Capitalism in Question

Professor Adler Conducts Research, Leads Program at Conference

September 17, 2013

What kind of economic system would a better world be built on? Would it be a capitalist one? If so, what kind of capitalism? If not, what are the alternatives?

These are the weighty questions Paul S. Adler, who is Harold Quinton Chair of Business Policy at the USC Marshall School Business, asked his colleagues to address at the Academy of Management’s 73rd annual conference in August.

Adler, who serves as vice president and program chair of the AOM, said the theme, “Capitalism in Question,” basically imposed itself this year, given the current state of the global economy: “The recent economic and financial crises, austerity and unemployment, combined with the emergence of many economic, social and environmental protest movements around the world, have put these questions back on the agenda.

“Although most of our work does not usually ask such ‘big’ questions, the assumptions we make about the corresponding answers deeply influence our research, teaching and service,” added Adler, who is also professor of management and organization at Marshall.

The AOM aims to inspire and enable a better world through scholarship and teaching about management and organizations. The more than 8,000 participants at the conference in Orlando, Fla., included AOM academicians and business executives, as well as spokespeople from think tanks across the political spectrum, activists and senior union leaders from across the nation and around the globe.

Because of that diversity, the sessions offered perspectives on capitalism across the spectrum, while addressing the benefits and costs of the three features that differentiate capitalism from previous economic systems in history: market competition among profit‐driven firms, wage employment within these firms and limited government over them.

These pressing issues have inspired Adler’s own research at USC Marshall. We asked him to talk about his recent work.

In light of your research, how would you answer the question about what economic system a better world would be built on?

I have been working on how businesses organize themselves to support sustained innovation as a strategic goal, and in this context I find that the distinctively capitalist features of organization (specifically, market-based competition and wage-based employment) are not very supportive of that strategic goal.

I find that many firms are developing new, “post-capitalist” forms of organization — ones that rely on collaboration rather than competition, and that treat contributors as partners rather than employees. The capitalistic features of business organization don’t disappear in these firms, because the broader market and social context weigh heavily on every firm. As a result, these innovation-oriented firms are pulled in the two opposite directions at once: much as we would like to be able to offer them a nice solution to this dilemma, my conclusion is that it is very hard to find a stable organizational form that supports an innovation strategy.

At the Academy of Management conference, you said that the theme of “Capitalism in Question” draws business academicians into a debate that brings you into closer conversation with colleagues in the social sciences. Has any of your research extended into other fields?

I have been studying the psychological counterparts to this challenge. We know a lot about the psychological makeup that allows people to thrive under conditions of capitalistic competition and wage-employment. But we know a lot less about the psychological factors that enable people to thrive and perform under conditions of “post-capitalist” collaboration and partnership. I have been trying to pin down these latter factors.

One setting where this has become a big issue is medicine: doctors in the past were primarily “individualistic” in their psychological orientation, proud of their individual diagnostic and treatment skills, but increasingly they are being asked to collaborate with other health-care professionals and even with their patients, and this seems to require a more “collectivistic” mindset. Interestingly, the demand for those individual skills hasn’t diminished at all, so doctors increasingly are being pulled in these two directions at once. I have been working with [Assistant Professor of Management and Organization at USC Marshall] Scott Wiltermuth and Dr. Richard Pitts at Kaiser Permanente trying to clarify how this all works.

Are you exploring any other areas in response to current economic concerns?

I am working on environmental sustainability. Here the capitalist economic system encounters a major and growing challenge, since market competition pushes firms to ignore environmental “externalities” even when business leaders might try sincerely to take more responsibility for these externalities. I am exploring the ways in which various “post-capitalist” models of business/government/community interaction might help us avoid or mitigate the environmental crisis that seems to be unfolding ever more rapidly.