, CA: Stanford University Press, 2002), 10–11 and 195–199; Stephen Haber et al., Mexico Since 1980 (New York: Cambridge University Press, 2008), 8–19; Noel Maurer and Stephen Haber, “Related Lending and Economic Performance: Evidence from Mexico,” Journal of Economic History 67, no. 3 (September 2007): 551–581.

15. Sari Pekkala Kerr and William R. Kerr, “Economic Impacts of Immigration: A Survey,” working paper 09-13, Harvard Business School, Boston, August 15, 2009, abstract available at

16. Some of the IPCC’s work has been the subject of international controversy. An independent study and report issued in August 2010 called for reforms in the IPCC’s governance but did not challenge its main findings. Jeffrey Ball, “Climate Panel Faces Heat,” Wall Street Journal, August 31, 2010, p. A1. See also InterAcademy Council, Committee to Review the Intergovernmental Panel on Climate Change, Climate Change Report: Review of the Processes and Procedures of the IPCC (The Netherlands: 2010).

17. Denver Water, Solutions: Saving Water for the Future (Denver: Denver Water, 2010), 32,; Sharlene Garcia, “CFBF Conducts Water Shortage Impact Survey,” California Farm Bureau Federation Ag Alert, June 18, 2008,

18. Burns et al., Global Economic Prospects 2009.

19. Newfarmer et al., Global Economic Prospects 2007, 55.

20. National Intelligence Council, Global Scenarios to 2025 (2008),

Chapter 3

1. “AIG Unit, Goldman Unwind CDS Positions: Source,” Reuters, April 12, 2010,

2. Henny Sender, “Fed Makes ‘a Killing’ on AIG Contracts,” Financial Times, January 20, 2010,

3. Burns et al., Global Economic Prospects 2009.

4. Ibid.

5. Marshall Goldman, Petrostate: Putin, Power, and the New Russia (Oxford: Oxford University Press, 2008).

6. In addition to overfishing and plastic pollution, parts of the Mediterranean Sea and one hundred square miles of gulf waters lying beyond New Orleans so lack oxygen that they are considered dead. The North Pacific Gyre, a known current convergence zone, has been found to have floating marine debris items whose density is reaching a million items per square kilometer.

7. Søren Jensen, “On the Road to Copenhagen: Telling Denmark’s Story,” presentation given at meeting of the Environmental and Energy Study Institute and the Embassy of Denmark, Washington, DC, November 24, 2009,

8. Romano Prodi, interview by author (JLB), Bologna, May 2010; Rachel Donadio, “Young, Smart, and Fearing for the Future,” New York Times, January 2, 2011.

9. This observation has been variously attributed to people as disparate as Mark Twain, Niels Bohr, Casey Stengel, and Yogi Berra.

10. Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (New York: Random House, 2007).

Chapter 4

1. The role of the Financial Accounting Standards Board (FASB) may shift somewhat if the United States decides to adopt International Financial Reporting Standards (IFRS). The U.S. Securities and Exchange Commission (SEC) staff has laid out a work plan for considering incorporation of IFRS into the financial reporting system for U.S. companies, and the Commission is expected to make some determination about the U.S. stance in 2011. Since 2002, FASB and the London-based International Accounting Standards Board (IASB) have been engaged in a process aimed at converging U.S. Generally Accepted Accounting Principles (GAAP) with IFRS.

Chapter 5

1. The Center for Responsive Politics, “Lobbying Database,”, 2010,

2. The Center for Public Integrity, “State Lobbying Totals, 2004–2006,” December 21, 2007,

3. Xavier Sala-i-Martin, Klaus Schwab, ed., The Global Competitiveness Report,2010–2011 (Geneva, Switzerland: World Economic Forum, 2010), Executive Opinion Survey, Data Table 1.04, Public Trust of Politicians. (Other editions of this annual publication, back to 2002, also show similar distrust of politicians. The report for 2010– 2011 covered 139 countries.)

4. Gallup, “Confidence in Institutions,” July 8–11, 2010,

5. World Economic Forum, “Trust Will Be the Challenge of 2003,” press release, Geneva, Switzerland, November 8, 2002, discusses the Voice of the People Survey results.

6. Edelman, “2010 Edelman Trust Barometer Executive Summary,” 2010, 8, figs. 12 and 13,

Chapter 6

1. Unless otherwise noted, sources for this section include Steve Fludder, “Ecomagination,” presentation at the HBS ICC Workshop on The Future of the Market System, Boston, October 9–10, 2009; Herman B. “Dutch” Leonard, “GE’s Ecomagination: Interview with Jeffrey Immelt,” Harvard Business School, classroom video, April 2, 2006; and various GE publications.

2. Kathryn Kranhold, “Greener Pastures: GE’s Environment Push Hits Business Realities,” Wall Street Journal, September 14, 2007, A1.

