the essence of capitalism is capitalizing

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(1) Why has economic advance become and remained so compelling a goal to all of us as individuals, even though it yields disappointing fruits when most, if not all of us, achieve it?

Fred Hirsch, Social Limits to Growth

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“But, in the end, even pirates understood that true freedom still required governance amongst themselves.”

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“I am making out a case for the sort of person who is in sympathy with the fundamental aims of Socialism, but who in practice always takes flight when Socialism is mentioned. Question a person of this type and you will often get the semi-frivolous answer: ‘I don’t object to Socialism, but I do object to Socialists.’ Logically it is a poor argument, but it carries weight with many people.”

George Orwell

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I find myself in a number of conversations about capitalism in which I have to explain the essence of capitalism is capitalizing. To be clear there are two sides to this capitalizing coin. One side means we are growers and when we are positively capitalizing, we are seeing opportunities and innovations to make the world better and do things that help make life better and capitalize on them.  Literally and figuratively, this is a huge thought and I would argue that falls more on the side where the balance on ‘collective good’ is proportionally higher than self-interest good. The other side of the coin is more a zero-sum aspect. Extracting and exploiting to capitalize on market opportunities. I would argue that is more on the side where the balance is on self-interest good is proportionally higher, if not solely, than collective interest good. I would argue the current business world resides mostly in the latter.

Which leads me to nouns and verbs.

I begin here because what that means is I have changed the discussion from a noun, capitalism, to a verb, capitalizing. This is incredibly important because while many people want to deconstruct capitalism as a system, I want to deconstruct HOW humans do capitalism. In other words, how they choose to capitalize within a system fostering business and innovation. If you believe things can be transformed through capitalism, then maybe you should invest some energy exploring the capitalizing aspect. Well. that’s what I think. I don’t begrudge rich people for being rich, I just crucify the rich over how they have capitalized on their opportunities to gain their rich status. The reality is there should be two main things people should talk about when debating the merits and flaws of capitalism:

1. Individuals who use the system to their objectives

2. Businesses, institutions, who manipulate the system to their objectives

I stated the two things that way to make a point. Capitalizing always has an objective. Capitalizing is using, manipulating, managing, abusing <whatever word you choose> the system to meet that objective. I would be remiss if I didn’t point out to the holier-than-thou Purpose folk that Purpose is an objective <within capitalism> and what really matters is how the business goes about the business of capitalizing, toward that objective, that really matters. As a follow-up to that sentence let’s also note that the individuals doing that how and the institutions modeling themselves to do that how are human beings thinking through the ‘how to capitalize’, i.e., its is not the system we should be redesigning, but rather have your design eyes on the humans working with the system.  What I am fairly confident in saying is that most companies have not come around to the idea that after years of making money from unethical, or hollow behavior, and unsustainable practices, and do not truly believe they have to dramatically change what they are doing to fit the demands of a ‘changing world’. Oh. They may change some of the words around the objectives and they may even make efforts to change the production & process aspects of doing business <digital transformation would be the prime example here> but basically their version of how to capitalize on market opportunities, extracting & exploiting what they need to attain desired growth objectives, will not dramatically change. That said. I imagine my larger point is that capitalism is capitalism, but capitalizing is never just capitalizing. What I just shared matters because capitalism has certainly vastly improved our lives and our means to live, but has also fed a certain human insatiability.

Which leads me to the capitalizing battle between self-interest and collective interest.

“The cold truth is that the individualist creed of everybody for himself and the devil take the hindmost is principally responsible for the distress which Western Civilization finds itself.”

Charles Beard in early 1900’s

Some guy named Sandel wrote “what money can’t buy … the moral limits of markets” after pointing out:

• 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 about growth, that attitude is simply not true <it is the typical efficiency versus effectiveness argument> with regard to reality. This is a perception/attitude problem.

