Capitalism has an image problem and Charles Murray does an interesting job of explaining why in last weekend's Wall Street Journal.
Murray, an author and scholar at the American Enterprise Institute, recalls how capitalism had been seen as a good thing, something that helped America grow and transformed us and much of the world from the economic model of extreme rich and poor to a society with a large and fairly comfortable middle class. Capitalists like Thomas Edison, Henry Ford and, more recently, Steve Jobs were viewed as heroes whose vision and willingness to take risks created jobs for thousands and products that made life more pleasant.
But, Murray writes, too many of today's capitalists have made their fortunes without producing anything tangible and without creating jobs or other benefits for others. He points to the people in banking and finance who can make millions -- or tens of millions -- by betting the right way in the market or by buying companies and selling them off piece by piece -- throwing thousands of people out of work in the process. It is capitalists like these who have often been in the headlines during the past generation.
The article calls this new form of capitalism "crony capitalism" because it allows a few people at the very top to benefit by accumulating extreme wealth and taking care of each other, with little or no regard for employees, stockholders or the public at large. And more than ever, the article says, government and the politicians who run government have become part of the crony system. Politicians often take part in creating the structure for -- and too often participate in -- wholesale corruption.
So it should be no surprise that capitalism has become a dirty word, so much so that presidential candidate Mitt Romney is trying to distance himself from his career as a capitalist in finance. And lists of least respected businesses lately include bankers and financiers high up near the top.
The Journal article also says -- and this, I feel, is key -- that capitalism has become segregated from virtue. The concept of virtue is based on the belief that some ways of behaving are good and some are wrong, always and everywhere. Historically, free enterprise and the obligations that come with financial success -- virtue -- were closely intertwined. But business has lost sight of the importance of virtue.
This doesn't mean that many businesses and super-wealthy capitalists don't make massive donations to worthy causes -- tax write-offs irregardless. But the list of wrong behavior in business -- collusion with corrupt politicians, illegal or immoral business practices, inhumane HR actions, tax fraud -- goes on and on. So why shouldn't the public think poorly of capitalists?
Murray talks about ways to bring about positive change, such as changing laws and tightening regulation and oversight...admitedly a challenge in the current partisan plotical climate. But those actions would be a much-needed start at a time when we need to be reminded that good business behavior is good for business.
It's a lot more than an "image problem." PR can't (and shouldn't) put a "spin" on bad behavior to make it look good. Long-term, it just doesn't work that way.