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Table of Contents

Why Local Is the New Global
By Rana Foroohar
This essay is adapted from the author’s book Homecoming: The Path to Prosperity in a Post-Global World, published by Crown in October 2022. It looks at how and why localization, regionalization, and decentralization will characterize the postneoliberal world. Click here to read.

Understanding the Benefits of Capitalism through the Lens of a New Theory of the Firm
By Bartley J. Madden
A theory helps us to see the world better and ask better questions. In this paper, the Pragmatic Theory of the Firm clarifies the firm’s purpose and showcases the benefits of viewing a firm as a holistic system in which knowledge building is the critical determinant of long-term performance. The Knowledge Building Loop is a practical six-step looped process for improving the accuracy and reliability of our knowledge. This way of looking at knowledge building is not only useful in business but also in everyday problem solving. To illustrate this point, the six steps are used to provide novel insights as to how the Wright brothers taught the world how to fly. Learning how to fly and how to improve corporate governance both entail knowledge building. The Pragmatic Theory helps approach one critical corporate-governance issue: most boards are primarily composed of directors with a worldview (one of the six components of knowledge building) rooted in command-and-control hierarchical organization. Dealing with this issue is more important than mandates promoting gender diversity for boards. Overall, the paper takes two different but related perspectives. On the one hand, economic progress depends upon a society supporting a free market economy in which firms ideally compete on a level playing field to innovate and efficiently deliver value to customers. On the other hand, at a deeper level, long-term progress is achieved through firms with viable knowledge-building cultures that benefit all of their stakeholders. Click here to read.

Where’s the “Value”? A Meditation on Why the Twenty-First-Century CEO Is Different
By Alan Murray
This essay asserts that the CEO of the twenty-first-century American (or, more broadly, Western) corporation has changed in ways that an executive counterpart from 50 years ago would not recognize. The CEO today focuses keenly on subjects, themes, and concerns that would have been regarded strictly as externalities by previous corporate generations. Along with a radical change in corporate values has come a notable flattening of erstwhile hierarchies.​​ Click here to read.

A Persisting Injustice in America’s Economy
By Edmund Phelps
Although much attention in America and many other countries is devoted—and rightly so—to gaps between demographic groups resulting in part from discrimination, one of the most striking gaps is that between the incomes of low-wage earners and the incomes of high earners. Click here to read.

Phelpsian Dynamism: A New Perspective
By Lauri Pietinalho
The essence of Edmund Phelps’s theory of dynamism is a deliberation on how an economy can invigorate rather than hamper the human drive to create and to explore. The theory perceives societal values associated with modernism and modern economies as the premise for such dynamism. This essay considers a more general relationship of societal values and the human drive to create and explore in (economic) life. I discuss how no particular societal values (even of exploration itself) foster exploration and creation, but how those values come to leave a sense of space in between them. Specifically, I suggest that such a space should be seen as accompanying an opening of societal values toward some new kind of plurality rather than being a feature of any certain set of values, even if plural per se. I conclude by discussing how this perspective reframes Phelps’s theory of dynamism. Click here to read the paper.

Jean-Paul Fitoussi’s “Newspeak and Economic Theory: How We Are Being Talked To”: A Comment
By Richard Robb
In the previous issue of this journal, Jean-Paul Fitoussi (JPF) argues that the impoverishment of language impoverishes thought and, in turn, democratic debate (Fitoussi 2022). He describes how a new vocabulary has canceled Keynesianism and left only neoclassical economic theory in its place. This comment makes two brief points in support of JPF’s thesis: First, a hundred years ago, many worried about modes of thought that were slipping away, as abstractions like rational choice overtook the kind of knowledge that resists quantification. That debate has receded into the past. Second, although behavioral economics and positive psychology appear to offer an alternative to rational choice as the singular way to understand our actions, they actually tighten its grip. Click here to read.

In Memory of Jean-Paul Fitoussi
By Luigi Bonatti, Luigi Paganetto, Edmund Phelps, Francesco Saraceno, Giovanni Tria
Jean-Paul Fitoussi, the distinguished French economist, was a member and great friend of the Center on Capitalism and Society. He died on April 15, 2022, at age 79. In this issue of the journal, we present a selection of tributes that were delivered on September 30, 2022, at the center’s 19th annual conference. Click here to read.