“The combination of technology and capitalism has given us a world that really feels out of control.”
“Communism forgets that life is individual. Capitalism forgets that life is social, and the Kingdom of Brotherhood is found neither in the thesis of Communism nor the antithesis of capitalism but in a higher synthesis.”
Martin Luther King 1967
Why am I writing my umpteenth article on capitalism?
I saw a number from some USA research the other day … something like 50% of people under the age of 30 do not believe in capitalism.
Capitalism is good.
Capitalism is not bad.
Just wanted to get that out of the way.
But that does not mean there isn’t always a tension between good and bad in the soul of capitalism. It is an incredible wealth-creating & life bettering mechanism and, yet, left to its own devices can run off the tracks <morally and financially>.
Capitalism needs guard rails. Or some smart guy called it “embedded countervailing power.” It needs guard rails because humans will be humans.
When business is good, human beings become greedy.
When business is bad, human beings become fearful.
And I would like to remind everyone that culture is created by … uhm … human beings.
I say that not to be a smart ass but to suggest there is a real culture war in America, maybe the world, and it is occurring in the business world.
I purposefully use ‘culture’ because it has to do with some ethics or moral fortitude, some personal responsibility and some pragmatic hope for the future.
In fact … if we fix how capitalism works <systemic & infrastructure aspects> the net result is addressing income inequality, wage stagnation and overall economic prosperity as well as some individual “self-stuff” <kind of all the big societal issues we tend to discuss>.
A moment on the role of government.
It is both a fallacy to believe Government is not the problem nor believe they are the solution.
We have a mixed economy < I stole that term from Foreign Policy magazine>.
Capitalism is not a governance system which is about maximizing corporate profit at the expense of the citizenry. Effective government curbs greed obejectives & regulates capitalism so that it does the good things it is supposed to do <innovate & bring prosperity to many> and it doesn’t do the bad things <be driven solely by greed>.
Let’s be clear.
America is not based on an unfettered capitalism nor has it ever been <nor was it ever meant to be by the founding fathers>.
It is a managed capitalism system <always has been … I say that to head off any of the ‘government is too involved’ today talking heads>.
Government attempts … sometimes better than other times … to put reins on humans within a capitalistic society. Let’s say it’s something like giving enough range for wild horses to run free … but not to trample the gardens and lawns of the surrounding areas.
This ‘fettered’ managed capitalism idea is not perfect. It ebbs and flows and morphs into different shapes as time passes.
But it IS an effective economic and political system.
I would suggest that while polarizing … capitalism is balanced … when balanced.
But a better version of capitalism really is not dependent upon governance and laws <and putting banks out of business> but rather personal decisions, choices & responsibility. Yes. I just suggested <again> that people, not the system, will define the better version of capitalism.
Adam Smith suggested the three pillars of a society are: prudence, looking after oneself as best as one is able; justice, keeping the law of the land; and beneficence, caring for others and society where there is need.
Clearly our main issue is not how to survive on true scarcity <that is not a perceived scarcity or a “less than” scarcity> but rather how to live well with plenty.
To date we have chased double digit growth and higher GDP all the while seeking higher material happiness <sometimes confused with higher standard of living>.
We have become societally insatiable.
In other words … we cannot have enough.
This funny Maslow chart reflects that as additional personal needs are fulfilled it induces new needs <which we, as humans, constantly improve ourselves in order to further attain these ‘self actualization’ activities>. Think about this from a non-funny sustenance perspective in growing from poverty to non poverty <but the dimension perspective will always reside in the human mind>.
Yes. Capitalism has certainly vastly improved our lives and our means to live.
But it has also fed this insatiability.
Some guy named Sandel wrote in “what money can’t buy … the moral limits of markets:”
- the more things money can buy the more the lack of it hurts.
- buying and selling can change the way a good is perceived (he used “giving children money as incentive to read a book may make reading a chore rather than a simple pleasure”).
This all leads to an overall attitude that endless <and double digit> growth is essential to maintain and improve our quality of life. While I will not go into the detailed debate … that is simply not true <this is a standard efficiency versus effectiveness argument>.
Now. All that said.
The issue is really about the attitudes & attributes we are attaching to capitalism.
As I share some thoughts to try and address the young’s lack of belief in capitalism I will lead with two things:
- Communism promises to make everyone equally rich and instead makes everyone equally poor.
- Youth thinks it invents the world. Maturity respects the world it finds.
