The problem with capitalism

I think capitalism right now is pretty screwed. Yet I’m still a capitalist.

Huh? Speaking earlier this year, Nick Clegg, the UK’s Deputy PM said that:

“We don’t believe our problem is too much capitalism – we think it’s that too few people have capital”

He then went on to talk about creating a business environment with much more employee ownership. This is something I’m massively behind, but sadly (and please correct me in the comments if I’m wrong) the government doesn’t seem to have followed up with anything substantial following this statement.

The problem with capitalism runs far deeper than (financial) capital distribution. This is because money is just one form of capital, yet pretty much the only thing that’s valued in our current capitalist system. What’s ignored is human capital, social capital and environmental capital.

For example, consider an employee-owned company that unsustainably cuts down rainforests or monopolises natural water supplies in order to make a profit. This may lead to a fairer distribution of financial capital, and probably builds human capital to a degree by treating workers more fairly. Yet it is still destroying environmental capital that has taken thousands of years to build. As a secondary effect, it also destroys social capital as communities that rely on the environment lose natural resources that they need.

In comparison to financial capital, there is very little reporting or attention paid to these other equally important forms of capital. So Nick Clegg is right that capitalism as a concept is not the problem. More employee ownership is a great first step because employees, unlike stock markets, have much wider concerns about the world, but we need to go much further and fix the whole capitalist system.

10 thoughts on “The problem with capitalism

  1. I see the future of capitalism and the economy as much more about the growth of small businesses and the rise of self-employment (no matter how much the government of the day does to prevent this), with people taking advantage of ever improving connectivity and community focused web platforms to ‘swarm’ together to work on specific projects.

    I think large organisations with lots of employee shareholders can still work to a degree (especially for businesses developing/selling physical products), but will suffer from a lack of agility, decision making paralysis and ‘silo thinking’ compared to more open crowd-sourced solutions. I expand on some of these points here: http://jonathanlea.com/how-the-internet-doesnt-create-jobs-but-leads

    • I have often wondered if the logical conclusion of organisational democracy is ‘small pieces, loosely joined’ eco-systems as you have described. I believe that in many cases, yes this will happen and personally I love the concept of networks taking on large institutions (Linux Vs. Windows for example.) But in many other cases, to deliver at scale there will be a need for organisations who have greater resources. But within these organisations the culture will become more and more networked and less hierarchical.

  2. “Liberty without socialism is privilege, injustice; socialism without liberty is slavery and brutality.” Mikhail Bakunin

    Just a thought

  3. What do ‘people’ care about?

    Until we devise a way of changing the innate behaviour of people for millenia (I’m OK, mine are OK, to hell with the rest of you) it is an attempt to push water uphill to get ‘people’ (Joe/Jane Ordinary) to involve themselves in developing society smoothly.

    Change has always, historically, been effected by people who are prepared to act agressively against the current societal norm – to be a bully / dictator. This is not accepted as being OK by the standards of democracy and certainly carries risks (the wrong guy/gal with the wrong ideas may turn out to be the bully/dictator rather than a relatively ‘good guy’ like Lee Quan Yew in Singapore in the 50s/60s). But it has always been the way that major change has been effected.

    Changes in the environment – globalisation and enhanced social communication – has had the unusual effect of both reducing the ability of bullies/dictators to impose change (potentially a good thing) and has enabled a vocal and involved minority to dictate the agenda for the majority (potentially a bad thing).

    We live in times which are getting to be more and more difficult for Jane/Joe Ordinary to cope with / understand / address. S/he is tending to hunker down even further into their established attitude of I’m OK, mine are OK, to hell with the rest of you.

    What is essential is that we find a way of involving Joe/Jane Ordinary in those things which do not effect them adversely in the short term but which will, unavoidably, effect them and theirs in the medium / long term.

    Other than taking the opportunity to express my views whenever offered a platform from which so to do I don’t have a solution to this essential need.

    Hopefully someone cleverer than me will come up with a solution which allows Jane/Joe Ordinary to escape the envelope bounded by his/her direct exposure to the impacts of circumstances which are likely to have an impact on him/her or theirs at some point in the future.

    • I look at human nature differently to the purely selfish way you outline (although of course people do behave selfishly sometimes.) I’ve been getting back into Maslow this week and read a great book about how you can help employees, customers and investors climb the hierarchy of needs from basic survival to self-actualisation. If you can tap into that kind of human potential and align it with the goals of the business then magic can happen.

      • ‘If you can tap into that kind of human potential and align it with the goals of the business then magic can happen’.

        I couldn’t agree more however it has not been my experience that you can achieve this desireable objective.

        On the numerous occassions when I have been negotiating with the objective of achieving a win / win situation with individuals or Unions (representatives of groups of individuals) or business people my experience has been that their thinking appears to have been dictated by the ‘I’m OK, mine are OK’ syndrome rather than the aspirational ‘win / win’ syndrome.

        I’m prepared to concede two points:
        1 I may have been negotiating badly – I’m not perfect, who is?
        2 I may have been wrong in assessing what was a ‘win / win’ situation – I was never able to hold a negotiation where everybody involved in the negotiation process was known to be being honest or to be attempting to achieve a ‘win / win’ outcome.

        However I also don’t know anyone who has been able to hold a negotiation where everybody involved in the negotiation process was known to be attempting to achieve a ‘win / win’ outcome so I can’t be sure – based on evidence – that such a situation is achieveable.

        It’s a competitative world out their and I don’t envy you the effort which you will be required to expend to convert Capitalism from being ‘red in tooth and claw’ to being more focused on achieving goals which many / most would consider to be altruistic.

        Some have made progress – the achievement of several Quakers and some others should cause many of us to feel shame in relation to our efforts – but it is a difficult task to change the visceral instincts of humankind which I will again suggest that, in my view, are largely driven by the ‘I’m OK, mine are OK’ syndrome.

        Cynical, eh!

        I don’t think that

  4. Good points.
    Hopefully we are going to see the rise of Capitalism2.0 where people have a stake in the results of their efforts in all three of the areas you mention: human, financial and environmental.

    I have to believe that people do want to put effort into worthwhile endeavours (McGregor’s ‘Theory Y’), because capitalism1.0 clearly fails too many people and otherwise we’re screwed!

  5. Pingback: Circular Capitalism « The future of a Nordic Graduate

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