Reading List: The New Capitalists

Ordinary investors are holding more sway, write the authors of The New Capitalists.

The New Capitalists

Stephen Davis, Jon Lukomnik, David Pitt-Watson
Harvard Business School Press, November
304 pp., $29.95


Back in 2002, a group of Catholic nuns used their tiny stake in General Electric to petition a resolution onto the agenda of its annual shareholder meeting calling for the company to cut greenhouse gases. CEO Jeff Immelt tried to remain agnostic, but when other shareholders took up the call, he stopped to listen. Next thing you know, GE no longer saw a nusiance but rather “ecomagination” and a $10 billion revenue opportunity.

Nuns guiding GE? Now, more than ever before, ordinary people have money in the market–and money talks. “In the early 1990s,” explain the authors of The New Capitalists, “only about 20% of U.S. voters identified themselves as investors; now more than half do.” And those folks aren’t just rubber stampers; increasingly, they want to see their values reflected in the companies they invest in.

Most investors today still hold executives accountable for selfish reasons–most notably, their pensions and 401(k)s–just as Adam Smith wrote 230 years ago. But The New Capitalists does a brilliant job capturing the incremental improvements in investor communication and collaboration that have been quietly, gradually reshaping the economy. For example, last year saw the launch of the International Interfaith Investment Group, a worldwide consortium of Buddhist, Hindu, Sikh, Christian, and Jewish investors, which seeks to find positive investments such as alternative energy rather than merely avoid negative investments like tobacco. Around the world, investment pundits are outing poor corporate governance using “guerrilla blogs” such as and, which hold companies in Australia and Hong Kong, respectively, accountable.

Unfortunately, chronicling these small-bore checks and balances doesn’t make for scintillating reading. “Some may yawn,” the authors acknowledge gracefully. “After all, business has had about 400 years to get used to public cries for social responsibility.” But the cries are getting louder. For folks like Immelt, the message is clear: Pay attention to your nuns; they just might have a good idea.

Combine Adam Smith’s capitalist self-interest in The Wealth of Nations with … Peter Drucker, who predicted the rise of institutional investors repping everyday people, to get … The New Capitalists, which says, listen to your investors–or pay the consequences.