The Battle for the Soul of Capitalism

Decline and Fall

U.S. business has achieved remarkable results and reshaped the world. But during the last part of the 20th century, its values have deteriorated, derailed by materialism and greed. Although the federal and state governments once focused idealistically on solving social, educational and resource allocation problems, selfishly motivated campaign contributions have redirected the political system. In the business sector, excessive compensation and unbridled activities by investment bankers, financiers and corporate managers helped produce the stock market bubble of 1998 to 2000, which inflated and then evaporated half the wealth created in the stock market during that period.

Today, the stock market is entertainment, not a long-term investment vehicle. Excessive TV coverage and the rabid pursuit of financial information, much of it meaningless, drive investors to pursue day trading and short-term profits. At the corporate level, managers are running their companies for their own benefit rather than that of their shareholders, even though the shareholders assume most of the risk by investing their cash.

In “owners’ capitalism,” managers operate companies...