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November 04, 2003
Book Review--The Soul of Capitalism: Opening a Path to a Moral Economy
    by William Baue

William Greider’s new book seeks to explain the contradictions between capitalism and social responsibility, and then seeks to reconcile these differences.

William Greider defies convention in so many ways in his new book, The Soul of Capitalism: Opening a Path to a Moral Economy.

First, he requires readers to actually read the book. There’s no bullet-pointed executive summary for easy scanning between conference calls, no introduction encapsulating his argument. The table of contents fails to outline his line of reasoning, offering instead eight succinct chapter titles that are cryptic rather than revealing. And he takes his sweet time creating context before he finally gets to his point.

In short, it is a welcome respite from neatly packaged books that offer ideas in the most easily digestible form.

Second, Mr. Greider points out that capitalism and social responsibility are mutually exclusive, and then he tries to reconcile them, a task that few sane authors would voluntarily undertake.

“The bottom line does not count humanity in its bookkeeping because to do so would violate its own ethical principles,” he writes, and then presents the other side of the coin. “When society resists the bottom line’s imperatives, it does so to preserve the integrity of its own moral values.”

Instead of pitting capitalism against social responsibility and vice versa, Mr. Greider escapes this diametric opposition by proposing symbiosis: social responsibility is not capitalism’s enemy, but rather its savior.

Here again, Mr. Greider resists the standard practice of persuasion by citation. Instead of walloping readers over the head with references to obscure academic studies, he appeals to a handful of real-world, relevant examples to illustrate his point. These exemplars are the heroes of this book, though they are more Clark Kent than Superman. Many of those shifting capitalism’s dominant paradigm toward social responsibility do not even explicitly consider this their primary goal, he explains.

In the chapter entitled “Imperious Capital,” which explores the role of finance capital in creating change, Mr. Greider numbers socially responsible investing (SRI) as one of the heroic movements seeking to humanize capitalism. He points out the humanness of the movement itself, cautioning against its statistical hubris in claiming more than $2 trillion invested in SRI in the US.

“That’s an astonishing figure, and one has to treat it with considerable skepticism since it includes huge pension funds that, for instance, may have stopped buying tobacco stocks but are otherwise thoroughly conventional investors,” he writes of the Social Investment Forum (SIF) statistic.

Mr. Greider also reveals his own human foibles, representing the Calvert Group’s manifold mutual funds as if they were singular (“Calvert’s SRI fund”).

Nevertheless, SRI illustrates his point that social responsibility may save capitalism. Mr. Greider invokes Innovest Strategic Value Advisors’ EcoValue’21 ratings, which consistently find that companies with better environmental practices financially outperform their peers.

“The argument that social investing outperforms has incredible leverage because it puts Wall Street in total contradiction with itself.” So said Peter Camejo, a trustee of the $3 billion public employees pension fund for Contra Costa County, California, the first US pension fund to employ Innovest screens that exclude environmental underperformers, according to Mr. Greider.

Pension funds represent an even more powerful force for humanizing capitalism, because they “are now the universal owner in the stock market,” holding $6 trillion, according to Mr. Greider. Fiduciary responsibility requires pension funds to act in the best interest of pensioners, which conventional wisdom defined exclusively as return maximization. Some pension funds now recognize that a secure retirement requires not only financial health but also social and environmental health, and so have begun to use their considerable weight to promote social and environmental responsibility.

In the end, Mr. Greider recognizes that convention is not easily defied, and he acknowledges that the transformation of capitalism that he envisions is not a present reality but rather a future goal. However, his examples create an accumulative effect in demonstrating that much of the foundation-laying is presently taking place, and the tipping point in capitalism’s paradigm shift toward social responsibility may be nearer at hand than it seems.

“If you can create these alternative forms, then you can show that capitalism doesn’t have to do the brutal stuff it does,” Mr. Greider quotes Leo Gerard, president of the United Steelworkers of America, referring to the union’s support of worker-friendly investments. “Then you have a meaningful, articulate voice that can show a different way of doing things--call it social capitalism as opposed to Darwinian capitalism.”


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