If there is one business school that likes to tackle the big questions of life, it is MIT Sloan in Boston in the US. And Otto Scharmer, senior lecturer at Sloan and co-founder of the MIT Green Hub, does not fail to deliver. His latest research is a proposal about how society can solve the current crises - economic, environmental, social - using what he calls seven acupuncture points. These include re-addressing issues such as technology, labour, capital and co-ordination mechanisms.
He argues that the problem today is that we are trying to solve “3.0 challenges” with “2.0” frameworks and response patterns. “By ‘3.0’ challenges, I mean problems that require us to innovate at a whole systems level. By ‘2.0,’ I mean response patterns that are driven by special interest groups that lobby for their narrow self-interests regardless of the costs that they impose on the whole system,” he maintains. “The 2.0 system is what we have now - think of Wall Street lobbying in Washington to prevent new banking rules even though they would be in the interest of taxpayers.”
The problem is that previous forced break-ups - of AT&T in 1982, for example - were based on antitrust laws designed to preserve competition, says Richard Herring, and these are not applicable in the case of TBTF banks. ”You cannot say there have been huge antitrust violations, if any. So it would be a whole new rationale for intervening, and there would be lots of opposition to doing that.”
Every country has big institutions, argues Wharton finance professor Jeremy Siegel. ”There are mega-companies in every industry. You go around the world and all the financial institutions are large, and there have always been banks that have been too big to fail…. Just because you have these things that are too big to fail doesn’t mean they are bad institutions.”
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