Is capitalism in crisis?
That’s a question being asked more frequently these days as a result of rising inequality, growing sympathy for socialism among the young, the leftward lurch of the Democratic Party, capitalists-turned-Cassandras like Ray Dalio and Peter Georgescu, and a host of new books including Anand Ghiridharadas’ Winner Take All, Shoshana Zuboff’s Surveillance Capitalism, and Raghuram Rajan’s The Third Pillar. This recent story in the Washington Post exemplifies the trend.
But most of the capitalists themselves are taking a more nuanced approach. In our annual survey of Fortune 500 CEOs, we asked the chiefs to say which of the following three statements they most agreed with:
–Capitalism is in crisis, and needs a major overhaul to better serve society.
–Capitalism is not in crisis, but would benefit from some tweaking to better serve society.
–Capitalism works just fine as it is.
Only 5% of those responding chose the first option. And 24% chose the last. The vast majority–71%–were in the middle category. It’s a problem, but the house isn’t on fire…yet.
My guess is we are still in the early innings of this ball game, and that those poll results will move north. As one CEO said to me recently: “We’ve got about 24 months to address this.” More than tweaks may be needed.
More news below. And don’t miss Beth Kowitt’s insightful look into Google’s civil war, out this morning here.
And if you are looking for a book to read this weekend, try the one most mentioned when we asked the CEOs to name the best they’ve read this year: Bad Blood.
Say hello to another glum day on the markets, courtesy of the U.S.-China trade war. China doesn’t seem keen to resume trade talks due to American “insincerity” and tariff threats, and Beijing is indicating it will prop up the domestic economy with stimulus measures. The Hang Seng is down 1.2% and the Shanghai Composite 2.5%, the Stoxx Europe 600 is down 0.6% and U.S. futures look in line with Europe. Bring on the weekend! Bloomberg
Wall Street may have liked Pinterest’s Q1 sales, which slightly beat estimates, but not so much its full-year outlook. After the digital scrapbooking company released its first post-IPO results, its shares dropped as much as 19%. Its growth seems to be slowing, and profitability is not in sight yet. Fortune
Google is facing a new antitrust inquiry, this time in Italy, where it stands accused of using its Android market dominance to stymie a charging-station-finding app from the energy giant Enel. Google allegedly refused to integrate Enel’s app into its Android Auto system, which would allow it to be used on the dashboard while driving. Guess what you can use to find charging stations while driving: Google Maps. CNBC
Bitcoin has been on a tear recently, but—surprise!—the party is over. Having peeked over the $8,000 threshold yesterday, the value of the most famous cryptocurrency dropped as low as $7,180, per Coinmarketcap data (Coindesk reports there was even a trade at $6,600.) At the time of writing, one bitcoin is trading at $7,285. Coindesk
Around the Water Cooler
Amazon has invested in the British food delivery service Deliveroo. The e-commerce giant is the lead investor in a $575 million round for the app. The news knocked 8% off the value of Just Eat, the country’s dominant food delivery service. Guardian
Shares in the British recruitment firm Staffline, which deals a lot with providing temporary staff, halved in value this morning after it issued a profit warning. Brexit seems to be the main culprit here—Staffline says many of its customers are hiring permanent staff instead of temps because they’re worried about the labor market tightening. The company also delayed publication of its 2018 results due to an underpayment inquiry. Financial Times
We already know that smartphone lifecycles are increasing—it’s the main reason why the industry is in the doldrums—but it’s nice to have some data on the subject anyway. Market researchers Kantar Worldpanel found that American smartphone owners used their handsets for 22.7 months on average a few years ago, but in 2018 the figure was up to an average of 24.7 months. In the U.K., it’s up to 27.7 months. Interestingly, in China the average was 20.2 months in 2016 and 21 months in both 2017 and 2018. CNBC
Taiwan has become the first Asian state to legalize same-sex marriage. Lawmakers approved the move a couple years after a Constitutional Court ruling that said the prohibition on same-sex marriages was unconstitutional. The rule change will come into effect a week from now. CNN