The Future of Capitalism

Three expert interviews are interwoven to discuss the human spirit, unbounded potential, and the future of capitalism.

What does the future of capitalism in America look like? To understand where we’re headed, one has to understand the past. Socioeconomic experts Glenn Hubbard, Dean of Columbia Business School, John Hope Bryant, founder of Operation Hope and Seema Hingorani, founder of Seven Step Capital and Girls Who Invest, offer their unique perspectives on historical and contemporary capitalism; and shed light on how diversity and inclusivity can help to foster a sustainable and expansive economy.  The future is bright and we all play a part as consumers, innovators, investors and participants in the free market economy…This is Capitalism.

Here is a transcript of the video:

The word capitalism, I think of it as any system where there is private ownership of property and the means of production, with public policy protecting those rights of ownership. Capitalism is about a dynamic economy that leads to individual freedom. That’s what this is about. (Glenn Hubbard)

Capitalism is sort of like democracy. It’s a horrible system except for every other system. So, we got to find a way to work with it and we got to find a way to make it noble.

I think where we need to move is to a kind of capitalism I like to call stakeholder capitalism, which is good for everybody. Not just those folks who bought a stock in a company.  Every person that interacts with any business.

The fact that I can go out and start a business today is an independent thinking act that leads to individual freedom. But for a market economy to work, you ought to believe it. In our economy, we have some people, my business school students for example, that have abundant opportunities for work. We have other Americans who feel left behind. That shouldn’t be.

Capitalism has always depended on institutions. Sometimes institutions are perverse. We have had times in our country’s history in which business opportunities were limited by public policy FIAT. So, capitalism responds to whatever the institutions are.

For the longest time, capitalism was slavery. After the civil war, President Abraham Lincoln created a bank called the Freedman’s Bank. President Lincoln thought the most important thing he could do was to create a bank that teaches former slaves about money. I decided to take the Freedman’s Bank story and that’s where I founded Operation Hope. A non-profit platform teaching financial literacy. Because to live in a system of free enterprise, and understand the rules of free enterprise, it must be the very definition of slavery. Today you have check cashers, next to a pawn shop, next to a liquor store, talk about oppressive capitalism. I think the way you transform America is to raise credit scores for poor people who are financially illiterate. Because it effects self-esteem, confidence, all those choices in life. If nothing changes your life today more than God or love or moving your credit score 120 points, from something that’s completely unbankable to a 670 or 680 credit score, they can actually say yes to them. You do that block by block in America, you solve all the problems. And you do it through the free enterprise system.

Certainly, when public policy limits opportunity; slavery, institutionalized racism, they limit opportunity in the market economy. Not just for the people who are discriminated against, but in terms of lost output, lost income, for everybody.

But when I think about that opportunity, I can’t help but think about half of the population were women. I don’t think women have access to capitalism in a way that they should. Business still looks very white and male. Only about 1.5% of the total world’s capital is managed by women. That’s not good. My parents came to this country over 50 years ago from India with $8 in their pocket. Not unlike a lot of other immigrant stories. My mom built a residential real estate business. So, I thought about the USA as the place for opportunity. When I think about what capitalism is, I think about the entrepreneur. I think about the innovator. Capitalism is this sense of the human spirit and pursuit of their unbounding potential. Which is why I started Girls Who Invest, to increase the number of women in portfolio management and senior leadership roles in the asset management industry. More gender diversity brings better outcomes. This is not just about social good. This is about making more money across the board. Capitalism in this country is limitless.

In the beginning, the thinking may have been that capital was a limiting factor. So, If I am starting a business or entrepreneurial idea, it’s capital that allows me to then combine labor and other inputs. Today, I would say that capitalism is the contest for ideas not just the contest for money. And a strength of the modern capitalistic economy is allowing funds to flow to exactly the most innovative and productive new ideas.

A lot of young women have said to me, Seema, we want to make a positive impact on the world, and we don’t see that we can really do that in finance. And I look at them and I say, oh my god, you guys, how do you think Facebook and Amazon got to where they are? The developing world? Think about how so many people have clean water. You realize that you can absolutely do that as an investor.

You know, there is a Steve Jobs in waiting in every zip code in America. And maybe it was a banker, believing in them, investing in them, giving them a role model. Giving them a change in culture, giving them an internship. Giving them a little capital. Would change their life and transform their life. So, I am going to use this system that we are talking about. The free enterprise system as a force for good at scale. The goal is for capitalism to have equal opportunity for everyone. The system itself really provides that. Capitalism still is a rising tide that lifts all boats.

I’ve seen it. I’ve lived it. I am very optimistic about the way capitalism is heading. It’s heading in the right direction.

Most of me is very optimistic.

The question is not whether we can affect the future. The question is, will we? And… I am extraordinarily jazzed about the future.