Responsible Capitalism is ‘an economic system that accommodates private ownership and the pursuit of market opportunities while achieving societal goals’.

There is almost no country today that has not organized its economy around market exchange and private property. Yet, capitalism comes in different forms, including state-led capitalism in East Asia and the system of capitalism often considered foremost, in Northern America, Europe and other regions. Capitalism hardly comes in a pure form. Markets and governments are always involved but their relative influence differs across countries and time periods. In all its iterations, capitalism is facing a major crisis.

In the last two decades we have witnessed the near collapse of the global financial system, a falling labour income share and a rise in inequality.[1] We are no longer talking about climate change and pollution, but about climate crisis and ecological collapse. A small number of tech giants are dominating the internet and traditional services. Public spending is at an all-time high[2], yet in 2019 only 45% of citizens living in OECD countries trusted their government.[3] The rise in populism and disenchantment with globalisation are undermining the long-accepted post WWII free-market order. In 2015, looking towards a new vision of capitalism, the UN General Assembly adopted a 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals, including climate action and reduced inequality. It was a start, but volunteer initiatives and pledges have so far proved inadequate to restore a system that works for all. In 2020 the Covid-19 pandemic further exposed and accentuated the failings of the capitalist system.

Research Questions

There is widespread agreement that corporations and finance must play a central role in reshaping capitalism, but there is no agreement yet what this role should be. For example, there is a tension between promoting competition in global product and capital markets and the type of coordination that is needed to address environmental and social challenges. How can companies adopt costly environmental or social standards when their competitors do not? The principle of “doing well by doing good” does not apply in all situations. More fundamentally, the profit motive itself has been called into question, even when defining profits long-term.

• What is the role of investors?
• Should investors engage with companies to bring about change or invest selectively?
• Should institutional investors aggregate the social preferences of their clients, or is such a pursuit reserved for politics and government?
• What should be the role of government?
• Responsible capitalism relies on government and regulation to define the rules, but what if corporations influence government outputs?
• Are government officials motivated and competent in implementing policies without help from investors and/or business?

These are only some of the questions that the ECGI programme seeks to explore.