Abstract
This chapter traces the intellectual and institutional history of “inclusive capitalism” from the mid-1990s until today. It traces the origins of the concept in influential writers on business management and development and shows how the concept was picked up by the United Nations (UN) and the United Nations Development Programme. Several factors explain this short and remarkable history of the concept of inclusive capitalism: persisting and widening global inequality, the need for an ideological alternative to a neoliberal Washington Consensus, the reshaping of the UN in development, and the offer of a depoliticized vision for another kind of globalization.
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Notes
- 1.
For comments on this chapter and earlier versions, I would like to thank Angus Burgin, Jacob Jensen, Steven L.B. Jensen, participants at the conference The Road to Global Inequality, 1945-Present Day: New Historical Perspectives, the Research Unit for the History of Economic and Political Thought at Aarhus University, and the History Department at Dartmouth College. I would also like to express my gratitude to the people whom I interviewed for this project. The Danish Council for Independent Research and its Sapere Aude programme funded this research.
- 2.
Richard Jolly, Louis Emmerij, Dharam Ghai, & Frédéric Lapeyre, UN Contributions to Development Thinking and Practice (Bloomington & Indianapolis: Indiana U.P., 2004); Dieter Plehwe, “The Origins of the Neoliberal Economic Development Discourse”, in Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective (Cambridge, MA: Harvard U.P., 2009), 239.
- 3.
John Williamson, “What Washington Means by Policy Reform,” in Latin American Readjustment: How Much Has Happened, edited by John Williamson (Washington: Peterson Institute for International Economics, 1989).
- 4.
William Lazonick & Mary O’Sullivan, “Maximizing Shareholder Value: A New Ideology for Corporate Governance,” Economy and Society 29, no. 1 (2000): 13–35.
- 5.
Milton Friedman, Capitalism and Freedom (Chicago: The University of Chicago Press, 2002); Milton Friedman, “The Social Responsibility of Business Is to Increase its Profits,” The New York Times, September 13, 1970.
- 6.
Sumantra Ghoshal, “Bad Management Theories Are Destroying Good Management Practices,” Academy of Management Learning and Education 4, no. 1 (2005): 75–91.
- 7.
For histories of neoliberalism, see, for example, Angus Burgin, The Great Persuasion: Reinventing Free Markets since the Depression (Cambridge, MA: Harvard U.P., 2012); David Harvey, A Brief History of Neoliberalism (Oxford: Oxford U.P., 2005); Ben Jackson, “At the Origins of Neo-Liberalism: The Free Economy and the Strong State, 1930–1947”, The Historical Journal 53, no. 1 (2010): 129–151; Jamie Peck, Constructions of Neoliberal Reason (Oxford: Oxford U.P., 2010); Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the NewDeal to Reagan (New York & London: W.W. Norton, 2009); Mirowski & Plehwe, The Road from Mont Pelerin, Quinn Slobodian, Globalists. The End of Empire and the Birth of Neoliberalism (Cambridge, MA: Harvard U.P., 2018).
- 8.
Thomas L. Friedman, The Lexus and the Olive Tree (London: HarperCollins Publishers, 1999); Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (London: Penguin Books, 2007).
- 9.
Friedman, The Lexus and the Olive Tree, 86–87.
- 10.
See, for example, Michael Hardt & Antonio Negri, Empire (Cambridge, MA: Harvard University Press, 2000).
- 11.
Joseph E. Stiglitz, Joseph Stiglitz and the World Bank: The Rebel Within, edited by Ha-Joon Chang (London: Anthem Press, 2001).
- 12.
Jürgen Habermas, Legitimationsprobleme im Spätkapitalismus (Frankfurt am Main: Suhrkamp, 1973).
- 13.
See, for example, Georg Kell & John G. Ruggie, “Global Markets and Social Legitimacy: The Case of the ‘Global Compact’,” http://www.yorku.ca/drache/talks/pdf/apd_ruggiekellfin.pdf.
- 14.
Gary Hamel & C.K. Prahalad, Competing for the Future (Cambridge, MA: Harvard Business School Press, 1994).
- 15.
C.K Prahalad & Allen Hammond, “Serving the World’s Poor, Profitably”, Harvard Business Review September (2002): 48–57; C.K. Prahalad & Stuart L. Hart, “The Fortune at the Bottom of the Pyramid”, strategy+business, 26, January 10, 2002, https://www.strategy-business.com/article/11518?gko=9a4ba. Prahalad and Hart state in their article that their concepts were first developed in a 1998 working paper.
