Book Cover

Capitalism,  The Way to a World of Peace and Plenty

July 27, 1995

Ms. Regina Herzlinger
Harvard Business School

Dear Regi:

Jean Francoise Revel warned that democracies perish if invaded by falsehood, it depends on educated citizenry.  History’s optimists have emphasized that the flip side of freedom is moral discipline.  Contrast these fundamentals with two positions from Harvard leaders: first, President Bok’s lament that in two decades of faculty meetings he never once heard mention of how to prepare students to be better citizens.  Secondly, in a handwritten response to my November 30, 1989 letter to Dean McArthur (copy attached), he confirmed “that for several decades now it has been deemed inappropriate by the professorate in America to become involved in values, moral standards of behavior, etc.”

The morality and protocols of Democratic Capitalism can fill this moral vacuum and educate in governance and monetary policy.  The business schools should present this coherent philosophy as the sought for superior form of commerce.  It’s a powerful message based on economic logic that can penetrate the decades of cultural conditioning where no amount of hand wringing about returning to old-fashioned values will.  There is a quotation attached by Wilhelm Ropke expressing delight that the moral system that moral humans must adopt happens to be the most effective also.

The idea that the business school should lead society back to moral values is full of irony and will be regarded with amusement by the liberal arts colleges.  The Platonian legacy of contempt for commerce is nearly intact.  Most would agree from the events of the last century, that the world is moving toward a “common ideology.”  But the responsibility of the university to facilitate the metamorphosis is not understood or accepted.  Like the nerve cells twitching while the brain is dead, they continue to offer collectivism or the “mixed economy.”  Adam Smith commented on this phenomena, his quote is attached.

My last letter to Dean McArthur, 12/21/94, is attached.  I was unaware of his planned resignation when I wrote.  But in your curricula deliberations Democratic Capitalism can be integrated only after accepting “The most moral is the most profitable” theme, and recognition that Financial Capitalism in its corrupted form is hurting Democratic Capitalism.  This may take courage in an environment where the buildings are names Morgan, Baker, Mellon, etc.

Marx was right, society is based on commerce and progresses by moving to a superior mode.  Society needs moral, trained leadership while democracy depends in educated citizenry and moral discipline.  The only hope of reversing the moral and economic decline is an infusion of young leaders motivated by the morality and trained in the governance protocols of Democratic Capitalism.  The first business school to present it as an economic logic will lead.

In 1981, Michael Novak, in “The Spirit of Democratic Capitalism,” captured the morality essential to the free system but, before him, Max Weber  captured the vocational nature of being a Democratic Capitalist in “The Protestant Ethic and the Spirit of Capitalism” (1904-5).  He restated the traditional warnings about greed and the acquisitive urge but described the continuous growth opportunities in Capitalism when managed by those who felt that their fulfillment of duty in worldly affairs was the highest form of moral activity.  He personalized this in Benjamin Franklin who felt “the joy and pride of having given employment to numerous people and of having had a part in the economic progress of his home town.”

John Stuart Mill’s “Manifesto of Democratic Capitalism” (my article on the “Long History,” pg.8) described a Capitalism with the unified purpose most seek.  Max Weber describes managers with a “calling” who could develop and expand such an environment.  When young students proceed through their educational process, it would be appropriate if they had the opportunity to be sensitized to this vocational concept of being a Democratic Capitalist.  Many, if not most, are already culturally conditioned to power and money but that still leaves many searching for a contributory, meaningful career.  They are the quality opportunities for new leadership but the university has a long deferred obligation to offer this alternative.  A world lacking such leaders was described almost a century ago by Weber as the last stage of our cultural development: “Specialists without spirit, sensualists without heart; this nullity imagines that it has attained a level of civilization never before attained.”  In this environment, many have great trouble with “the most moral is the most profitable.”  Perhaps it can be best assimilated approaching it both from the arguments of economic logic and historical references.  There is plenty of consistent, inspiring material: Smith, Owen, Tocqueville, Kant, Hegel, John Stuart Mill, Marx, Weber, Keynes, Von Mises, Hayek, Ropke, and Novak.

As I expressed in my letter to Dean McArthur, the business schools will continue to struggle with their identity crisis until they commit to this challenge.  Efforts to “teach ethics” will have limited success if the ethics aren’t integrated into a philosophical and historical whole.

With best regards,

Raymond B. Carey, Jr.

bcc: Mr. Michael Hartoonian
Dean Diane Dunlop
Richards Van Scotter


Ray CareyRay Carey

Ray Carey learned through managing companies for 33 years how to change the work culture to provide employees with their best opportunities to develop and contribute. This experience began as a 28 year old plant manager and later president of an electric motor company, and concluded with eighteen years as president , chairman, and CEO of ADT, Inc.

See Carey's autobiography of his work career in chapter two of his first book,

Democratic Capitalism, The Way to a World of Peace and Plenty.

For more information about Ray Carey and his advocacy of democratic capitalism, visit the pages of this website.