These 9 books will help you make sense of why we need 'better capitalism' REUTERS/Charles Platiau
French economist Thomas Piketty's 2014 bestseller, "Capital in the 21st Century," is still a foundational text on understanding today's destabilizing inequality.
Our Better Capitalism series focuses on why inequality has been hurting economic growth, and why new approaches to business and policy can be a course correction. We've chosen books from writers like the economist Joseph Stiglitz and the futurist Amy Webb that make sense of where we are, how we got here, and where we should be headed. This article is part of Business Insider's ongoing series on Better Capitalism.
For over a year, Business Insider has been exploring why we need "Better Capitalism" and how we can achieve it.
It started with the rejection of the shareholder primacy theory that grew in popularity in the late 1970s and became the norm beginning in the '80s. It's led to a short-term focus on profits above all else, and we're arguing that this has come at the expense of stakeholders like workers and communities, and has been a significant factor in the country's out-of-control wage-and-wealth inequality.
We've found that there is an increasingly loud call to tie profits to purpose, and it's not just a moral argument.
To make sense of where we are today and where we should be headed, we've gathered some of our favorite books on the economy and the role of business in society.
'The Shareholder Value Myth' by Lynn Stout
'The Shareholder Value Myth' by Lynn Stout
The late Cornell Law professor Lynn Stout rose to prominence challenging the ideas that have dominated the past 40 years. In 2012, she took on the theory of shareholder primacy, which is the idea that public companies exist above all else to serve the needs of shareholders, and that if they make decisions with this approach, customers and employees will naturally benefit.
There's an argument to be made that this approach may have made sense in the 1980s, after the stagflation of the '70s, but Stout shows that it was inherently flawed and achieving the opposite result. Shareholder primacy can benefit investors in the short term, but it's an approach considering all stakeholders that creates lasting long-term value for investors, as well.
Find it here » 'Rewriting the Rules of the American Economy' by Joseph Sitglitz
'Rewriting the Rules of the American Economy' by Joseph Sitglitz
Joseph Stiglitz is a Nobel Prize-winning economist based at Columbia University, and his 2015 book looks at how shareholder primacy has been one of many policies that he believes have been hurting the American economy.
Stiglitz dismisses the argument that implementing policies that would decrease inequality would hinder growth. Instead, he explains, the wealthiest Americans have increasingly captured the benefits of the growth seen in the past few decades, which handicaps the economy from performing at its best.
Find it here » Advertisement 'Conscious Capitalism' by John Mackey and Raj Sisodia
'Conscious Capitalism' by John Mackey and Raj Sisodia
Whole Foods founder John Mackey and Babson College professor Raj Sisodia kicked off a movement with their 2013 book, "Conscious Capitalism."
Stout and Stiglitz used their books to show that prevailing business theories were not only detrimental to workers and communities, but to shareholders and the economy as a whole; Mackey and Sisodia use theirs to show that businesses were already in a position to link their profits to purpose, and that investing in all stakeholders also increased the bottom line.
Find it here » 'Winners Take All' by Anand Giridharadas
'Winners Take All' by Anand Giridharadas
Anand Giridharadas is a journalist and former McKinsey consultant who was fully enmeshed in the world of the elite. As an Aspen Institute Fellow, he was a true believer in "doing well by doing good." But by 2015, he felt like everything was built on a charade.
In his book, Giridharadas gives a scathing critique of how countries like the United States have essentially handed over societal problems to corporations and billionaires, without addressing the roots of the issues.
We're using our list to highlight ways that those in power can better use that power, but Giridharadas' book is an important wake-up call that will ensure you are always conscious of the bigger picture.
Find it here » Advertisement 'Crashed: How a Decade of Financial Crises Changed the World' by Adam Tooze
'Crashed: How a Decade of Financial Crises Changed the World' by Adam Tooze
The debate over the role of public companies, the wealthy, and policy in America has been waged for decades, but it's begun a new phase as the generation that entered the workforce during the financial crisis has come of age.
Columbia historian Adam Tooze offers perhaps the most extensive explanation of the crisis itself, its causes, and ramifications, and how what happened in the American financial system was closely linked to the crisis that shook Europe.
Find it here » 'Janesville' by Amy Goldstein
'Janesville' by Amy Goldstein
We're in the early stages of another major shift in industry, where advances in technology will be both replacing and creating millions of new jobs. New solutions around job retraining and skills-based education will play a vital role in ensuring the changes benefit as many people as possible, but "Janesville" also shows there are no quick fixes.
Washington Post reporter Amy Goldstein
reported extensively in Janesville, Wisconsin, from 2011 to 2017, tracking the struggles of a town after its General Motors plant closed. Her findings included the insight that when we talk about "closing the skills gap," we must be very deliberate about the path from training to job. It will require the cooperation of educators, politicians, corporations, and labor. Find it here » Advertisement 'Capital in the 21st Century' by Thomas Piketty
'Capital in the 21st Century' by Thomas Piketty
French economist Thomas Piketty had an unexpected best-seller when his 800-page economics book was published in English in 2013.
It's still the gold standard on understanding how we've come to a new Gilded Age.
Find it here » 'The Curse of Bigness' by Tim Wu
'The Curse of Bigness' by Tim Wu
Massachusetts Sen. Elizabeth Warren has breaking up big tech in her presidential campaign platform, and it's based on a growing movement of economists and lawyers pushing for enhanced antitrust law.
Columbia law professor and former Federal Trade Commission adviser Tim Wu has provided the most succinct and persuasive case for why we should revitalize antitrust, to weaken the effects increased market concentration is having on workers, politics, and customers.
Find it here » Advertisement 'This Changes Everything' by Naomi Klein
'This Changes Everything' by Naomi Klein
We've been focusing on how the neoliberal policies of the past 40 years have negatively impacted people, but reporter and activist Naomi Klein's 2014 book focuses on how those same policies of growth at all costs have also ravaged the planet.
The literature on the harmful effects of climate change is extensive, but "This Changes Everything" specifically focuses on the role business has played, and why citizens must demand that significant moves toward sustainability are enforced.
Find it here » 'The Big Nine' by Amy Webb
'The Big Nine' by Amy Webb
"Artificial intelligence" is a ubiquitous but often misunderstood buzzword when we discuss the future of business.
New York University professor Amy Webb is here to help. She breaks down how "The Big Nine" developers of AI are shaping our futures, but that nothing they create has inevitable ramifications.
She uses data and history to show what's actually happening in the world of AI,
dispelling both excessive fear and optimism, and proposes ways that countries and corporations will have to work together to create regulations and expectations around increasingly powerful technology. Find it here » Advertisement 'The Third Wave' by Steve Case
'The Third Wave' by Steve Case
There are different ways of categorizing the industrial shift we're in — there's a debate over whether it qualifies as "the Fourth Industrial Revolution" — but it's undeniable that technological changes are transforming the way we work.
AOL founder and venture capitalist Steve Case sees this period as
the beginning of "The Third Wave of the Internet," following the first wave of foundational internet companies like AOL and second wave companies like Facebook.
We're headed into a world where "the internet of things" will become the internet of everything, and Case believes that this is going to more evenly distribute the power concentrated in Silicon Valley and Wall Street. It's why he's investing in rising startup scenes throughout the country, which he thinks will be critical to the future success of the American economy.
Find it here »