Rebecca Henderson: Reimagining Capitalism in a World on Fire

Rebecca Henderson is the John and Natty McArthur University Professor at Harvard, where she specializes in innovation and organizational change. Her newest book "Reimagining Capitalism in a World on Fire" examines how capitalism might be reworked so as to strive for a greener, more equitable future. "Reimagining Capitalism" was named to the shortlist of the Financial Times and McKinsey Business Book of the Year Award, and has received high praise from both academia and industry. Many scholars have argued that capitalism is at a crossroads, as the climate crisis and soaring inequality pose problems that the free market has proven to be incapable of solving. Professor Henderson points to Milton Friedman and the Chicago school of economics as the origin of these issues. As businesspeople adopted shareholder value maximization as their primary goal, and proponents of free market capitalism attacked government and regulation, capitalism spiralled out of control. How can businesses balance social responsibility and profitability? What changes need to be made to our current form of capitalism? And can the system truly be reformed? These are the questions that led Professor Henderson to write Reimagining Capitalism. In this interview, we explore these questions and more, diving into Professor Henderson’s insights as well as the research that informed her conclusions. We begin with Professor Henderson’s vision of “purpose-driven capitalism,” in which businesses place profit maximization on equal footing with serving society. How feasible is such an idea? Are there any real-world examples of businesses embracing this philosophy? Professor Henderson argues that, in many cases, the interests of business align with the interests of society. One of Professor Henderson’s key insights is that business and strong political institutions are complements – not adversaries. In opposition to the classical view of government as detrimental to economic efficiency, Professor Henderson argues that businesses benefit from capable government and regulation. What does this mean for tech giants like Facebook and Google? We discuss potential antitrust activity against these companies, and how it might be carried out in a responsible manner. Finally, we place Professor Henderson’s research alongside other recent books about capitalism: Thomas Piketty’s "Capital in the Twenty-First Century", Branko Milanovic’s "Capitalism, Alone", Nicholas Lemann’s "Transaction Man", Katharina Pistor’s "The Code of Capital", Glen Weyl on "Radical Markets"… How does "Reimagining Capitalism" differ in its approach to reforming capitalism? What makes Professor Henderson’s insights unique from that from academic economists?