A recent op-ed in Fast Company urges us all to reconsider capitalism as the system we want for building our future society. The tacit assumption is that capitalism is responsible for plenty of malaise. More explicitly, capitalism is criticised according to the following identified maladies:
- Opinion polls show that millennials no longer drink the capitalist Kool-Aid.
- Capitalism is viewed as a system that churns nature and humans into capital, regardless of the costs to human well-being and the environment.
- Even well-meaning CEOs are hampered by the system of capitalism, so they cannot fix this hopeless system from the inside.
- By some measures, inequality, poverty, and hunger have all risen thanks to capitalism.
The conclusion is that we should consider alternatives, and even reconsider systems like socialism. So let’s drink someone else’s Kool-Aid instead.
But what about the alternative facts?
I am primarily concerned with promoting the process of scepticism, as opposed to promoting the conclusion of a particular belief system.
I took issue with the facts and the line of reasoning used to arrive at the conclusion. The conclusion does not follow from the evidence presented, partially because most of the facts are false, and the standard for evidence employed allows opinions to suffice as evidence. This piece made me go:
Opinion polls are a poor substitute for evidence
Opinion polls are just that: An aggregate of opinions. Opinions rank very low on the hierarchy of evidence. That opinion polls return negative reviews of capitalism merely tells us that people are second-guessing capitalism. It does not mean that capitalism as a system has failed any more than it shows how successful the system of capitalism is when opinion polls give it good ratings. Or that North Korea is a successful system when polls in North Korea show that Kim Jung-on is the number one supreme ultimate leader.
Capitalism churns nature and humans into capital
I am guessing the author aimed at commodity fetishism. Suggest that humans like you and I, and our natural environment, are just capital.
Inadvertently, this means that you and I have value in a capitalist system. We are valuable, if only in terms of how much we are objects of trade in a market economy. Deplorable, but what is the alternative? To consider us all as having inherent value, but not really of value to anyone to any degree in particular? We just have value, but this value does not amount to anything tangible.
We may all have value as individuals – equal value, in fact – in alternative systems. These alternative systems refuse to treat you and I as something with tradeable value on a market, but they do view our skills and our abilities as valuable, though we are not allowed to profit from them. From us according to our abilities, and to those others without those same abilities according to their needs, in a command economy, like the one enjoyed by Kim Jon-un in North Korea.
Given that capitalism is a system of private ownership of capital, it means that you and I own our own property, our own labour, and our own capital goods. We are free to trade with each other, and free not to trade with each other as well. The alternative is publicly-owned goods, which in effect means government-owned goods and services, with no freedom to choose who benefits from our abilities, and no choice regarding whose needs are being filled, or how much they are filled, or even identifying what those needs are.
Do you want labour camps? Because this is how you get labour camps and one car that is the best car by virtue of the fact that it is the only car.
Well-meaning CEOs are not corrupt, they do corrupt things. Because evil capitalism
It is worth following the citations in the op-ed.
For example, besides the long-standing joke that you should never invest in airlines, airlines have been having a tough time to make ends meet since more governments implemented stringent controls following the 9/11 terrorist attacks. Airlines are probably the worst example here, since airlines continue to enjoy bailouts and struggle to earn profits for their shareholders.
Regardless, let’s just take the cited example without the broader context. The author claims that the evil capitalism has been punishing a well-meaning CEO for paying his labourers more. The full story cited shows that airline shares in general have declined on Wall Street, their credit ratings were downgraded as a result of labour deals, and also that Warren Buffet invested in three airlines.
The moral of this full story is that this ‘evil capitalism’ gives us various different results for the price of one: Namely, you can both take your money away from companies that you view as being unfair towards shareholders when they decide to give their workers increases, and you can also put your money where your mouth is and decide that this is a good thing and invest in such companies.
In fact, there is an entire branch of investing known as impact investing that focuses on exactly that. Max Keiser, warts and all, has started a hedge fund called Karmabanque that does this sort of thing.
I am not familiar with impact investing ever being a thing in a command economy. Perhaps someone can cite some examples whereby the non-private capital owners were punished for not making their shareholders or their customers happy in a command economy? I can’t recall that the shareholders or the producers of the Trabant ever went bankrupt for producing a product with a reputation for being uncomfortable, slow, noisy and dirty? Great equality, though!
But hang on! There was a CEO who did exactly that. Dan Price paid all of us workers a minimum wage of $70 000 per year. Great thing, right? All his shareholders must have bailed, right? No. Not exactly. As expected, he was inundated with job applications from those for whom that’s a lot of money to work for, and his ‘most valued’ employees who thought that it’s unfair decided to quit. Point being, since he is the owner of capital in a capitalist society, he is free to do so. Good luck to him!
Did inequality, poverty and hunger all rise due to capitalism?
The short answer is no. At least not according to people like Hans and Osla Rosling who work with the data. Watch their TED talk entitled, “How not to be ignorant of the world” for more information regarding this.
What about particular answers, such as China and Ecuador mentioned by the author?
It is well-known and often cited that China’s labourers only started doing better thanks to economic reforms – that is, after they became more capitalist. Their income inequality did go up, though. It is worth reading up on income inequality in China, and noticing what is causing this.
In China’s case, poverty and hunger became alleviated, while inequality became worse. This means there is something fishy about inequality – both in how it is measured with the Gini Coefficient, and in the concept. The truth is that people don’t really care about inequality. People care about fairness. Ask Dan Price about that.
“… I’m sorry to say we’re capitalists, and that’s just the way it is”
There is a fair point made in the op-ed, and that is that just-so answers are unacceptable. If millennials raise doubts about capitalism, then they deserve substantiated answers to address those doubts. What the opinion polls do show, if they are reliable, is that millennials doubt capitalism, however defined.
Just like those who oppose capitalism enjoy the burden of proof to substantiate their claims, the rest of us who support capitalism should also be willing and able to get the dialogue going – and able to substantiate our answers.