CEOs Must Start Selling Capitalism

Alexandria Ocasio-Cortez wants the government to pay those “unwilling to work” and to end air travel as part of her Green New Deal. Kamala Harris likes the idea of free medical care for all Americans; Bernie Sanders would throw in free college. And Elizabeth Warren seeks to upend hundreds of years of U.S. legal tradition by making CEOs subject to personal criminal prosecution for misdeeds in their companies. This follows two years of President Donald Trump publicly assailing CEO decisions ranging from GM plant closings to Twitter algorithm tweaks.

So should CEOs be battening down the hatches amid all this populist campaigning against business leaders—and even calls for outright socialism?

Not exactly. “You can’t overreact to the shrillness you’re hearing out of Washington and other places,” says Mark Hogan, a global advisor to Toyota and a member of its board. “You control what you can control. You do your best in supporting the communities where you work. You can’t wring your hands about the other stuff. These things go in cycles.”

But that doesn’t mean CEOs should stay silent. Instead of simply kissing off the threat of fundamental changes to our economic system, some business leaders understandably want to engage their constituencies in defending free enterprise and address their concerns, especially among young consumers.

“We need to be telling that positive story to make sure all the things that business represents today are clear and understood and put in a historical context,” says Idie Kesner, dean of the Indiana University business school in Bloomington, Indiana. The trick, of course, is how.

MAKE A CASE FOR BUSINESS

CEOs can begin by highlighting the current U.S. economy that—despite recent hiccups—includes low unemployment, rising wages, increasing consumer confidence and productivity that is finally climbing. Worldwide, standards of living are rising as never before, thanks to industry-led revolutions in technology, medicine, manufacturing and more.

Many icons of modern life also illustrate these benefits. For Apple, it could be as simple as explaining how a government committee couldn’t have created the iPhone. And Uber and Lyft wouldn’t exist in a socialist straitjacket of overregulation and union control.

“Unlike a college professor who has to rely on blackboard economics to tell the story of market discipline,” says Emily Chamlee-Wright, president of the Institute for Humane Studies at George Mason University, “companies can actually tell the story of how they’re creating value.”

WARTS AND ALL

Capitalists’ toolboxes must include more than just defiant salesmanship. The case for free markets must also acknowledge that the past few decades have shown an ugly side of capitalism. “Corporate executives launched the greatest epidemic of executive corruption in American history in the early 2000s,” which soured middle America on the Fortune 500 and Wall Street, argues Chuck Underwood, a management consultant and speaker on generational differences.

These days, it behooves companies to adjust to the new reality that younger generation consumers and employees expect companies to stand for—and embrace—sublime purposes beyond merely generating sales and profits for shareholders, including social and even political causes. This shift is taking place mainly through greater consideration of ESG issues. Evansville, Indiana-based Berry Global, for instance, has joined about 30 other companies, including P&G, in the Alliance to End Plastic Waste to help end plastic waste in the environment, a cause célèbre among consumers.