- 16.
Prahalad & Hart, “The Fortune”, 2.
- 17.
Prahalad & Hart, “The Fortune”, 1. My emphasis.
- 18.
See also Carl J. Schramm, “Building Entrepreneurial Economies”, Foreign Affairs 83, no. 4 (2004): 104–115, p. 104.
- 19.
Prahalad & Hart, “The Fortune”, 14.
- 20.
Prahalad & Hart, “The Fortune”, 14.
- 21.
Many examples of “best practices” were offered along the way, including a CD with “35 minutes of video success stories filmed on location in the Bottom of the Pyramid in India, Peru, Mexico, Brazil, and Venezuela.” C.K. Prahalad, The Fortune at the Bottom of the Pyramid (Upper Saddle River, NJ: Wharton School Publishing, 2004).
- 22.
Prahalad, The Fortune, p. xi. My emphasis.
- 23.
Prahalad, The Fortune, p. xii.
- 24.
See also Chris Jochnick, “Systems, power and agency in market-based approaches to poverty,” Oxfam American Research Backgrounder series, 2012, www.oxfamamerica.org/market-based-approaches-to-poverty. Jochnick sees “market-based approaches” as alternatives to “many development proponents” who “remain focused on macroeconomic growth through foreign direct investment and large-scale public-private partnerships,” but also to those who “push for a return to protected markets and stronger regulation of corporations.” Market-based approaches thus constitute a “third stream” that “accepts globalization, but intervenes more directly in markets to ensure pro-poor impacts” (p. 4). Jochnick further notes that market-based approaches have surged in the past 15 years.
- 25.
Ghoshal, “Bad Management Theories.”
- 26.
Milton Friedman, Capitalism and Freedom; Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits.”
- 27.
Michael E. Porter & Mark R. Kramer, “Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility”, Harvard Business Review 84, no. 12 (2006): 78–92. See also Michael E. Porter & Mark R. Kramer, “The Competitive Advantage of Corporate Philanthropy”, Harvard Business Review, 80, 12 (2002): 56–68; Michael E. Porter & Mark R. Kramer, “Creating Shared Value”, Harvard Business Review, 89, 1/2 (January/February 2011): 62–77.
- 28.
Porter & Kramer, “Creating Shared Value,” 66.
- 29.
Porter & Kramer, “Creating Shared Value,” 67 & 72.
- 30.
Porter & Kramer, “Creating Shared Value,” 75.
- 31.
Christian Olaf Christiansen, Progressive Business. An Intellectual History of the Role of Business in American Society (Oxford: Oxford U.P., 2015); Luc Boltanski & Ève Chiapello, The New Spirit of Capitalism (London: Verso, 2007); Luc Boltanski & Ève Chiapello, “The New Spirit of Capitalism”, paper presented at the Conference of Europeanists, Chicago, March 14–16, 2002, http://www.darkmatterarchives.net/wp-content/uploads/2011/11/boltanskiSPIRITofCapitalism.pdf; Ève Chiapello, “Capitalism and its Criticisms,” in New Spirits of Capitalism? Crises, Justifications, and Dynamics, edited by Paul du Gay & Paul & Glenn Morgan (Oxford: Oxford U.P., 2013), 60–81; Bahar A. Kazmi, Bernard Leca & Philippe Naccache, “Is Corporate Social Responsibility a New Spirit of Capitalism?” Organization 23, no. 5 (2016): 742–762, https://doi.org/10.1177/1350508415619239; E.P. Thompson, “The Moral Economy of the English Crowd in the 18th Century,” Past & Present 50 (1971): 76–136.
- 32.
Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (London & New York: Bantam Press, 2000), 192.
- 33.
Soto, Mystery of Capital, 1.
- 34.
Soto, Mystery of Capital, 194–195. De Soto quotes from Klaus Schwab & Claude Smadja, “Globalization Needs a Human Face,” International Herald Tribune, January 28, 1999.
- 35.
In the autumn of 2017, I interviewed a number of key experts on the UN, including current and former UN staff. I did this in order to get an in-depth, multi-perspective view on the historical relationship between the UN and private business in relation to development and poverty reduction. In general, people I have interviewed have expressed that the relationship between the UN and the private sector changed profoundly during the 1990s.
- 36.
