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Overview of "Prosperity" by Colin Mayer

"Prosperity: Better Business Makes the Greater Good" by Colin Mayer is a thought-provoking book that challenges the fundamental principles of business thinking. Published in 2018, the book aims to redefine the purpose and role of corporations in society, arguing that the current focus on maximizing shareholder value is misguided and has led to significant social, environmental, and political disasters.

Key Themes

  1. Purpose of Business: Mayer fundamentally disputes the Milton Friedman doctrine that the sole purpose of a company is to maximize shareholder value. Instead, he advocates for a broader purpose that includes contributing to economic and social well-being for all stakeholders, not just shareholders.

  2. Value of Natural Capital: The book emphasizes the importance of valuing natural capital, which includes the environment, and argues that current economic models undervalue this critical component. Mayer suggests that a more comprehensive approach to value creation should include natural, human, intellectual, and social capitals.

  3. Critique of GDP: Mayer also critiques the use of GDP as a measure of economic success, arguing that it misses essential aspects of human well-being and societal value. He advocates for a more holistic approach to measuring prosperity.

  4. Corporate Governance and Finance: The book proposes a comprehensive new agenda for corporate governance, finance, and regulation. Mayer argues that corporations should be structured to prioritize long-term sustainability and social responsibility over short-term profits.

  5. Policy and Reform: "Prosperity" not only addresses how businesses can be run more responsibly but also outlines policy changes needed to support this new agenda. Mayer suggests that governments and regulatory bodies must play a crucial role in fostering a more sustainable and equitable business environment.

Plot Summary

The book is structured around a critical examination of the current state of business thinking and its consequences. It draws on historical, legal, economic, scientific, philosophical, and historical insights to make its case. Mayer presents a radical yet carefully considered prescription for corporations, advocating for a shift in their purpose and structure to prioritize long-term sustainability and social responsibility.

Critical Reception

Positive Reception: The book has received positive reviews for its well-argued and concise presentation. It is praised for providing a comprehensive new agenda for establishing corporations as powerful forces for promoting economic and social well-being.

Martin Wolf's Review: The Financial Times' Martin Wolf, in his review, "reluctantly agrees" with Mayer's arguments, highlighting the urgency and importance of the book's message.

Broader Impact: The book has been noted for its ability to bring together diverse perspectives from various fields, contributing to a broader discussion about the role of corporations in society. It is seen as an excellent challenge to the world of business and governments, urging them to rethink their priorities and policies.

In summary, "Prosperity" by Colin Mayer is a seminal work that challenges the conventional wisdom of business thinking, advocating for a more sustainable, equitable, and responsible approach to corporate governance and finance. The book offers a comprehensive new agenda for corporations and policy makers, aiming to promote economic and social well-being for all stakeholders.