Today’s capitalism has veered toward an individualistic orientation – a ‘me’ accumulation game. And this is where we inevitably dive into self-interest versus collective interest. It was Tocqueville who suggested America embodied “self-interest rightly understood”. I would argue that over time the tension between individual & collective interests has bifurcated into a warped either/or. What I mean by that is industrialization encouraged I’s (individuals) to begin believing the company <which is actually a profits-sustaining non-human entity> was the “I” and business took that idea and embedded it in a culture of “we are in this together” and encouraged everyone it was a zero-sum game business world. So “I” got warped and then it became a bit of a “business is war” world instead of a 4 Musketeer world < all for one and one for all> society. I am not going to suggest some utopian vision, but we are talking about capitalizing and in a capitalism world in which everyone was capitalizing the right way not only would there be profits for all <not equal, but for all> there would also be no such thing as systemic issues so there would be minimal poverty, no healthcare crisis, no retirement crisis, no senior care crisis, no childcare crisis. What I mean by that is part of capitalizing in a capitalism is the hard decisions and sacrifices that society, business and individuals have to make – not at the sacrifice of profits for Purpose, but rather because the collective good is in the best interest of the self-interest of the individual <ponder that thought for a bit>.

We need to make some of these hard decisions because capitalizing chases dollars, not needs, leading to a moral scarcity with an abundance of purchasable choices (some of need, many of want, and a large percentage with questionable real benefits). Yes. Capitalizing, limited in any morality of collective good, ceases to build some common values into everyday value and everyday lives and, in fact, diminishes little by little what is embedded with time and the system encourages corrosive individualistic orientated behavior where individual behavior is associated with individual advantage. This means in a zero-sum world society gets eroded one person capitalizing at a time. But there is even a worse consequence. The absence of social values makes it a transactional consumption world in which the only regulations/boundaries are ‘fairness consumption guidelines’ not actual control of the market with an eye toward societal needs/values. This means capitalizing is driven by institutions focused on matching ‘hedonic tendencies’ motivated by individual aims. To be clear, this does not mean individuals are immoral (or even amoral), but that in this capitalizing mindset morality is, for the most part, in the hands of the individual and not the one producing things for the individual – buyers choose, but sellers shape through choice architecture (with inordinate power). The issue here then becomes (a) the size of the institutions exhibit hollow moralistic behavior suffocates anything any one individual can choose and (b) historical hollow behavior embedded over time warps an individual’s view of what a moralistic choice is. And even then, I have to point out that the root of all these macro societal issues is that how one individual behaves matters. In fact, it is almost all that matters. So. If that is so, and the individuals have become more ignorant than the system itself, how does a market behave well? I am certainly not suggesting everyone is ignorant, but in an individualistic oriented society, attached to a zero-sum belief, the probability of individuals behaving less than optimal WITHIN the market increases significantly. So maybe rather than work the system, we should work the people.

Which leads me to today’s flawed version of capitalizing.

“Capitalizing” as a verb, has been hijacked by the fact Americans simultaneously lost the vision of a common greater good, the capacity to see the union as larger than the sum of its parts, and, the belief that a common good was what makes America great.  It is not a great leap for me to suggest that it seems like business is an age of cultural, moral and ideological vacuum <beyond making money/profit> which means that society has nothing to fall back on other than, well, money or accumulation to fill that void and, well, money chooses how it wants to live. As a consequence, instead of thinking of the future (with any meaningful thought) nothing exists or matters, but the present. This is a derivative of an individualistic ideology in that a collective cares about the future, but the individual focuses on optimizing/maximizing the present. The materialistic considerations of this existence provide, at best, tepid comfort and at worst, a cold hollow comfort. But that is where the state of ‘capitalizing’ is at the moment.

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‘In the day we sweat it out on the streets of a runaway American dream …’

It’s a ‘death trap,’ a ‘suicide rap.’  I want to guard your dreams and visions.”

Born to Run

Think about this generalization about the ‘winners’ in capitalism – they didn’t get that way from being generous, but via ruthlessness. In unrestrained capitalizing, competition is king, and to outdo your competitors and become the most powerful involves having the cash to invest in things like research and development, expansion, marketing, lobbying etc. as well as cutting corners, paying employees the minimum, maybe some stock manipulation and unethical behavior topped of legions of lawyers to push the absolute limits of what you can get away with to grow. Because if you don’t do it, someone else will and they become the ‘winner’ instead of you. I imagine I am suggesting that the business issue of the day is that there is no such thing as an ethical capitalizer. Yes. I know that is a generalization, but directionally speaking I feel fairly comfortable with that statement.

