“Always Do The Right Thing” Nick Hanauer
The following is an excerpt from a thought-provoking talk that Nick Hanauer delivered September 30 upon receiving the Harvard and MIT Humanist of the Year Award. The talk is entitled How to Destroy Neoliberalism: Kill ‘Homo Economicus’. Hanauer founded Civic Ventures, co-founded venture capital firm Second Avenue Partners, and was the first non-family funder of Amazon.
I’ve never published a missive comprised almost entirely of someone else’s words but Hanauer’s talk contains a vital, important message that I strongly feel every business leader would do well to contemplate. What follows is the last part of the talk, culminating in his credo we should all live by.
“Capitalism is the greatest problem-solving social technology ever invented. But knowing that capitalism works is different than knowing why it works. And contrary to economic orthodoxy, it is reciprocity, not selfishness that guides it—indeed—as if by an invisible hand. It is social reciprocity that builds the high levels of trust necessary for large networks of people to cooperate at scale. And it is only through these networks of highly-cooperative specialists that the complexity that defines our modern economy can emerge.
Dr. King said, “the arc of the moral universe is long, but it bends toward justice.” In the same way, thanks to the fundamental evolutionary logic of the market, the arc of the economic universe bends toward complexity. And these two arcs are just part of a larger circle that is anchored by justice, which creates the trust, that enables cooperation, which produces the complexity from which our prosperity emerges.
So this is the main point of my remarks: Properly viewed through this prosocial economic lens, we see clearly that it is our humanity, not the absence of it, that is the source of our prosperity.
But of course, in working to change the way we think about the economy, my ultimate goal is to change the way we act within it. And to this end, I’d like to close by offering four simple heuristics to guide your own actions and activism:
Heuristic number one: Capitalism is self-organizing, but not self-regulating.
The notion of market capitalism as a Pareto-optimal closed, equilibrium system is—to use the technical term—bullshit. Throughout the world, the most broadly prosperous capitalist economies are also the most highly regulated and highly taxed. To be clear: Government investment and intervention is not a necessary evil. It is just plain necessary.
Which leads us to heuristic number two: True capitalism is not shareholder capitalism.
The neoliberal claim that the sole purpose of the corporation is to enrich shareholders is the most egregious grift in contemporary life. Corporations are granted limited liability in exchange for improving the common good. Thus, the true purpose of the corporation is to build great products for customers, provide good jobs for employees, provide a fair return to shareholders and to make their communities stronger—in coequal measure.
Heuristic Three: Capitalism is effective, but not efficient.
Schumpeter’s “perennial gale of creative destruction” has proven extraordinarily effective at raising our aggregate standard of living, but it can also be extraordinarily wasteful, cruel, and unequal—unequal to the point that it threatens to destroy capitalism itself. If our economy and our democracy are to survive the ever-quickening pace of technological change, we must use every tool available to close “the innovation gap” between our economic institutions and our civic institutions.
And finally, heuristic number four: True capitalists are moral capitalists.
Being rapacious doesn’t make you a capitalist. It makes you an asshole and a sociopath. In an economy dependent on complex trust networks to facilitate the cooperative tasks from which prosperity emerges, and when prosperity itself is understood—not as money but as solutions to human problems—true capitalists understand that every economic act is an explicitly moral choice—and they act accordingly.
And so, to all the aspiring business and technology leaders in the audience today, I want to challenge you to adopt an alternative credo, far more ambitious—and more humanist—than Google’s “Don’t be evil”: “Be good.” Or maybe, “Always do the right thing.”
And when you do the right thing, do it with confidence that if it is the right thing to do for your customers, for your employees, for your community, and for the planet—then it is also the right thing to do for your shareholders.”