What we want from Capitalism
Capitalism is the main tool we have to tackle the world's vast, global scale problems: climate change, economic inequality, hunger, devastated oceans. Can it do the job?
Certainly, if the word "capitalism" is, must be, taken to mean a fully laissez-faire, 'Greed is good' mode, we're in trouble and must find other tools.
So, I'm going to assert that capitalism comes in different flavours, and that in these flavours are perhaps the specific ingredients we need to find ways to optimize capitalism for the monster challenges ahead of us.
There are robust alternatives to current, US-style laissez-faire, ‘neoliberal’ capitalism. Indeed, at present, it seems that these alternatives can deliver outcomes no less robust in the long term (and perhaps, if China’s recent strides are to be believed - I’m not 100% convinced) even in fast-growth, tech-sector innovation. These alternatives may house the most robust approaches for dealing with social and environmental externalities - and frame also a way to deal with US laissez-faire capitalism: creating a library of plausible cases, in which capital corporations can achieve a balance of market-rate financial outcomes and beneficial missions.
One might even go further, and assert that the growth of mission-focused, capital corporations is essential for the next decades of the economy, society and the environment.
We don't have to accept the laissez faire model as inevitable. History assures us this: not even US capitalism of a few more decades ago, as exemplified by Ford: Henry Ford, no milquetoast shrinking violet, paid his workers FAR MORE than minimum wages. Many companies took similar tacks.
And there's German-style, in which each large corporation has a supervisory board that includes the interests of other stakeholders: the State (e.g. Bavaria); the workers; the customers, etc.
Tech / AI specific and general challenges
The general challenges are well known - that some classes of jobs will be eradicated (or, often, devalued) by AI. Examples: medical diagnoses will go from the work of specialist doctors to AI-led processes where specialist doctors are in a supporting roles.
A specific other concern is this: insofar as AI benefits from network effects (the quality of AI requires exposure to lots of data, which requires a strong AI position, … and thus leadership perpetuates leadership, as has occurred for social media and search), we face also the prospect of creating powerful monopsonies around AI platforms. (So, perhaps not literally a single player being able to control AI for - e.g. medical diagnoses - but a dominant platform with best outcomes for its employees and partners and suboptimal outcomes for others).
The general outcome is similar to that of other technical disruptions from the time of mechanical looms forward: jobs will be lost, and not just for Luddites, but for all. Policies have to deal with broad-scale loss of jobs and broad-scale creation of new opportunities and broad-scale recognition that, at least for as long as the transition takes, not having a great job may just be a fact for millions (hundreds of millions worldwide), not a moral failing. (A coal miner losing his job in Appalachia cannot be greatly faulted for the rise of solar power.)
The specific outcome is that AI’s major developers, the platform leaders, will have market powers that will not have useful analogies in the makers of looms, for example. The emergence of powerful new technologies will likely exacerbate economic inequality.
The role of companies
I’m going to align (mostly) with the idea that free market capitalism is what’s available. But not completely. In the USA of perhaps 20 years ago, US-defined capitalism was very nearly the only thing on the menu. But in 2018, we also get the distinct and powerful models of capitalism as it is practiced in Germany and China (and other places beside). In these countries (and some others) the idea of a large company being able to shirk social responsibilities by shrugging and saying that their only responsibility is to shareholders/ the bottom line / the next quarters’ results, etc., borders on absurd. For Germany and China (etc.) the capital enterprise works in quite tight coordination with government to achieve a combined outcome of financial and social (and other) benefits.
For the Chinese corporation: the CCP (the Chinese Communist Party) has a management team inside and alongside the enterprise’s management, at all (nearly all?) levels. Additionally, the CEO answers to the CCP as well as to the board of directors, etc. On the desk of the CEO of any large Chinese corporation is a special red phone; when it rings, the CEO must answer - it’s Beijing calling, with its explicit instructions. Of course, Beijing tries to muster its economy in line with the dictates of a five-year plan - but the plan encompasses social as well as economic objectives. The red phones are a visible part of the machinery for doing this.
For the large German corporation: the state also has a formal role, but expressed with a lighter hand than that of the CCP for the Chinese corporation. Each large German firm has a dual board structure in which the supervisory board (Aufsichtsrat) includes representation of other stakeholders: the state (e.g. Bavaria), employees, financial and social institutions.
I believe Japan’s large Keiretsus had similar (but perhaps informal), smoke-filled-room levels of coordination between big companies and government to achieve non-financial goals.
Canada's democratic-socialist ethos achieves similar outcomes with - it seems - considerable informality. At a dinner with Canadian oilmen, one of them bragged about being ruthless, and crass (by Canuck standards), but that, for them, being Canadian meant that "I am my brother's keeper".
Even within the US, there are other major variants on the capital corporation.
The family- or founder-controlled corporation: Google, but also Ford and Corning (and, of course, private corporations). Each of these retain voting control within a small group of founding investors and their trusts, with the consequence that the firms can hew to a long-term view and largely ignore the pressure of quarterly results and tactically-focused short-term investors.
Somewhat new! The benefit corporation - this is really just a standard, for-profit corporation with a charter: the existence of the charter is both a beneficial mission for the firm and a defense against investors looking to move the firm away from the mission. Yes, many are small, but also there are some large ones: Danone’s US business is one (annual revenues over $6B, over 6,000 employees); others are Method (soaps), Kickstarter, Patagonia, Etsy (which had a 2017 IPO as a public benefit corporation).
The moral is: surely we'd do better to push capital structures toward all those forms which reward social and environmental good, rather than either accepting neoliberal capital or giving up altogether.