Quarterly Capitalism
“Quarterly capitalism” means the same thing as “short-termism”—overreliance on quarterly reports and quarterly profits rather than long term planning. “Capitalism, for the Long Term” by Dominic Barton, published in the March 2011 issue of the Harvard Business Review, popularized the “quarterly capitalism” term.
“Quarterly capitalism” has been mentioned—and condemned—by such politicians and public figures as Al Gore (in 2011), Prince Charles (in 2013) and Hillary Clinton (in 2015, during her presidential campaign).
Wikipedia: Dominic Barton
Dominic Barton (born 1962) is a Canadian management consultant. He has been managing director of McKinsey & Co since 2009. He graduated from the University of British Columbia with a BA Honours in Economics and pursued an MPhil in Economics as a Rhodes Scholar at Brasenose College, Oxford University.
Harvard Business Review
Capitalism for the Long Term
Dominic Barton
FROM THE MARCH 2011 ISSUE
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Most important, the dialogue has clarified for me the nature of the deep reform that I believe business must lead—nothing less than a shift from what I call quarterly capitalism to what might be referred to as long-term capitalism. (For a rough definition of “long term,” think of the time required to invest in and build a profitable new business, which McKinsey research suggests is at least five to seven years.) This shift is not just about persistently thinking and acting with a next-generation view—although that’s a key part of it. It’s about rewiring the fundamental ways we govern, manage, and lead corporations. It’s also about changing how we view business’s value and its role in society.
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The deficiencies of the quarterly capitalism of the past few decades were not deficiencies in capitalism itself—just in that particular variant. By rebuilding capitalism for the long term, we can make it stronger, more resilient, more equitable, and better able to deliver the sustainable growth the world needs.
Twitter
Princess Susannah
@Artsalot
“we have quarterly capitalism and quarterly democracy” - Al Gore #SVCF
4:49 PM - 4 Oct 2011
Forbes.com
REEN TECH 2/21/2012 @ 10:18AM
Ending Quarterly Capitalism
By Mindy Lubber
Quarterly capitalism – a system that drives far too many CEOs, directors, investors, and analysts to focus on short-term performance and return on investment – is on a collision course with reality. In the risk/reward equation that fundamentally drives capitalism, the majority is heedless to the long-term risks of climate change, water scarcity and other game-changing environmental and social threats that will also be financial game changers for the global economy.
A new research paper issued last week by London-based Generation Investment Management, Sustainable Capitalism, has some alarming news about just how short-sighted this quarterly capitalism has become.
The Telegraph (UK)
Prince Charles calls for pensions industry ‘fit for 21st Century’
The Prince of Wales today urged pension funds to adapt to Britain’s ageing population.
By Dan Hyde 5:17PM BST 16 Oct 2013
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“With an ageing population and pension fund liabilities that are therefore stretching out for many decades, surely the current focus on quarterly capitalism is becoming increasingly unfit for purpose.
“There is mounting evidence from the likes of Harvard and London business schools that those companies that improve the way they tackle environmental and social challenges prove to the be the ones better able to deliver long term returns – so you can have your cake and eat it.
Twitter
Hillary ClintonV
@HillaryClinton
Quarterly capitalism—focusing only on short-term profits—is bad for wages, bad for business, and bad for our economy.
12:56 PM - 24 Jul 2015
Bloomberg.com
Hillary Clinton Takes Aim at ‘Quarterly Capitalism’ in NYU Speech
Jul 24, 2015 3:08 PM EDT
In a speech at NYU’s Stern School of Business on Friday, Democratic presidential candidate Hillary Clinton took on Wall Street’s short-term focus. She proposed a progressive reform of capital gains taxes for the top income tax bracket. The current definition of a long-term holding period—just one year—is woefully inadequate. That may count as long term for my baby granddaughter, but not for the American economy.”
Vox
Hillary Clinton wants to take on “quarterly capitalism” — here’s what that means
Updated by Matthew Yglesias on July 24, 2015, 10:00 a.m. ET @mattyglesias .(JavaScript must be enabled to view this email address)
In a speech today at NYU’s Stern Business School, Hillary Clinton plans to finger what she considers a key impediment to long-term economic growth: “quarterly capitalism.” It’s a brand of excessively short-term thinking in which Wall Street considerations end up doing too much to drive Main Street business decisions.
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What is “quarterly capitalism”?
The term comes from McKinsey & Company managing director Dominic Barton and some ideas he laid out in a March 2011 Harvard Business Review article, but the basic concept is much older. It stems from the ritual through which publicly traded companies release a statement about revenue and spending every three months, known as the quarterly earning report.
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The thesis of quarterly capitalism is that the link between short-term earnings and share prices, and the link between share prices and CEO pay, has created management practices that are excessively focused on living month to month.