For this reason, even if you think that the absence of future generations is not a moral loss or that the end of civilisation would be a good thing (issues that I discuss in Part IV), it’s still very important to avoid AI takeover or the lock-in of bad values. There will be future generations of intelligent beings either way, and by preventing the takeover of the world by an AI with bad values, you are changing how good or bad the future is over the course of civilisation’s life span. That’s the main effect, rather than any impacts on civilisation’s life expectancy.

This is an important and underappreciated point: there is no shortage of ‘patient capital’ – institutions such as pension funds and university endowments are naturally looking for investments that may only pay off in the long term – but there is a shortage of patient individuals working in the finance sector, an industry remunerated almost entirely by transactions. The result is a constant flurry of financial activity engaging senior executives, investment professionals and advisers which rarely adds to, and often detracts from, the effectiveness and success of the underlying business. The financial pressures that motivated strategy at Merck and Valeant not only damaged the standing of the businesses and their products but also diminished the returns to their shareholders in the long run. In later chapters I will show that these are far from exceptional cases. The history of pharmaceuticals illustrates much that is right and wrong in the relationship between business and society. I have described four problem areas: the motivation and standards of behaviour of leaders of the industry; the interface between business and finance; the difficulty of constructing a regulatory regime that is relevant and effective; and the sometimes too tenuous relationships between prices, costs and values. None of these issues is unique to the pharmaceutical sector: similar questions arise in every kind of business, and the answers are necessarily specific to industry, time and place. But in this book – and another that will follow – I will illustrate principles and directions of travel.

PART 2: A Brief History of Business

4: The Mechanical Firm

“A central thesis of this book is that this transactional account of business is not just repellent but mistaken. It does not describe how successful business works – or could work – in modern society. Individuals do, of course, respond to incentives, but a better description is that individuals tend to behave in line with the behaviours expected in their environment; they are led to do what the community approves, both through praise and material reward. Social aspects of work, including both relationships within the workplace and those between business and society at large, are crucial to both personal productivity and personal fulfilment.

PART 5: How It All Worked Out

“It is not a coincidence that the emphasis on financial metrics in business occurred at the same time as explosive growth in the size and remuneration of the financial sector. There were useful innovations, such as the emergence of venture capital as a means of financing start-up businesses. But the financial sector is primarily rewarded by fees from facilitating

transactions, not for the consequences of these transactions. Corporate executives engaged in a frenzy of dealmaking, buying and selling existing businesses; incentive plans encouraged actions that generated immediate revenues or cost savings, mostly with unmeasured consequences for the business in the long run. The result was the destruction of many of the great businesses which an earlier generation of less well-rewarded managers had created.

PART 6: The Corporation in the 21st Century

24: Combinations and Capabilities

“The modern firm is a community, rather than an office or a factory. It is defined not by its plant and machinery but by its capabilities. The successful business is characterised by the distinctive nature of its collection of capabilities and the match between these capabilities and the needs of its customers – and other stakeholders. The claim that George W. Bush told Tony Blair that ‘the problem with the French is that they don’t have a word for entrepreneur’ is, sadly, apocryphal.