Suffice it to say that Capitalism is becoming some evil entity in the minds of many young people. In addition, aspects of other ideologies <communism being one> are being used relatively flippantly as ‘better than’ what is occurring within capitalism.
I actually believe it is a lack of understanding … but it is also quite possible there is a deeper lack of faith with capitalism.
If you step back you can see why the young <and the shallow thinkers> feel this way.
- Real unemployment is nearly in double digits. Most Americans think the economy will recover next year, but only 2% think it will make a complete recovery.
- On average, according to Gallup, Americans believe that 50 cents of every dollar the federal government spends is wasted. Democrats, who are supposed to believe in big government, guess that 41 cents of every federal dollar is wasted. Republicans think it is 54 cents, and independents put the number at 55 cents in the dollar.
- A poll found that most Americans would rather their government did less. Some 57% said it was doing too many things that were better left to individuals and businesses. Only 38% thought it should do more.
And many people have genuine complaints. Many working-class men have lost their jobs. Those who are still employed have seen their wages stagnate. And overall they don’t trust government not to make it worse.
This is a sad state of affairs <for government who CAN make shit happen> because regulations can positively address stagnation & inequality without intervening in entrepreneurial decisions or in the price/profit mechanism.
The harsh black & white truth no one wants to say is that regulation is what makes free markets … well … free <free markets cannot sustain themselves>.
I have been thinking about capitalism for a while nudging my mind toward discussing morals and character <society & culture>.
I found it interesting to think about Schumpeter when addressing the youth capitalism challenge.
- what Joseph Schumpeter called ‘the cultural contradictions’ of Capitalism
One of the cultural contradictions <I believe he outlined 5> was … Rationality.
In that Capitalism encourages rationality in behavior. And that culture creates, and demands, a natural conflict by insisting on some ‘irrational’ behavior.
Rationality comes to life as the “maximization” of particular interests of individuals and groups.
This same rationalization then bleeds into both personal lives <family & home> and ultimately becomes embodied in some form or fashion into cultural forms.
Children become quasi economic assets <or their rearing incorporates rational ‘maximization’ theory embedded in capitalism>.
At its extreme … maximization bleeds into soulless wealth and extreme consumption thereby substituting saving and societal salvation.
Oddly, but fairly, he suggests consumption wins against accumulation. This leads to a certain diminishing of the desirability of incomes above a certain level.
At the same time, however, when the breaks of certain values associated with ethical or religious tradition fail <called the sophrosyne: Greek philosophical term meaning healthy-mindedness and from there self-control or moderation guided by knowledge and balance. Roman poet Juvenal later interpreted sophrosyne as “mens sana in corpore sano” – “a healthy mind in a healthy body”> individuals and groups come into natural conflict with capitalism. The basic human instinct is one of core values <in some degree within everyone> and therefore the natural contradiction forces some balance within capitalism.
This means that the irrational components of behavior are critical for capitalism to emerge and withstand rational arguments … especially when based on long term considerations.
“This is the genius and the Achilles’ heel of American culture. We … have a strong belief in self-determination and agency, even when our expectations fly in the face of reality,”
Katherine Newman, who studies social mobility
Capitalism in America is not functioning efficiently for a variety of reasons … but that doesn’t make it bad.
The issue of Confused capitalism … or being confused by capitalism.
No matter how altruistic and non-materialistic you may be … the issue is simple … as we sit perched on a stool at the bar of society where we can scan the room and see the danger of those who have nothing or little … as well as those who have the most <and lots of most>.
If the majority of us begin to look like we are either nearing the dangerously ‘nothing people’ or, contrarily, appear to be too distant from those who ‘have the most’ <no matter what your exact status is> we get nervous … if not angry.
Materialism, culturally, is therefore naturally cyclical in that it will always seek to balance itself. For we always ‘want’ … but most of us want it to be within the realm of ‘hopeful that we can get more’ … without appearing too greedy. Hence that is fairness.
Give me a chance for something more than I have … and give me more and I won’t be too greedy.
While everyone can debate the role of money with regard to people’s happiness … it is true that economic health does make people happier <more secure, more comfortable, more sustenance>.
This actually means that free-market capitalism is not devoted to integrity and a reliance on trust but rather economic growth.
And this suggests the people need to be regulated.
Why do we balk at regulation?
The US has always been a wide-open, free-wheeling country, with a high tolerance for big winners and big losers as the price of equal opportunity in a dynamic society. If the US brand of capitalism has rougher edges than that of other democracies most people inherently believe it is worth the trade-off for growth and mobility.