Author interview with Jens Christian Wandel, December 4, 2017.
- 37.
Kofi A. Annan, We the Peoples: The Role of the United Nations in the 21st century (New York: The United Nations, 2000), 38–40.
- 38.
Author interview with Thomas G. Weiss, November 16, 2017; author interview with Michael W. Doyle, November 16, 2017.
- 39.
Author interview with Michael W. Doyle, November 16, 2017. My description of Annan as being more accommodating towards business builds upon interviews with people who worked closely together with him (such as Doyle) as well as with people who did not work with him.
- 40.
Kofi Annan, Interventions: A Life in War and Peace, with Nader Mousavizadeh (New York: The Penguin Press, 2012).
- 41.
Annan, Interventions, 212.
- 42.
Annan, Interventions, 214.
- 43.
Kofi Annan, Address of Secretary-General Kofi Annan to the World Economic Forum in Davos, Switzerland, on 1 February 1997, https://www.un.org/press/en/1997/19970131.sgsm6153.html.
- 44.
Kofi Annan, Address of Secretary-General Kofi Annan to the World Economic Forum in Davos, Switzerland, on 30 January 1998, https://www.un.org/press/en/1998/19980130.SGSM6448.html.
- 45.
Annan, Address in Davos 1998.
- 46.
Kofi Annan, Address of Secretary-General Kofi Annan to the World Economic Forum in Davos, Switzerland, on 31 January 1999, https://www.un.org/press/en/1999/19990201.sgsm6881.html.
- 47.
Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 2001); John Ruggie, “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order,” International Organization 36, no. 2 (1982): 379–415.
- 48.
Kofi A. Annan, We the Peoples. The Role of the United Nations in the 21st Century (New York, NY: The United Nations, Department of Public Information, 2000), http://www.un.org/en/events/pastevents/pdfs/We_The_Peoples.pdf, 6. My emphasis.
- 49.
Annan, We the Peoples, 35. My emphasis.
- 50.
See especially article 5 (“only through broad and sustained efforts to create a shared future, based upon our common humanity in all its diversity, can globalization be made fully inclusive and equitable”) and article 20 wherein it was stressed “to develop strong partnerships with the private sector and with civil society organizations in pursuit of development and poverty eradication,” http://www.un.org/millennium/declaration/ares552e.htm.
- 51.
United Nations Development Programme, Partnerships to Fight Poverty. Annual Report 2001 (New York, NY: United Nations Development Programme, Communications Office 2001), link to the report here: http://www.undp.org/content/undp/en/home/librarypage/corporate/undp_in_action_2001.html, 2.
- 52.
UNDP Commission on the Private Sector and Development, Unleashing Entrepreneurship: Making Business Work for the Poor. Report to the Secretary-General of the United Nations (New York, NY: United Nations Development Programme, 2004), http://www.md.undp.org/content/dam/moldova/docs/Publications/unleashing_entrepreneurship.pdf.
- 53.
Mark Malloch-Brown, The Unfinished Global Revolution. The Pursuit of a New International Politics (Toronto: Viking Canada, 2011), 131. My emphasis.
- 54.
Malloch-Brown, Unfinished Global Revolution, 131.
- 55.
During the interviews I did with people working at the UNDP, I also learned about the importance of “the private sector” being a much broader concept than just encompassing business corporations. Author interview with Nick R. Hartman, November 13, 2017.
- 56.
Commission on the Private Sector and Development, Unleashing Entrepreneurship, 5 & 7.
- 57.
Prahalad & Hammond, “Serving the World’s Poor, Profitably.”
- 58.
United Nations Development Programme, Creating Value for All: Strategies for Doing Business With the Poor (New York, NY: United Nations Development Programme, 2008), link to the full report here: http://www.rw.undp.org/content/rwanda/en/home/library/poverty/creating-value-for-all%2D%2D-strategies-for-doing-business-with-the-.html.
- 59.
UNDP, Creating Value for All, 14 & 24, my emphasis. Also see World Resources Institute (with The International Finance Corporation, part of the World Bank Group), The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid (Washington, DC: World Resources Institute, 2007), http://documents.worldbank.org/curated/en/779321468175731439/pdf/391270Next040billion.pdf.
- 60.
Bill Gates, “A New Approach to Capitalism in the 21st Century,” Address at the World Economic Forum, January 24, 2008, https://news.microsoft.com/speeches/bill-gates-world-economic-forum-2008/; Klaus Schwab, “Global Corporate Citizenship,” Foreign Affairs 87, no. 1 (2008): 107–118.
