Protests Show Capitalism ‘Nearly Broken’ (Simon Clark)

Created by : Francis Goodwin View profile

David Blood

Oct. 19, 2011 (Bloomberg) -- The protesters camping in London in support of the Occupy Wall Street demonstrators may be right and capitalism risks losing its “license to operate,” Generation Investment Management LLP’s David Blood said.

Blood, who worked at Goldman Sachs Group Inc. (GS) for 18 years before starting fund manager Generation with former U.S. Vice PresidentAl Gore in 2004, said the protesters’ message is that the financial system is “broken” and “unfair.”

“In many respects, their concerns are right, and their assessment of where we’ve got to is right,” Blood, 52, said yesterday at a debate at St. Paul’s Cathedral, London, near where the protesters have gathered. “The problem is that capitalism itself is broken or nearly broken.”

The financial industry is too focused on short-term gains and flawed incentives that are eroding trust in the system, Blood said. Generation seeks to maximize long-term returns by investing in companies that prioritize social and environmental factors as well as economic performance. The firm manages about $6.5 billion, according to two people with knowledge of the company, who declined to be identified because the information isn’t made public.

“Unfortunately capitalism has a terrible, terrible name now,” he said. “It’s possible that we will lose the license to operate and then we will have a real problem.”