Profits and purpose
In 1996, Life magazine published a shocking exposé of child labor practices in South Asia. The lead photograph showed a 12-year-old boy in northern Pakistan, stitching soccer balls stamped with the Nike logo. It would take two years—and a collapse in profits—for the company’s cofounder and CEO, Phil Knight, to declare a commitment to social responsibility. In 2015, Nike was independently ranked the world’s most sustainable sportswear company.
Is it possible for businesses to turn a profit while helping society instead of harming it? In Reimagining Capitalism in a World on Fire (Public Affairs, 2020, $28), Rebecca Henderson ’81 argues that not only is it economically feasible for them to address global challenges like climate change, economic inequality, and the failure of political institutions, but they may be our greatest hope. “Business is arguably the world’s most powerful global institution,” she says. “And so I believe very strongly that business must be a part of the solution, and can play a centrally important role in helping to create a just and sustainable society.”
Henderson contends that the century’s greatest challenges have been caused by the corporate hunger to maximize shareholder profits, a pursuit rooted in the ideas presented by Milton Friedman and other economists after the Second World War. “Profit maximization only increases prosperity and freedom when markets are genuinely free and fair,” she writes. “Modern capitalism is neither.”
Recent books from the MIT community
Climate Change from the Streets: How Conflict and Collaboration Strengthen
the Environmental Justice Movement
By Michael Méndez, MCP ’03; Yale University Press, 2020, $30
The Sword Is Not Enough: Arabs, Israelis, and the Limits of Military Force
By Jeremy Pressman, PhD ’02; Manchester University Press, 2020, $37.50
Education Crossing Borders: How Singapore
and MIT Created a New University
By Dara R. Fisher, SM ’13; MIT Press, 2020, $30
Continuum Mechanics of Solids
By Lallit Anand, professor of mechanical engineering, and Sanjay Govindjee ’86; Oxford University Press, 2020, $85
Beautiful Symmetry: A Coloring Book about Math
By Alex Berke, graduate student in Media Arts and Sciences; MIT Press, 2020, $19.95
Enduring Cancer: Life, Death, and Diagnosis in Delhi
By Dwaipayan Banerjee, associate professor of science, technology, and society; Duke University Press, 2020, $25.95
Blueprint for Greening Affordable Housing,
By Kimberly Vermeer ’82 and Walker Wells; Island Press, 2020, $35
Now, Henderson says, businesses must rethink their role. The compelling narratives in her book follow individuals at the helm of companies like Unilever, Toyota, and Walmart as they pursue profits and purpose with equal ambition.
“At one level, the book is about how there is a business case for business to save the world,” she says. “But the other thing is that we’ll only take advantage of that business case if we think about our mission as businesspeople in a different way—if we are purpose driven, if we think about ourselves as members of a broader community, if we bring our full humanity to work.”
Those values are reflected in Henderson’s life. At MIT, she was fueled by a mechanical engineer’s desire to see the bigger picture: “It really bothered me that I would drive past a factory and not know what was going on inside it,” she recalls. After graduating in 1981, she became one of the first women at the McKinsey office in London and then, curious to understand why some organizations resisted change, embarked upon a PhD in business economics at Harvard. Years later she returned as faculty, and her MBA students encouraged her to write a book. “Sometimes students say, ‘What’s the one thing we should take away?’” she says. “I say, ‘Love the ones you’re with and live the life you have, because that’s all we have.’”
“That’s why I tried to make the book personal,” she says. “I don’t think we’ll solve the problems we face unless we really get personal.”
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