3. Ibid.

4. Leonard, “GE’s Ecomagination.”

5. “Green Is Green at General Electric: Is Jeff Immelt the Man to Pull ‘Ecomagination’ Off?” Strategic Direction 22, no. 9 (2006): 21–23.

6. Unless otherwise indicated, sources for this section include the following: Yong Tao, “Mobile Services and Microfinance at the Base of the Chinese Pyramid,” presentation at the HBS ICC Workshop on The Future of the Market System, Harvard Business School, Boston, October 9–10, 2009, and subsequent personal communications; William C. Kirby, F. Warren McFarlan, G. A. Donovan, Tracy Yuen Manty, “China Mobile’s Rural Communications Strategy,” Case 9-309-034 (Boston: Harvard Business School, 2009); “China Mobile,” draft case study prepared for Enterprise Solutions to Poverty, Nancy Barry, founder, by MBA interns Thomas Miklavec, Jieun Choi, Rohan Menon, Greg Snyders, Andres Martin Buldu, and Katie Leonberger, 2008, and various China Mobile publications, analyst reports, and press accounts.

7. China Mobile was the successor to China Telecom (Hong Kong) Limited, which had been spun off from the state-owned China Telecom in 1997 and listed on the New York and Hong Kong Stock Exchanges. Through a series of industry restructurings and name changes, China Telecom (Hong Kong) Limited became China Mobile (Hong Kong) Limited and eventually, in 2006, simply China Mobile Limited. See M. L. Cohen, “China Mobile Ltd.,” in International Directory of Company Histories, ed. Jay P. Pederson (Detroit: St. James Press, 2010), 108, 156–159.

8. Number of rural customers is authors’ estimate derived from data published by China Mobile.

9. Quoted in Kirby et al., “China Mobile’s Rural Communications Strategy,” 11.

10. Unless otherwise noted, this account is drawn from Rohit Deshpandé, “Cipla,” Case 9-503-085 (Boston: Harvard Business School, 2006).

11. Yusuf Hamied, interview by Rohit Deshpandé, August 2005, cited in Zoë Chance and Rohit Deshpandé, “Putting Patients First: Social Marketing Strategies for Treating HIV in Developing Nations,” Journal of Macromarketing 29, no. 3 (September 2009): 227.

12. First Call India Equity Advisors, Cipla Limited, analyst report, April 27, 2009, 4.

13. Compulsory licensing in this context refers to the permissible manufacture of patented products without prior approval from the patent holder, upon payment of an appropriate fee. Parallel imports refers to the legal importation of goods—here, pharmaceuticals—from countries where they are sold at a lower cost.

14. Espicom Business Intelligence, “Generic Companies Analysis: Cipla, Quarter I, 2009” (Chichester, West Sussex, UK: Espicom), 9.

15. Edelweiss Securities Limited, Cipla, analyst report, August 10, 2009, 5.

16. First Call India Equity Advisors, Cipla Limited, January 29, 2010, 1.

17. Unless otherwise indicated, material in this paragraph is based on Chance and Deshpandé, “Putting Patients First,” 222–225 and 227–228.

18. For other companies’ approach to the intellectual-property question, see, for example, Lynn S. Paine, “Pfizer: Global Protection of Intellectual Property,” Case 9-392-073 (Boston: Harvard Business School, 1995).

19. Chance and Deshpandé, “Putting Patients First,” 223.

20. World Health Organization (WHO), Joint United Nations Programme on HIV/AIDS (UNAIDS), and United Nations Children’s Fund (UNICEF), Towards Universal Access: Scaling Up Priority HIV/AIDS Interventions in the Health Sector: Progress Report 2010 (Geneva: World Health Organization, 2010), 53,

21. Simon Dixon, Scott McDonald, and Jennifer Roberts, “AIDS and Economic Growth in Africa: A Panel Data Analysis,” Journal of International Development 13, no. 4 (May 2001): 411, cited in Chance and Deshpandé, “Putting Patients First,” 222.

22. Edelweiss Securities Limited, Cipla, analyst report, May 7, 2010, 3.

23. Estimate from World Health Organization (WHO), Joint United Nations Programme on HIV/AIDS (UNAIDS), and United Nations Children’s Fund (UNICEF), Towards Universal Access, 5, 54.

24. Unless otherwise indicated, this account is based on Sandra J. Sucher, Daniela Beyersdorfer, and Ane Damgaard Jensen, “Generation Investment Management,” Case 9-609-057 (Boston: Harvard Business School, 2009); and on conversations with David Blood.

25. See, for example, Elizabeth Pfeuti, “Blood & Gore Reaps Four-Fold Rise in Profits,” Financial News, September 22, 2010.

