THERE are 68,000 firms listed around the world, most of which have little in common. Yet one thing unites bosses from Shanghai to San Francisco—the sense that capitalism has become too hyperactive, forcing them to take ever shorter-term decisions at the expense of their owners and of society. It’s as close to received wisdom as you can get in business. On September 28th a body called Focusing Capital on the Long Term (FCLT) announced its board of directors, now devoted to fighting myopia among investors and managers. Some mighty names have signed up, including BlackRock, the largest fund manager, and Unilever, a consumer-products firm.

The new body’s biggest challenge is proving that short-termism is a problem. Of the two main bits of evidence, one is circumstantial. It seems horribly frenetic that the average holding period for a share in America is only 200 days, mainly because of computerised trading. The other is subjective—managers’ perception that they are harried. In a study commissioned by FCLT of 1,000 executives around the world, 51% felt under most pressure to deliver financial results within a year or less. Rather than take the long view, they feel obliged to cut costs, massage quarterly profits and buy back shares.

A clear-cut case? Not really. Corporate investment in America has been sluggish in the last year, but at 13% of GDP, its...Continue reading