Real Solutions for a Troubled Economic System
by Philip Kotler
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Pub Date 15 Apr 2015 | Archive Date 01 Jun 2015
AMACOM Books, AMACOM
But trouble is cracking its shiny veneer. In the U.S., Europe, and Japan, economic growth has slowed down. Wealth is concentrated in the hands of a few; natural resources are exploited for short-term profit; and good jobs are hard to find.
With piercing clarity, Philip Kotler explains 14 major problems undermining capitalism, including persistent poverty, job creation in the face of automation, high debt burdens, the disproportionate influence of the wealthy on public policy, steep environmental costs, boom-bust economic cycles, and more.
Amidst its dire assessment of what's ailing us, Confronting Capitalism delivers a heartening message: We can turn things around. Movements toward shared prosperity and a higher purpose are reinvigorating companies large and small, while proposals abound on government policies that offer protections without stagnation. Kotler identifies the best ideas, linking private and public initiatives into a force for positive change.
Combining economic history, expert insight, business lessons, and recent data, this landmark book elucidates today's critical dilemmas and suggests solutions for returning to a healthier, more sustainable Capitalism—that works for all.
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Average rating from 7 members
For many Philp Kotler, marketing guru and scholar par excellence, needs no introduction. Now his laser-focussed analytical mind has been cast over the thorny economic issue of capitalism.
Even if you are not an economics nerd you are in for a real treat with this book that feels oh-so-short yet it really does cram in a lot of readable, digestible information. Kotler considers 14 major problems that he says undermine capitalism, such as job creation, debt burdens, wealth disparity and economic cycles, explaining clearly and patiently the issues with crystal-clear clarity.
We are not in a hopeless, no-win situation, however claims Kotler, pointing out that many initiatives could be implemented, combining private and public efforts into a force for positive change. That is the easy part. Convincing those with the levers of power to put away their self-interest or myopia might be something else.
Many corporations wield more power and influence than national governments. The combined value of the world’s 200 largest companies account for about 28% of the world’s total gross domestic product (GDP). Many companies are effectively larger than countries when comparing revenues to GDP. Wal-Mart is larger than Norway, Exxon Mobile is larger than Thailand, and General Electric is larger than New Zealand. Harnessing group think and social responsibility can be a challenge. Kotler notes that because so many city, state and national governments are cash poor, they are selling normal government functions to private firms. Where will it end? One day could there be a return to the old “company towns” but in a new guise: a country effectively owned by a cabal of a few too-big-to-challenge mega corporations?
It is worthy to reproduce Kotler’s fourteen stated shortcoming of capitalism, whereby he believes that capitalism: proposes little or no solution to persisting poverty: generates a growing level of income and wealth inequality; fails to pay a living wage to billions of workers; may not provide enough human jobs in the face of growing automation; doesn’t charge businesses with the full social costs of their activities; exploits the environment and natural resources in the absence of regulation; creates business cycles and economic instability; emphasizes individualism and self-interest at the expense of community and the commons; encourages high consumer debt and leads to a growing financially driven rather than producer-driven economy; lets politicians and business interests collaborate to subvert the economic interests of the majority of citizens; favours short-run profit planning over long-run investment planning; should have regulations regarding product quality, safety, truth in advertising, and anticompetitive behaviour; tends to focus narrowly on GDP growth and needs to bring social values and happiness into the market equation. Ouch! Where’s the good news?
A further shameful, damning indictment is that about five billion of the world’s seven billion citizens are either poor or extremely poor, often lacking food, energy, education, healthcare and any real prospect of a future. It doesn’t need the extreme of a socialist utopia to see the inequality, whereby even a doubling of their daily income – a dollar or two – could make a real, transformed difference. Kotler notes that poverty pours its poison on the rest of mankind. A claim that is sadly hard to deny. There is no automatic correlation between economic growth and economic development. Kotler shows the example of the African country of Angola, where its GDP grew by 20% yet poverty increased substantially - much of the higher GDP flowed into the pockets of the ruling elites and their relatives and friends.
A review cannot do this book justice. There’s just so much data, whether it is low pay, executive compensation, tax laws and inequalities or even national bureaucracies, Kotler cuts right the bone. It isn’t pleasant reading on many levels, even for someone who prides himself on being reasonably well informed about world events and happenings.
Who really should not read this book at least once and digest its contents? Those who have even the remotest connection to the levers of power should be locked in a room and forced to digest Kotler’s analysis and act upon it. The rest of us should use it as a means of seeking change. Capitalism need not be bad. It just needs a bit of a tweak here and there. Are we prepared to try and get things changed? Changed before it might be too late!
Confronting Capitalism, written by Philip Kotler and published by AMACOM. ISBN 9780814436455, 256 pages. YYYYY
Confronting Capitalism: Real Solutions for a Troubled Economic System by Philip Kotler is a contemporary look at American Capitalism. Kotler studied at DePaul, earned his Masters from the University of Chicago and his Ph.D. in economics from MIT. He studied under three Nobel laureates: Milton Friedman, Paul Samuelson, Robert Solow. Kotler is currently the S. C. Johnson Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University.
In earning my Masters in International Relations, I was required to take economics at the graduate level as well as going back to take the undergraduate courses to complete my degree. In my experience economics was dry and focused on theory rather than the effects -- the supply and demand curve rather than the real world effects of capitalism. In political science capitalism was just accepted as the only working system because we won the cold war. Communism was dead, even though it never really existed. Capitalism is the same. Ayn Rand called capitalism the unknown ideal believing that it was never truly tested. It was always interfered with by government. The result was two systems that never existed, in fact, but one claimed to be the winner.
