HBS Summit Talks Economy

Business leaders from around the world lamented economic inequality and the challenge it poses to market capitalism on the second and final day of the Harvard Business School Global Business Summit.

Former University President Lawrence H. Summers, in his keynote address, focused on the decline in the United States’s stature as a moral and economic “beacon” over the past several years.

“A decade ago, our economy was the envy of the world,” Summers said. “We were on the cutting edge of technological innovation in fields like biotechnology and the Internet. This financial crisis has changed the view of the United States and of our own sense of economic strength.”

Summers, who is an adviser to Democratic presidential candidate Barack Obama, also took a shot at the Bush administration. He said that while the United States still attracts “many of the world’s most talented people,” misfires like the government’s handling of Guantanamo Bay, Abu Ghraib, and Hurricane Katrina have hurt the country’s reputation.

On the topic of economic inequality, the former Treasury Secretary cited the importance of both creating prosperity and spreading its benefits.

“People who once felt security in heir communities, their livelihoods, their nation, and the world no longer feel secure,” Summers said. “They think that their economic security is hanging by a thread, and they’re not sure what the new global system is going to be like for them. Our challenge is to make the system work for all these people.”

Summers closed his speech noting that capitalism had successfully faced down similar challenges in the past.

“In the 20th century, we saw a Republican Roosevelt and a Democratic Roosevelt preside over periods when capitalism was saved from itself,” Summers said. “This is our challenge today.”

CAPITALISM IN DANGER?

A panel moderated by Business School professor Michael E. Porter further explored the difficulties currently facing capitalism.

Thierry J. Breton, the former French minister of economy, finance, and industry, emphasized the importance of understanding why there exists widespread discontent with capitalism.

“We want a better life for ourselves and for our children. That is what capitalism is all about,” Breton said. “People want healthcare and education, but with which money? People are mad because they don’t know how the system will work for them.”

Sir Ronald Cohen, known by some as “the father of British venture capital,” called on the audience to employ their skills to help the less fortunate.

“We must use the methods that each of us learned at HBS to solve the world’s social problems,” Cohen said. “If we dither and delay in dealing with housing repossession, unemployment, and inflation, then the backlash against capitalism will be serious.”

ENTERPRISING NONPROFITS

Summit attendees split up in the afternoon to attend interactive classroom sessions on a variety of topics. Business School professors Herman B. “Dutch” Leonard ’74 and Allen S. Grossman moderated a session on the future of social enterprise.

Panelist Andrea Silbert ’86, president of the Eos Foundation, a private philanthropic organization, traced the development of the social sector.

“When I graduated from HBS 16 years ago, there was no term called ‘social enterprise,’” Silbert said. “It was called the nonprofit sector. I was considered on the fringe and not a part of mainstream business.”

John C. Whitehead, a former co-chairman of investment bank Goldman Sachs, cited the public school system as an area in which nonprofit work could make a difference, saying the government has failed “miserably.”

Whitehead called on the panel’s audience members to participate in social enterprise regardless of their economic status.

“You don’t need a lot of money to make a difference in the nonprofit world,” Whitehead said. “Nonprofits can benefit from your expertise and your advice towards solving complicated problems.”

—Staff writer Prateek Kumar can be reached at kumar@fas.harvard.edu.