Buut while we like the free wheeling we also recognize that we are going through some type of crisis. It just becomes a discussion on what type of crisis.
Some think it is a crisis of capitalism. <I don’t>
Others think the crisis is moral. <I do>
“Advocates of capitalism are very apt to appeal to the sacred principles of liberty, which are embodied in one maxim: The fortunate must not be restrained in the exercise of tyranny over the unfortunate.”
First there is attitude. What is maybe a disregard for societal fairness versus what could be construed as individual ‘winning’ or ‘what I deserve.’
A lot has been written about the effects of globalization during the past generation. Much less has been said about the change in social norms that globalization enabled. Many people, particularly people in power positions, took the vast transformation of the economy as an excuse to rewrite the rules that used to govern their behavior.
I say that because while there will always be isolated small groups of lawbreakers in high places what truly destroys morale is a systemic corner-cutting, rule-bending, self interest behavior type of construct.
I have thought about how and why this happens.
It starts early.
As young children we start off with a healthy core of greatness, but before long it gets covered in layers of doubt, fear and guilt. Often this is caused by people we trust most like parents, teachers and managers who put us down in subtle and less subtle ways. It’s as though people were flicking bits of mud at us until our core of greatness is totally covered. Even worse, we flick mud at ourselves by accepting smaller versions of ourselves through negative self-talk and poor thinking; and we become a tiny fraction of the potential that once existed.
Once potential is curbed we seek to find success in other ways … sometimes circumventing “what is right” to make small excusable steps in our behavior to attain ‘small personal successes.”
Second is our propensity to consume <and its self perpetuation>.
Our propensity to consume without thought for the planet, the poor or even the person next door is a sign that greed and fear are the motives of the moment.
Freedom certainly creates problems (inequalities most notably), but it also solves them.
But the central aspect of freedom advanced by these thinkers was the market, or what Adam Smith had described as the propensity to truck, barter and exchange. In this area, freedom allowed dispersed individuals—disposing of their own resources and choosing for themselves what they want to buy—to generate a level of prosperity that has had no precedent in human history. And the pricing system that emerges from the market—that is, from the push and pull of supply and demand—provides the indispensable knowledge needed to guide the economy.
So. All that said.
I would tell young people that Capitalism is not the issue.
It is the people within the system <and young people can fix that by entering the system>. The system can work just fine … it is simply being abused at the moment.
Capitalism needs to be managed to be more oriented to the long term and socially more responsible.
Interestingly … Richard Branson has formed an initiative to do just this … but I found it interesting that initially he sought to have a board of Business Elders … but there were too few candidates from the business world of sufficiently unimpeachable character to staff it <insert ‘oh my’ here>.
Anyway <to conclude part 1>.
Since World War II in particular, America has been on a consumption surge/binge. While wages have certainly stagnated family disposable income has grown, life standards have improved, health has improved and overall quality of life has improved <and showed a continuous growth>. Unfortunately, at the same time, while families busily lived their lives they also had access to the finest inventory of toys capitalism could provide. Each generation was doing better than the one before, life was good and standard of living acquired a layer of ‘non essentials’ as part of how the people lived a successful & happy life.
At the same time.
Televisions starting bringing news, influential people talking and capitalism toys into the family living room. Television allowed busy families the opportunity to be exposed to complex issues through professionally crafted sound bites and talking points. People were now becoming more informed from a larger perspective, not just local perspective, and we ushered in the inevitable “keeping up with the Joneses” aspect.
What we face is the natural rising tide of ‘better than before’ facing the ebb and flow of time. The waters being drawn backwards is not appreciated by those standing in a spot washing their feet in the surf. Is it greed for most people? No. it is simply a desire for the status quo – “better is a right not a privilege.” Therein lies the social & cultural task at hand.
Anyway <to conclude part 2>.
I write and post on my blog. And speak about it wherever and whenever I can <especially to young people>.
It is easy to talk about it because it seems like if we take a moment and reflect on the problems in the world today we might easily come to the conclusion that it is mainly due to deterioration of our morality compass.
It seems like everywhere we see people filled with greed and intent on self-gratification.
It seems like people are always willing to compromise on values/morality to make personal gains.
If we start talking about values and create some sort of awakening in the minds of people.
Will everyone do it? of course not.
But someone has to go first.
Someone has to become the catalyst for change.
Why not the youth? We should encourage them to enter the system and build what they desire from the inside out rather than simply breaking the system as unfixable.