26. See, for example, Forest Reinhardt, Down to Earth: Applying Business Principles to Environmental Management (Boston: Harvard Business School Press, 2000); Daniel Esty and Andrew Winston, Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage (New Haven, CT: Yale University Press, 2006); Stuart L. Hart, Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World’s Most Difficult Problems (Upper Saddle River, NJ: Wharton School Publishing, 2005); and C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Upper Saddle River, NJ: Wharton School Publishing, 2005).

27. Founded by Nancy Barry, a former World Bank executive and a participant in our U.S. forum in New York.

28. See, for example, Eric Wesoff, “Huge 2010 Finish for Greentech Venture Capital,” Greentech Media, January 3, 2011,

29. Howard H. Stevenson, “A Perspective on Entrepreneurship,” ch. 1 in Michael J. Roberts, Howard H. Stevenson, William A. Sahlman, Paul Marshall, and Richard G. Hamermesh, New Business Ventures and the Entrepreneur, 6th ed. (New York: McGraw-Hill/Irwin, 2006), 3–15.

30. Chester I. Barnard, The Functions of the Executive: Thirtieth Anniversary Edition (Cambridge, MA: Harvard University Press, 1968).

31. Some scholars would call the leaders in these cases institutional entrepreneurs because their innovations extend beyond the boundaries of a single company and involve a shift in basic beliefs and assumptions. Change that involves such shifts is also called divergent change. On institutional entrepreneurship and divergent change, see, for example, Julie Battilana, Bernard Leca, and Eva Boxenbaum, “How Actors Change Institutions: Towards a Theory of Institutional Entrepreneurship,” Academy of Management Annals 3, no. 1 (2009): 65–107.

32. Alexis de Tocqueville, Democracy in America, ed. J. P. Mayer and Max Lerner, trans. George Lawrence (New York: Harper & Row, 1966), 498. See especially ch. 8, “How the Americans Combat Individualism by the Doctrine of Self-Interest Properly Understood,” 497–499.

33. Ibid., 499.

34. See, for example, Edward J. Balleisen, “Policing the Bounds of Commerce: Prospects for a History of Commercial Fraud in America,” presentation to Business, Government, and the International Economy Unit, Harvard Business School, Boston, January 2003.

35. Barbara Tuchman, The March of Folly: From Troy to Vietnam (New York: Alfred A. Knopf, 1984).

36. Ibid., 126.

Chapter 7

1. An equilibrium, in this sense, consists of an arrangement where workers provide a given amount of labor, owners of capital provide a given amount of equipment and other productive assets, and a set of goods is produced and consumed, where neither individual firms nor consumers can improve their well-being by changing what they supply, purchase, or consume.

2. For example, an argument in this general form was advanced to justify the North American Free Trade Agreement (NAFTA), among many other applications; we will return to this example later.

3. Tyson Slocum, “Blind Faith: How Deregulation and Enron’s Influence over Government Looted Billions from Americans,” Public Citizen, December 2001, See also Stephen Labaton, “Enron’s Collapse: Regulation,” New York Times, January 24, 2002; Michael H. Granof and Stephen A. Zeff, “Unaccountable in Washington,” New York Times, January 23, 2002.

4. David Barstow et al., “Regulators Failed to Address Risks in Oil Rig Fail-Safe Device,” New York Times, June 20, 2010.

5. Unless otherwise indicated, this section is based on the following sources: Karl Schriftgiesser, Business Comes of Age: The Story of the Committee for Economic Development and Its Impact on the Economic Policies of the United States, 1942–1960 (New York: Harper & Brothers, 1960); Sidney Hyman, The Lives of William Benton (Chicago: University of Chicago Press, 1969); and press accounts provided by CED.

6. Schriftgiesser, Business Comes of Age, 14.

7. Ibid., 26; see also Hyman, The Lives of William Benton, 265.

8. William Benton to Paul G. Hoffman, November 1943, quoted in Hyman, The Lives of William Benton, 290.

9. Hyman, The Lives of William Benton, 270.

10. Bylaws as they appear in ibid.

11. “CED Will Continue Economic Studies,” New York Times, May 24, 1948.

12. “The Economy: The Patient Feels Fine,” Time, January 21, 1946.

13. See, for example, Schriftgiesser, Business Comes of Age, 57. See also Robert M. Collins, “Positive Business Responses to the New Deal: The Roots of the Committee for Economic Development 1933–1942,” Business History Review 52,no. 3 (autumn 1978).

14. Russell Porter, “Program Outlined by Hoffman Group,” New York Times, January 13, 1947.

15. See, for example, two recent statements by the Committee for Economic Development, Research and Policy Committee, Washington, DC: “Quality, Affordable Health Care for All: Moving Beyond the Employer-Based Health-Insurance System” (2007) and “Rebuilding Corporate Leadership: How Directors Can Link Long-Term Performance with Public Goals” (2009).