The second problem with economics is that it is indeed very complex in the real world. However, many people’s understanding of it comes from sound bites on the news or political commentators. A few might even aspire to read Ayn Rand’s fiction, but almost no one has read Adam Smith all the way through or for that matter Marx. We live in a country, which in the world view, sees very little difference between our political parties, yet people call the two major parties socialist and capitalist/fascist. Our economic viewpoints wax and wane on how well the economy is doing at the moment.
Confronting Capitalism does something I have not seen before. It takes economics and puts it on a practical human scale. It discusses the things that the victor of the Cold War would rather not mention, the very real flaws of the system. Kolter brings to the table fourteen of these problems. They include the boom-bust cycles, damage to the environment and limited natural resources, persistent poverty, personal debt burden, unemployment caused by automation, the influence of wealth on government, and the growing concentration of wealth into the hands of the few. These are all real aspects of economics that affect the common person.
Kolter in plain words and clarity explains what is ailing our system. It is not an attack on capitalism but something more like a doctor’s visit. Much like a doctor examining an overweight smoker, Kolter does not condemn the system but rather points out the problems and offers serious solutions -- quit smoking, eat healthier, exercise so you can become stronger and live longer. Kolter keeps his attention on practical matters. Instead of awarding CEO’s bonus for yearly gains, focus on long term growth. Short term growth creates an unstable system that works on cutting workers, quality, and what ever else that can increase short term profit. He gives examples of other companies that focus on the long term and still make profits.
Confronting Capitalism also looks to balance. Unrestricted capitalism is much like Rand’s Unknown Ideal, unknown. What we fail to recognize is that the government has been involved in the economy since the beginning of the country. One of the first major issues with our new country was the Whisky Rebellion -- taxes. We like to think the West was settled solely with rugged individualism, but it was the government that granted tracts of land to the railroads which opened the West. Eisenhower used the federal government to create the interstate highway system. Between the two of those systems most of our industry and consumer goods flow. The government has always been involved in the economy.
Kolter gives a centrist view on capitalism. He presents what is right and what is wrong with the current system. What separates Confronting Capitalism from other economics books is the author’s style and method. Kolter is very clear and concise in his writing and writes so that he is understood by the general public. It is economics for the masses, but without any dumbing down. What Carl Sagan and Stephen Hawkings did and do for science Kolter does for economics. It is this type of clear thinking that is needed to get American’s to understand economics as a system and not an isolated issue. An outstanding read.
also posted on Goodreads. Will be posted on commercial websites when published.
The U.S. economy is increasingly run by a “visible hand” instead of Adam Smith’s “invisible hand.” Large sectors of the economy are guided by a few powerful companies. The question is whether the visible hand runs these sectors with Smith’s “enlightened self-interest” or with just “self-interest”, according to Philip Kotler in his book Confronting Capitalism: Real Solutions for a Troubled Economic System.
The book enumerates fourteen different problems which the author sees with capitalism, ranging from increasing income inequality and persistent poverty to the dangers of narrow self-interest and the ways in which politics subverts economics. The identification of the fourteen issues is largely uncontroversial, although some might categorise them differently or combine some together. It is the author’s prescriptions for change which are likely to be wildly controversial.
It seems ironic that capitalism, as a system apparently built essentially by neglect as each person pursues his or her own interests in a rational manner, should be the subject of passionately held beliefs raising it almost to the level of a religion. I suspect that, by proposing a number of solutions which interfere with the sacred tenets of the free market, the author will be calling down on his head the wrath of the devotees of laissez-faire.
Readers who have little or no knowledge of economics and how capitalism works will find this book helpful if they keep in mind that many of the author’s simple-sounding solutions are highly controversial and unlikely to be adopted by any government which relies on support from wealthy citizens.
Confronting Capitalism brings a fresh perspective on what capitalism is and how different variations of it are in existence in the world today. It provides an overview of what the subject is about so readers who are not acquainted much with the subject will be able to understand what is being discussed. This is followed by 14 chapters which correspond to the problems with this economic system and proposed solutions for each problem.
One of the things that I like in this book is the simplicity in writing employed by the author. I was expecting that it would include several concepts written in a way that only those who have PhDs in economics would understand. Fortunately, this book is written like the author is speaking to a friend who is just curious to know about this prevailing economic system.
Moreover, each chapter includes the proposed solutions for the different economic pitfalls provided in the book. The solutions are meant to stir thinking rather than a compilation of quick fixes. The problems of capitalism are not simple and therefore require delicate balance on whatever approach are taken to solve it.
On the other hand, I can say that this book is not entirely neutral. When you read this book, you also see the biases of the author towards several issues. However, I can say that the author provided justice by explaining both sides of the issues as much as possible. You may never agree on some of his view points as I don't agree with some but certainly this book will make you think about the issues.
As far as to whom I would recommend this book, I would say that politicians, businessmen, entrepreneurs, lobbyists, and others who have an interest in the way our economic system works should buy and read this book.
Overall, this is a great read. The book tackles multiple issues with such conciseness that I would very much want to dig deeper and read more books about the issues provided.
Readers who liked this book also liked:
Burton I. Kaufman
John Kotter; Holger Rathgeber