The Surprising Truth About Capitalism

The Truth About Capitalism

Here is the truth about capitalism. Capitalism isn't good. And it's not bad. Capitalism is powerful. And with much power comes much responsibility.

Capitalism For Democracy

There was a time when capitalism worked in the public interest. Before the penning of the Powell Memo, businesses minded their own business, and capitalism was doing great. America had a booming middle class, an economy the world envied, and the highest rates of upward mobility that animated ‘The American Dream.’ A family could live comfortably on the income of one wage earner. About 80% of Americans expressed a fundamental trust in government institutions. Capitalism was used to generate the resources we needed to provide citizens healthcare, education, and economic opportunities. American wages increased in direct proportion to the national economic growth, which reflected a time when the strength of our economy reflected the strength of its people. This wasn’t a happy accident, nor was it the inevitable byproduct of a virtuous cycle. This was by intention. Capitalism has the unique ability to create the resources we needed to deliver the impact we want. And during this time, capitalism was leveraged to enhance our core concepts of democracy. And capitalism was being used to invest in citizens and enhance our democracy. We were not perfect, of course, but we were a work in process. This was responsible economics.

Capitalism Against Democracy

We are now in a time where capitalism works against the public interest. After the penning of the Powell Memo, big businesses began fraternizing with government institutions, and used their rapidly growing resources to "purchase" policies in their favor. America has a waning middle class, and the lowest rates of economic mobility that stand to question the future of "The American Dream". A family can barely live on the income of two wage earners, forcing many families to work multiple jobs in attempts to make ends meet. Barely 20% of Americans express a fundamental trust in government institutions. Capitalism is being used not to provide healthcare, education, and opportunity, but to provide a barrier to those things by attaching extortionary price tags to these fundamental pillars of a strong society.  American wages have flatlined as the national economic growth continued to rise, which reflects a time when the strength of our economy is in no way reflective of the strength of its people. Capitalism is being leveraged to undermine democracy, by shaping public policies that work against the best interest of its people. This is irresponsible economics.

Capitalism isn't good; and it's not bad. Capitalism is like fire. Fire in the hands of a boy scout is good. He can make bonfires, toast smores, roast hotdogs, and build community. But fire in the hands of a psychopath is not good. Because he’ll burn the place down. I’m simply suggesting we should be more like boy scouts, and less like psychopaths. Because honestly, who doesn’t love s'mores?

What is Capitalism?

Capitalism itself was an economic innovation. Capitalism is a system based on private property and a free exchange of goods and services. There’s nothing inherent in any economic system that makes it good or bad, virtuous or vicious, moral or immoral. Capitalism can be used to enhance democracy, or it can be used to destroy it. But it does not, by its own indifferent nature, do either.

What is "Bad Capitalism"?

Bad Capitalism exclusively prioritizes "The Profit Motive". And The Profit Motive, unhindered by any moral compass or legislative oversight, can and has mutated into "Profit at all costs." Predatory practices designed to maximize profit without consequence incentivizes bad behavior. Bad capitalism creates and perpetuates vicious cycles. Bad capitalism perpetuates a flawed behavioral model that describes people as "perfectly selfish, perfectly rational, and relentlessly self-maximizing," which is not only morally corrosive but scientifically wrong. It has driven a hyper-individualist culture that has shifted us from American Ideals to American Idols. It has driven a consumer economy where we have an excess of material possessions, but are more stressed, depressed, and anxious than ever before. We have been groomed to consume. We are overfed and undernourished; stuffed with material and starved for meaning. Bad capitalism has moved the wealth of our nation to the hands of a few, and enabled them to purchase public policies that consistently work against the best interests of the people. Bad capitalism is creating an economic bubble and cannibalizing democracy. And Bad capitalism is simply unsustainable. But the opposite of "Bad Capitalism" isn't socialism or communism. The opposite of "Bad Capitalism" is "Good Capitalism."

Also Read: What is "Bad Capitalism"?

What is "Good Capitalism"?

"Good Capitalism" anchors itself squarely in "The Purpose Motive." The Purpose Motive doesn't dismiss the role of profit; it views profit as a tool, not a goal. A means to an end, but my no means the end in itself. Good capitalism is an economics as if people mattered. Good Capitalism rejects immediate gratification in favor of long-term growth, health or integrity. It creates a virtuous cycle that enhances the health and prospertiy of its people, instead of creating mechanisms to extort them for profit. Good Capitalism shifts us from a consumption economy to a contribution economy, where we create strong economic potential as we create positive social change. It relies on an act that draws from our higher nature instead of our lower. Good Capitalism enhances democracy. It generates the economic resources we need to advance our democratic ideals. Cpitalism that works in the public interest, and is used to advance the good of people and the planet, is "Good Capitalism." And Good Capitalism is the only real future of economics and democracy.

Also Read: What is "Good Capitalism"?

The Future of Capitalism

Capitalism is what we make it. If it is organized for people, capitalism can be a good and moral system. If it is organized for a few powerful private interests, it can be an exploitative system. Capitalism is organized by the rules we create for it; it is not a natural phenonemon like the "free market" fallacy would hope that you to believe. And five decades of data has shown us that The Profit Motive is a suboptimal driver of economic theory. 'Money’ alone is never enough; profit is insufficient. And the quest for success (or excess) will never satisfy our call to significance. Purpose is the point. Humans are wired for it; businesses neglect it; customers demand it; and the world needs it. Democracy is about accomplishing what can only be achieved when citizens join together to further the common good. "Good Capitalism" allows us to do exactly that. And when we use capitalism to expand opportunity and widen the circle of prosperity, then that is the power of fire harnessed properly.