16. For an excellent summary of this decline and the subsequent turnaround, see James E. Austin, “Business Leadership Lessons from the Cleveland Turnaround,” California Management Review 41, no. 1 (fall 1998): 86–106. The discussion in this section draws heavily from this article and the associated set of teaching cases published by Harvard Business School Publishing.

17. This account is drawn from Benjamin W. Heineman Jr., interview by author (LSP), Boston, June 9, 2010; Benjamin W. Heineman Jr. and Fritz Heimann, “Arrested Development,” National Interest (November–December 2007); and Benjamin W. Heineman Jr. and Fritz Heimann, “Focus on ‘Controlling the Climate’ Reducing Corruption Worldwide: Fritz Heimann,” Metropolitan Corporate Counsel (March 1996).

18. U.S. Climate Action Partnership, “A Call for Action: Consensus Principles and Recommendations from the U.S. Climate Action Partnership, a Business and NGO Partnership,” January 2007,

19. Angie Drobnic Holan and Lukas Pleva, “Cap and Trade Legislation Stalls in the Senate,”, July 26, 2010,

Chapter 8

1. Cited by J. D. Bernal, “The Place of Speculation in Modern Technology and Science,” in I. J. Good, The Scientist Speculates: An Anthology of Partly-Baked Ideas (New York: Basic Books, 1962), 15.

2. U.S. Senate, Industrial Relations: Final Report and Testimony Submitted to Congress by the Commission on Industrial Relations Created by the Act of August 23, 1912, vol. 8 (Washington, DC: Government Printing Office, 1916), 7,660.

3. China Mobile’s efforts in rural China, for example, are enabled by IBM products and services.

4. Joseph L. Bower, “Cooperation for Competition: U.S. and Japan,” Case 9-386-181 (Boston: Harvard Business School, 1986).

5. Discussed in Ray A. Goldberg and Jessica Droste Yagan, “McDonald’s Corporation: Managing a Sustainable Supply Chain,” Case 9-907-414 (Boston: Harvard Business School, 2007), 4.

6. Ibid.

7. Elliott Fisher et al., “Health Care Spending, Quality and Outcomes: More Isn’t Always Better,” Dartmouth Atlas Project Topic Brief, February 2009,

8. This is a theme pursued by, among others, Donald L. Berwick, former CEO of the Institute for Healthcare Improvement based in Cambridge, Massachusetts, and since July 2010, the administrator of the U.S. Federal Centers for Medicare and Medicaid Services.

9. An exception is the Committee for Economic Development, which has examined health care most recently in Committee for Economic Development, Research and Policy Committee, “Quality, Affordable Health Care for All: Moving Beyond the Employer-Based Health-Insurance System,” statement, Washington, DC, 2007.

10. Donald M. Berwick, Thomas W. Nolan, and John Whittington, “The Triple Aim: Care, Health, and Cost,” Health Affairs 27, no. 3 (2008): 759–769, abstract at, citing J. M. McGinnis and W. H. Foege, “Actual Causes of Death in the United States,” Journal of the American Medical Association 270, no. 18 (1993): 2207–2212; and A. H. Mokdad et al., “Actual Causes of Death in the United States, 2000,” Journal of the American Medical Association 291, no. 10 (2004): 1238–1245.

11. The existing industry mutual-insurance organization, Oil Casualty Insurance, Limited (OCIL), based in Bermuda, seems to be headed in the right direction but does not currently have the necessary scale to play this role definitively. It operates as an excess liability reinsurer; the companies it reinsures must self-insure or seek other insurance for the first $25 million of any liability claim, and OCIL then insures them against the part of their loss that falls in the range of $25–$100 million. This mechanism may provide a model for a larger effort, but with a maximum policy limit of $100 million, the scale of the current arrangement is modest compared with what we have in mind. Revealingly, BP is not a shareholder, and OCIL’s July 19, 2010, newsletter observes: “OCIL will continue to monitor the impact of the Deepwater Horizon explosion. The Company’s exposure to the event is expected to be minimal” (Oil Casualty Insurance, Ltd., “Deepwater Horizon,” OCIL News, July 19, 2010,

12. Bradley Blackburn, “The Giving Pledge: Billionaires Promise to Donate at Least Half Their Fortunes to Charity,” ABC News, August 4, 2010,

13. This phraseology borrows from Sandra Day O’Connor, who famously made a similar observation about the U.S. Supreme Court’s decision in Roe v. Wade. Akron v. Akron Center for Reproductive Health, Inc., 462 U.S. 416, 458 (1983) (O’Connor, J., dissenting).