Which leads me to the verb: capitalizing.

Capitalizing is active, a coherent accumulation of actions. I have purposefully focused on individuals rather than the system, or system changes, because in this case the capitalizing system (the incentives, constructs, feedback loops, etc) is crafted by humans. So. Whatever people make they can unmake.

I admit this is tricky. One could argue we the individuals are stuck in a bigger system we can’t control nor really know how to navigate successfully. Basically, we are a reflection of the system institutions in society that create us or at minimum shape us. But I inevitably turned back to what Donella Meadows asked and limits of growth “How good a human nature does society permit?” to which I add “how good a human nature does business permit” for I believe if business permits the best of human nature, society will inevitably arc toward a better nature itself. That, in a nutshell, is about capitalizing in a capitalism.

My belief is that human nature is inherently being conscious of the collective, but the ‘capitalizing narrative’ suffocates that consciousness. So, I would argue this is the first step is effectively integrating self-interest into collective interest. If you are conscious, aware, of the whole – needs, wants, desires – you have the ability to insert your self-interests within the collective consciousness wherein you, and we, benefit. I would be remiss if I didn’t point out, hearkening back to my earlier point #1, there are less than moral people who use this exact same equation to manipulate or exploit the conscious of the collective to solely benefit their individual self-interests in capitalizing. I would also be remiss if I didn’t point out, hearkening back to point #2, there are businesses who will actively manage their ’capitalizing’ to suggest they are making the collective better when even if you squint you will never see the truth in that claim. Look. Capitalizing is inherently a void in which individuals and businesses fill because there is no rulebook <substantive ways of doing capitalizing the right way> for everyone other than maybe ethics, dignity, integrity and a number of things which we would like to be common but are actually ‘accepted across a spectrum of behavior’ items.  Vacuums, or voids, are doomed to be filled. This combined with the fact that extreme individualism comes at a cost to the collective (individuals owning and consuming more shit creates more bad shit … not just business revenue). So, the less meaning an individual has the more they will consume to fill that space (even though it isn’t an equal tradeoff). Meaning, while having an infinite value, only demands some finite things to fulfill, while consumption is theoretically infinite and the void it attempts to fill is infinite in that it never can attain the highest value. In fact, that unbalanced tug of war can often lead to creating a sense of meaning despite a massive amount of empty consumption as we pluck out some meaningful out of the numerous meaningless, i.e., we build a casket for humanity with splinters of meaningfulness. I say that because capitalizing demands good human nature in order to craft the consumption/meaningfulness ratio society needs and, yes, I am suggesting capitalizing can effectively ‘distribute’ meaning. If we don’t fix, or address that, it doesn’t matter if we embrace anti-capitalism or anti-growth or anti-anything that exists today. Ponder that.

In the end. The capitalism system is unquestioning. It encourages all individuals, not just the executives, to be equally ignorant, indifferent, relatively oblivious to the meaningful consequences other than what is measured and slow to not only embrace any real changes but even to have the curiosity to explore any. But here is the god news – humans. As humans move across the capitalizing landscape, they inevitably do, well, landscaping. The landscape may want to fight back, but humans being humans relentlessly change the landscape. This has exponential positive dynamics if we look at it in a non-zero-sum game way in that in that scenario we tend to cooperate more (that collective interest thing) and things get better through cooperation, in other words, 1 + 1 = 3 (cooperation also mitigates risks). This is an important thought to end with because the truth is capitalizing is at the core of growth for individuals (it creates the spaces for potential to progress), business (it creates the profits to reinvest and innovate), community & culture (smart expansion) and society (it creates the opportunities for betterment). The question isn’t whether we should be capitalizing, but rather how we elect to capitalize. Capitalizing, cooperation and collective interest. The answer resides somewhere in there. Ponder.

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author’s note: capitalizing effects everything from how an organization should be designed to how an organization defines its vision, from how communities interact, how laws and rules are constructed and even how societies exist, therefore, while this piece tugs at some of the foundational issues the real solutions will reside in the builders – the people who will build the framework for how we work and live.