The Man Who Broke Capitalism

David Gelles’ The Man Who Broke Capitalism resonated with me on multiple levels, as both an employee and an investor. Working in a company recently acquired by private equity funds, I see firsthand the same profit-maximizing tactics Jack Welch pioneered at General Electric. The relentless drive to squeeze margins, cut costs, and justify layoffs under the guise of efficiency feels eerily familiar. Having just survived my company’s first round of layoffs - an unprecedented event in our history - I can’t help but notice how our use of the vitality curve  mirrors the logic Welch popularized. What once seemed like a system for rewarding performance now feels like a mechanism priming us for workforce reductions.

At the same time, as an investor in the stock market, I recognize the other side of the equation. To an investor, a company’s internal struggles matter little; what truly matters is whether its stock price goes up or down. This book forced me to reconcile these two perspectives - the worker affected by corporate decisions and the investor who benefits from them. It also highlighted the perverse incentive  at play, where managers are disproportionately rewarded for aggressive cost-cutting, often at the long-term expense of the company and its employees. Being a lower-level manager myself, the book served as a cautionary tale - offering a glimpse into the type of leader I could become if I unquestioningly follow these principles.

One of the book’s greatest takeaways for me was the ability to recognize early warning signs of corporate restructuring and the potential consequences that follow. While I may not be able to change how private equity treats my company, at least I can anticipate and prepare for what’s coming. That’s why I believe this book should be required reading for any aspiring manager - it provides a sobering perspective on the broader system many of us operate within.

That said, while The Man Who Broke Capitalism is well-written and insightful, it is also quite one-sided. Gelles paints Welch as a near-demonic figure, responsible for many of the worst aspects of modern corporate America. While I agree that Welch’s influence was profound - and often damaging - the book lacks strong counterarguments or examples of alternative leadership approaches. In contrast, thinkers like Ken Blanchard advocate for more balanced, people-centric leadership styles, but these perspectives are largely absent from Gelles’ narrative.

Perhaps the most eye-opening realization for me was understanding why so many investors prefer U.S. stocks. The ruthless, short-term-focused corporate strategies Welch championed are, in many ways, what enable the S&P 500 to maintain its impressive ~10% annual returns. This book also reshaped my view of celebrated investors like Warren Buffett. He is often glorified in financial media, but I hadn’t fully realized how much of his success comes from the same cost-cutting and profit-maximizing playbook that Welch helped institutionalize.

Ultimately, The Man Who Broke Capitalism is a thought-provoking read that challenged my views on corporate leadership, investing, and my own career trajectory. While it leans heavily into criticism of Welch, it provides an important lens through which to understand the forces shaping modern capitalism. Anyone working in management - or investing in the stock market - should read this book, if only to better understand the game they’re playing.