Chapter 9

1. “Hidden Debt, Hidden Deficits: The 2019 Update,” Hoover Institution, Stanford University, June 11, 2019,

2. Quote from UN Conference on Trade and Development (UNCTAD), landing page ( for UNCTAD, “Key Statistics and Trends in International Trade 2018,” report 2019,

3. Susan Lund et al., Globalization in Transition: The Future of Trade and Value Chains (McKinsey Global Institute, January 2019), 16,

4. U.S. Energy Information Administration, “International Energy Outlook 2019,”

5. Alicia Adamczyk, “The US Is Home to More Billionaires Than China, Germany and Russia Combined,”, May 19, 2019,

6. Jesse Bricker et al., “Changes in U.S. Family Finances from 2013 to 2016: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin 103, no. 3 (September 2017): 10,

7. UN Department of Economic and Social Affairs, “International Migrants Numbered 272 Million in 2019, Continuing an Upward Trend in All Major World Regions,” Population Facts 2019/4 (September 2019),

8. UN Refugee Agency (UNHCR), Global Trends: Forced Displacement in 2018 (Geneva: UNHCR, 2019),

9. Brian Kennedy and Meg Hefferon, “U.S. Concern about Climate Change Is Rising, but Mainly among Democrats,” Factank, Pew Research Center, August 28, 2019,; Moira Fagan and Christine Huanga, “A Look at How People around the World View Climate Change,” Factank, Pew Research Center, April 18, 2019,

10. Sarah Chayes, Thieves of State: Why Corruption Threatens Global Security (New York: W. W. Norton & Company, 2016).

11. Transparency International, “Corruption in the USA: The Difference a Year Makes,” December 12, 2017,

12. Daniella Cheslow, “U.S. Slips in Annual Global Corruption Rankings,”NPR, January 29, 2019,

13. The World Bank, “World Development Indicators: Literacy Rate, Adult Total (% of People Ages 15 and Above),”

14. Michael Devitt, “CDC Data Show U.S. Life Expectancy Continues to Decline,” American Academy of Family Physicians News, December 10, 2018,

15. The World Bank, “World Development Indicators: GDP, PP (Current International $),”

16. See, for example, Graham Allison, Destined for War: Can America and China Escape Thucydides’s Trap? (Boston: Houghton Mifflin Harcourt, 2017); and William Overholt, China’s Crisis of Success (Cambridge and New York: Cambridge University Press, 2018).

17. World Health Organization, “Emergencies Preparedness, Response: Epidemic Focus,” May 13, 2016,

18. Francesca De Châtel, “The Role of Drought and Climate Change in the Syrian Uprising: Untangling the Triggers of the Revolution,” Middle Eastern Studies 50, no. 4 (July 4, 2014): 521–535, doi:10.1080/00263206.2013.850076.

19. Some accounts cite government policies that encouraged overuse of groundwater reserves. These policies, in turn, increased the vulnerability of the rural population to the effects of drought. See, for example, P. Aguirre, “Drought, Climate Change, and Civil War,” Chicago Policy Review, summarizing “Climate Change in the Fertile Crescent and Implications of the Recent Syrian Drought,” by C. P. Kelley et al., in Proceedings of the National Academy of Sciences 112, no. 11 (2015): 3241–3246.

20. Thomas J. Bollyky, Plagues and the Paradox of Progress (Cambridge, MA: MIT Press, 2018). In addition to the data, our arguments in this section and other data cited are drawn from this book.

21. Bollyky, Plagues and the Paradox.

22. Ibid.

23. Overholt, China’s Crisis of Success.

24. Climate Signals (a project of Climate Nexus), “Storm Surge Increase,”, December 4, 2018. Climate Nexus is a sponsored project of RockefellerPhilanthropy Advisors,

25. U.S. Bureau of Labor Statistics, “Labor Share of Output Has Declined since 1947,” TED: The Economics Daily, March 7, 2017,

26. Willy Shih, “Whatever the Outcome of U.S.-China Trade Talks, Global Supply Chains Are Set to Change,” Forbes, February 19, 2019,

27. Lund et al., Globalization in Transition.

28. Philip R. Lane, “The European Sovereign Debt Crisis,” Journal of Economic Perspectives 26, no. 3 (summer 2012): 49–68.

29. “Free Exchange / Cost Conscious,” Economist, June 22, 2019, 65.

30. Peter J. Wallison and Edward J. Pinto, “A Government-Mandated Housing Bubble,” Forbes, February 16, 2009,

31. Susan Lund et al., “A Decade after the Global Financial Crisis: What Has (and Hasn’t) Changed?,” McKinsey Global Institute Briefing Note, September 2018,

32. Marcin Szczepanski, “A Decade On from the Crisis: Main Responses and Remaining Challenges,” European Parliament Briefing, October 2019,

33. John Cassidy, “Ten Years after the Start of the Great Recession, Middle-Class Incomes Are Only Just Catching Up,” New Yorker, September 13, 2018,

34. Polly Toynbee, “Brexiteers Promised a New Dawn for UK Farming, Not Agricultural Armageddon,” Guardian, August 15, 2019,

35. Kenneth Rogoff, “An Economist Explains What Happens if There’s Another Financial Crisis,” World Economic Forum, April 30, 2019,

36. Philip Bump, “Ted Cruz Gets It Very Wrong on Recent Presidents’ Deportation Numbers,” The Washington Post, December 16, 2015,; Department of Homeland Security, US Immigration and Customs Enforcement, “Fiscal Year 2017 ICE Enforcement and Removal Operations Report,” last updated December 13, 3017,

37. Ricardo showed how comparative advantage would increase the wealth of both England and Portugal when they traded textiles for port wine.