- 61.
After 2008, commentators have (again) declared the death of the “foreign finance fetish.” See, for example, Nancy Birdsall & Francis Fukuyama, “The Post-Washington Consensus”, Foreign Affairs 90, no. 2 (2011): 45–53. More recently, see the IMF paper: Jonathan D. Ostry, Prakash Loungani & Davide Furceri, “Neoliberalism: Oversold?” Finance & Development 53, no. 2 (June 2016), https://www.imf.org/external/pubs/ft/fandd/2016/06/pdf/ostry.pdf. Secondly, the meaning of the concept “inclusive capitalism” has been stretched, so that it now also refers to rampant inequality within Western societies. See, for example, the “Coalition for Inclusive Capitalism” initiative here: https://www.inc-cap.com/about/, or Center for American Progress, “Report of the Commission on Inclusive Prosperity” (Washington, DC: Center for American Progress, 2015), https://cdn.americanprogress.org/wp-content/uploads/2015/01/IPC-PDF-full.pdf.
- 62.
Jennifer Bair, “Taking Aim at the New International Order”, in The Road From Mont Pelerin, edited by Mirowski & Plehwe, 347–385.
- 63.
Lisa Ann Richey & Stefano Ponte, Brand Aid: Shopping Well to Save the World (Minneapolis, MN: University of Minnesota Press, 2011).
- 64.
Subhabrata Bobby Banerjee, “Corporate Social Responsibility: The Good, the Bad and the Ugly”, Critical Sociology 34, no. 1 (2008): 51–79; Christian Olaf Christiansen, Progressive Business; Christian Olaf Christiansen, “The Economic Rationality of ‘Doing Good to Do Well’ and Three Critiques, 1990 to the Present,” in History of Economic Rationalities. Economic Reasoning as Knowledge and Practice Authority, edited by Jakob Bek-Thomsen, Christian Olaf Christiansen, Stefan Gaardsmand Jacobsen & Mikkel Thorup (Cham, Switzerland: Springer), 133–140; Mikkel Thorup, Pro Bono? (Winchester, UK: Zero Books, 2015); David Vogel, The Market for Virtue (Washington, DC: Brookings Institution Press, 2006).
- 65.
Ronen Shamir, “The Age of Responsibilization: On Market-Embedded Morality,” Economy and Society 37, no. 1 (2008): 1–19.
- 66.
Nicole Aschoff, The New Prophets of Capital (London & New York: Verso, 2015).
- 67.
Ronen Shamir, “The De-Radicalization of Corporate Social Responsibility”, Critical Sociology 30, no. 3 (2004): 669–689; Ronen Shamir, “Between Self-Regulation and the Alien Tort Claims Act: On the Contested Concept of Corporate Social Responsibility,” Law & Society Review 38, no. 4 (2004): 635–664; Shamir, “The age of responsibilization”; Ronen Shamir, “Corporate Social Responsibility: Towards a New Market-Embedded Morality?”, Theoretical Inquiries in Law, 9 (2008): 371–394.
- 68.
See, for example, George Lakoff & Mark Johnson, Metaphors We Live By (Chicago: Chicago U.P., 2003); George Lakoff, Thinking Points: Communicating Our American Values and Vision (New York, NY: Farrar, Straus and Giroux, 2006).
- 69.
Ernesto Laclau & Chantal Mouffe, Hegemony and Socialist Strategy (London: Verso, 2001); Niklas Luhmann, “What Is Communication?”, Communication Theory 2, no. 3 (1992): 251–259.
- 70.
Samuel Moyn, Not Enough: Human Rights in an Unequal World (Cambridge, MA & London: The Belknap Press of Harvard U.P., 2018).
- 71.
I here draw upon a conception of politics that focuses upon antagonism and conflicts of interest as such a concept of politics has been developed in the tradition of Carl Schmitt, Ernesto Laclau, Chantal Mouffe, and others. Carl Schmitt, The Concept of the Political (Chicago & London: University of Chicago Press, 2007).
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Christiansen, C.O. (2019). Partnerships Against Global Poverty: When “Inclusive Capitalism” Entered the United Nations. In: Christiansen, C.O., Jensen, S.L.B. (eds) Histories of Global Inequality. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-19163-4_12
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