Inclusive capitalism: The emergence of a new purpose paradigm in economics and business administration and its implications for public policy

With the societal cracks resulting from decade-long neoliberal policies becoming increasingly visible in many countries, capitalism as the most suitable institutional system to produce material wealth, environmental sustainability and social stability has come under growing attack. This contribution examines what the growing army of recent heterodox scholars in economics and business have to say on what one could call ‘inclusive capitalism’. This concerns both the flaws in current capitalist systems and the behavioral assumptions that underpin it, as well as the possible institutional fixes they propose. I first sketch the background of the crisis surrounding capitalism, delve into its conceptual foundations and offer a working definition. I subsequently examine what social and environmental inclusion refer to and use Kate Raworth’s conceptualization of the doughnut economy as a point of departure to explore what ‘inclusive capitalism’ may imply. I also identify requirements for its implementation in institutional practices. It appears that ‘purpose’ rather than utility maximization or profit maximization is what novel economists and business scholars perceive as the key driver in ‘stakeholder-oriented capitalism’ or the ‘economics of mutuality’. Their claim is that at the end of the day this is not only a moral imperative for companies but also more beneficial for them in terms of long-term profitability. Moreover, they see a far more important role for government in shaping markets and leading the way into a more inclusive future than it is currently fulfilling. I argue that it is time for scholars in the field of public policy to take heed of these new theoretical developments in neighboring disciplines and respond to them.