38. Joseph L. Bower, “Liz Claiborne China,” Case 9-301-098 (Boston: Harvard Business School, April 2001).

39. “Supply Chains for Different Industries Are Fragmenting in Different Ways,” Economist, July 11, 2019,

40. Angel Gurría, “Opening Remarks,” given at the 2019 OECD Forum: Launch of the Economic Outlook, Paris, May 21, 2019,

41. Lund et al., Globalization in Transition, 4.

42. These distinctions are imperfect since many major companies are not state owned but have a provincial development corporation as the major shareholder.

43. Megan O’Sullivan, Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power (New York: Simon & Shuster, 2017), 228–229.

44. According to a 2018 Transparency International report, over the past seven years of 180 countries studied, the score of 20 countries improved, 16 worsened, and the remaining 144 made no improvement on corruption. The 2019 Freedom House report, “Freedom in the World 2019,” shows declines in aggregate freedom scores in 68 countries between 2018 and 2019. Transparency International, “Corruption Perceptions Index 2018,” Transparency International, Berlin, 2018, 6,; Freedom House, “Freedom in the World 2019,” Freedom House, Washington, D.C., 6,

45. António Guterres, “Cost of Corruption at Least 5 Per Cent of Global Gross Domestic Product, Secretary-General Says in International Day Message,” United Nations press release, December 5, 2018,

46. William Grimes, “Wiseguys and Fall Guys, Welcome to Globalization,” New York Times, April 11, 2008,

47. The World Bank, “World Development Indicators,”

48. See, for example, the extended discussion of corruption and its impacts in Chayes, Thieves of State.

49. Transparency International, “Corruption Perceptions Index 2018.”

Chapter 10

1. According to Pew Research Center, experts polled in 2014 were about evenly divided on whether automation is likely to displace more jobs than it creates. Aaron Smith and Janna Anderson, “AI, Robotics, and the Future of Jobs,” Pew Research Center, August 6, 2014,

2. Russell Gold, “PG&E: The First Climate-Change Bankruptcy, Probably Not the Last,” Wall Street Journal, January 18, 2019,

3. Several recent polls show that, compared with their seniors, young adults of both parties in the United States have a less favorable view of capitalism and a more favorable view of socialism. See, for example, Pew Research Center, Survey of U.S. adults conducted April 29 to May 13, 2019, as reported in Hannah Hartig, “Stark Partisan Divisions in Americans’ Views of ‘Socialism,’ ‘Capitalism,’ ” Factank, Pew Research Center, June 25, 2019,

4. For a discussion of changes in corporate governance, see Joseph L. Bower and Lynn S. Paine, “The Error at the Heart of Corporate Leadership,” Harvard Business Review, May–June 2017.

5. See “Preface to the Expanded Edition” of this book for a review of some changes in law and policy that have been suggested. In Ray Dalio, “Why and How Capitalism Needs to Be Reformed,” Economic Principles (blog), April 5, 2019,, the hedge fund manager and author speak to the importance of building bipartisan support for any proposed changes in policy.

6. Unless otherwise indicated, this section is based on Joseph L. Bower and Michael Norris, “JPMorgan Chase: Invested in Detroit (A),” Case 9-918-406 (Boston: Harvard Business School, March 2018).

7. U.S. Census Bureau, 2010 Census, data for Detroit city, Michigan, Summary File 1, Tables P5, P8, PCT4, PCT5, PCT8, and PCT 11.; Kate Linebaugh, “Detroit’s Population Crashes,” Wall Street Journal, March 23, 2011,

8. Michigan Department of Technology, Management & Budget, “Employment and Unemployment Statistics for the City of Detroit in July 2010: Local Area Unemployment Statistics (LAUS),”; Shelly Banjo, “New Yorker’s Moves to Boost Michigan’s Economy,” Wall Street Journal, August 6, 2010,; Susan Saulny, “Razing the City to Save the City,” New York Times, June 20, 2010,

9. “Detroit Future City, 2012 Detroit Strategic Framework Plan, Executive Summary,”

10. Bower and Norris, “JPMorgan Chase (A),” 8.

11. CDFI Coalition, “What Are CDFIs?,”

12. Chad Livengood, “State Ends Direct Oversight of Detroit Finances,” Crain’s Detroit Business, April 30, 2018,

13. Peter L. Scher, “Return on Community: A Business Imperative,” JPMorgan Chase & Co., Corporate Responsibility Report, April 2019,

14. This account is based largely on Joseph L. Bower and Michael Norris, “Cummins, Inc.: Building a Home Community for a Global Company,” Case 9-313-024 (Boston: Harvard Business School, March 21, 2014).

15. Cummins executive, interview with author (JLB), June 26, 2012.

16. Data from “Economic Opportunities through Education: Building a Regional Talent and Learning Development System,”

17. Kirk Johannesen, “Cummins Veteran Heads New Team,” Republic (Columbus, IN), September 12, 2016,

18. For Columbus data, see CivicLab, “Collaboration by Design: The Sixty-Year, Overnight Success Story of Columbus, Indiana,” keynote presentation, CivicLab, Columbus, IN, 2017, For average U.S. family income, see U.S. Census Bureau, “Income of Families and Persons in the United States: 1950,” Report P60-09, March 25, 1952,

19. CivicLab, “Collaboration by Design.”

20. Irina Vinnitskaya, “AIA Ranks Columbus, Indiana as US’s 6th Most Architecturally Important City,” ArchDaily, December 4, 2012.

21. CivicLab, “Collaboration by Design,” 13–15, 18.

22. Blair Claflin, “Cummins Makes Big Jump in Two Key Financial Rankings,” press release, Cummins Newsroom, July 19, 2019,

23. Unless otherwise indicated, this section is based largely on Lynn S. Paine, Nien-hê Hsieh, and Lara Adamsons, “Governance and Sustainability at Nike (A),” Case 9-313-146 (Boston: Harvard Business School, June 2013; revised September 2016).

24. Ellen McGirt, “How Nike’s CEO Shook Up the Shoe Industry,” Fast Company, September 1, 2010,

25. Mark Parker, quoted in Paine, Hsieh, and Adamsons, “Governance and Sustainability at Nike (A),” 4.

26. These changes are described more fully in Paine, Hsieh, and Adamsons, “Governance and Sustainability at Nike (A).”

27. “A New Challenge for Nike Chief Sustainability Officer Hannah Jones,” brandchannel, July 3, 2018,

28. Information in this paragraph and the next comes from Noel Kinder, interview with author (Lynn S. Paine), August 2, 2019.

29. Walter Loeb, “Retail Person of the Year: Mark Parker, Nike CEO,” Forbes, January 2, 2018.

30. Andrea Cheng, “Nike, Already World’s Largest Sneaker Maker, Proves It’s Still a Growth Company,” Forbes, December 20, 2018,

31. Calculations are based on share price and index data for the period January 20, 2006, to December 9, 2019, from Capital IQ, Inc., a division of Standard & Poor’s.

32. Unilever, “Unilever Sustainable Living Plan,” November 2010,

33. Unilever, “Unilever Sustainable Living Plan Progress Report 2011,” See also Christopher A. Bartlett, “Unilever’s New Global Strategy: Competing through Sustainability,” Case 9-916-414 (Boston: Harvard Business School, August 24, 2016), 3.

34. Andrew Saunders, “The MT Interview: Paul Polman,” Management Today, March 1, 2011.

35. Julia Finch, “Unilever Unveils Ambitious Long Term Sustainability Programme,” Guardian (London), November 14, 2010,

36. Adi Ignatius, “Captain Planet: An Interview with Unilever CEO Paul Polman,” Harvard Business Review, June 2012.

37. Bartlett, “Unilever’s New Global Strategy.”

38. Thomson Reuters StreetEvents, “Final Transcript, UL-Q4 & Full Year 2008 Unilever PLC Earnings Conference Call,” February 5, 2009, 11.

39. Michelle Russell, “Unilever ‘Green’ Plan Needs to Attract the ‘Right’ Investors,” Just-Food, November 15, 2010.

40. Jennifer Reil and Roger Martin, “How Unilever Won Over Shareholders with Its Long-Term Approach,” Globe and Mail, October 13, 2017,

41. Material in this paragraph is based on Bartlett, “Unilever’s New Global Strategy.”

42. Unilever, “Sustainable Living Plan Progress Report,” 2011, 40.

43. Unilever, “Mobilising Collective Action, Unilever Sustainable Living Plan, Summary of Progress 2015,” 8–9,

44. “Unilever’s Sustainable Living Plan Continues to Fuel Growth,” press release, Unilever, October 10, 2018,

45. CDP (formerly Carbon Disclosure Project) categorized Kraft Heinz as a laggard in climate-change readiness: “Top FMCGs in Race to Keep Up with Conscious Consumers,” February 25, 2019,

46. Nicholas Megaw, “Unilever ‘Sees No Merit’ in Kraft Heinz Offer,” Financial Times, February 17, 2017,

47. “The Parable of St. Paul,” Economist, August 31, 2017,

48. “Accelerating Sustainable Shareholder Value Creation,” press release, Unilever, April 6, 2017,

49. In chapter 11, we discuss the importance of engaging with shareholders about initiatives like Unilever’s and others discussed in this chapter.

50. “Unilever CEO Announcement: Paul Polman to Retire; Alan Jope Appointed as Successor,” press release, Unilever, London/Rotterdam, November 11, 2018, Total shareholder return calculation for Unilever’s peer group is based on financial and share price data as converted to U.S. dollars at spot price as of August 20, 2019, where applicable, from Capital IQ, Inc., a division of Standard & Poor’s.

51. According to an Oxfam study covering the period 2013 to 2016, Unilever moved into first place among its peers on Oxfam’s sustainability metrics in 2016: Oxfam, “The Journey to Sustainable Food,” Oxfam briefing paper, April 19, 2016, CDP (formerly Carbon Disclosure Project) puts Unilever among the leaders in climate-change readiness: “Top FMCGs in Race to Keep Up with Conscious Consumers,” CDP, February 25, 2019, Unilever ranked second in Access to Nutrition Foundation, Global Access to Nutrition Index 2018 (October 31, 2018), Even skeptics acknowledged that Unilever’s record, though far from perfect, compared favorably with that of its peers. See Daphné Dupont-Nivet, “Inside Unilever’s Sustainability Myth,” New Internationalist, April 13, 2017,

52. Lucy Tesseras, “Unilever CEO says Keith Weed’s Replacement Will Be a ‘CMO++,’” MarketingWeek, June 19, 2019,

Chapter 11

1. William Bradford, History of Plymouth Plantation, 1620–1647 (Boston: Massachusetts Historical Society, 1912), 1:299–303, manuscript pages 96–97.

2. Damien Cave, “The World Burns All Year: Are There Enough Planes to Douse the Flames?” New York Times, November 23, 2019 (print edition), A4,

3. Quoted in Joseph L. Bower and Michael Norris, “JPMorgan Chase: Invested in Detroit (A),” Case 9-918-406 (Boston: Harvard Business School, March 15, 2018), 8.

4. Joseph L. Bower and Lynn S. Paine, “The Error at the Heart of Corporate Leadership,” Harvard Business Review, May–June 2017.

5. Bower and Norris, “JPMorgan Chase,” 1.

6. Global Sustainable Investment Alliance, “2018 Global Sustainable Investment Review,” 2018, 8, figure 2, (In Japan, assets managed under a sustainability mandate grew from JPY 840 billion in 2014 to JPY 231,952 billion in 2018.)

7. UN Principles for Responsible Investment Association, “About the PRI,” Signatory Growth chart,

8. See Government Pension Investment Fund, “Policy to Fulfill Stewardship Responsibilities,” revised November 18, 2019,; see also Siobhan Riding, “World’s Biggest Pension Fund Steps Up Passive Stewardship Efforts,” Financial Times, September 15, 2019,

9. Climate Action 100+, “Global Investors Driving Business Transition,” See also Climate Action 100+, “2019 Progress Report,” September 2019,

10. Financial Reporting Council, UK Corporate Governance Code, July 2018,, 4. See also Big Innovation Centre, The Purposeful Company Policy Report (London: Big Innovation Centre, February 2017),; and Big Innovation Centre, The Purposeful Company Interim Report (London: Big Innovation Centre, May 2016),; David Kershaw and Edmund Schuster, “The Purposive Transformation of Company Law,” working paper 4/2019, London School of Economics, Law, Society, and Economy, available for download at the Social Sciences Research Network library,

11. The Pacte Law is described in English at “PACTE: The Action Plan for Business Growth and Transformation,” French government website, See also Margaux Renard, “The French ‘PACTE’ Law: Growing Space for Social and Environmental Topics in Corporate Management of French Companies,” Hogan Lovells Focus on Regulation, June 6, 2019,

12. Larry Fink, “Purpose and Profit,” 2019 letter to CEOs, January 2019,

13. Larry Fink, “A Fundamental Reshaping of Finance,” 2020 letter to CEOs, January 2020,

14. UN Department of Economic and Social Affairs, “Global Investors for Sustainable Development Alliance,” See also Andrew Edgecliffe-Johnson, “Global Business Chiefs Pledge to Boost Sustainable Development,” Financial Times, October 16, 2019.

15. Business Roundtable, “Statement on the Purpose of a Corporation,” A pdf of the statement, last updated September 6, 2019, is available at See also Business Roundtable, “Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans,’ ” press release, August 19, 2019,

16. For the 1973 Manifesto, see Klaus Schwab, “Davos Manifesto 1973: A Code of Ethics for Business Leaders,” World Economic Forum, December 2, 2019,

17. For the 2020 Manifesto, see Klaus Schwab, “Davos Manifesto 2020: The Universal Purpose of a Company in the Fourth Industrial Revolution,” World Economic Forum, December 2, 2019,