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Friday, 15 December, 2017

Capitalism Hijacked

Summary: Supporters of Capitalism put forward strong and logical reasons why Capitalism is socially beneficial. On the other hand, antagonists of Capitalism point to all the problems which they ascribe to Capitalism, which are numerous and serious. They can’t both be right, so what’s going on?

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The simple truth is that we claim to be Capitalists as we follow certain principles of capitalism, namely that of free enterprise, but that alone does not make us Capitalists. Both parties mistakenly believe we are Capitalists when in fact we are nothing of the sort. This accounts for the diametrically opposed views of both parties being correct and true. They are arguing at cross purposes, as neither understands that we are not following the important principles of Capitalism; we are not Capitalists.

Something has hijacked the Capitalist ideology, which everybody thinks we follow, but the evidence proves otherwise. So what is it that has hijacked our Capitalist principles so cleverly?

Ideologies deal with the things we say we believe in. We can say we believe in anything, even although we may not, because, talk is cheap. It’s what we do that determines what we truly believe. To ensure we achieve what we truly believe, we measure performance. Measures dictate outcomes. Outcomes reflect what we believe. Therefore, we truly believe that the creation of short-term profit for the exclusive benefit of shareholders at the expense of other business constituents (or stakeholders) is the purpose of business. This is what our business measurement standard measures. However, this, by definition, makes us Profiteers, not Capitalists. A Profiteer is an entity which use an unfair advantage to create profit. The unfair advantage, under these circumstances, is our measures, which only favour the interests of shareholders, over other constituents involved in the value creation activities of the business. Normally, profiteering involves “external profiteering”, where the business creates a profit at the expense of other businesses, the government, etc. (i.e. external entities.) However, in this case, it’s a matter of “internal profiteering”, which is a far more insidious form of profiteering, as business owners profit from their own stakeholders, or partners (i.e. internal entities or partners); those dedicated to generating profit for the business.

Now we are clear that we are Profiteers rather than Capitalists, the two divergent arguments made by pro and anti-Capitalist makes sense. Profiteering is the root cause of our most serious social, environmental, economic and business problems. So, the anti-Capitalist arguments are true about greed, self-interest and exploitation, but misdirected at Capitalism rather than our inadequate and inappropriate business measures.

The pro-Capitalist argument that Capitalism benefits society remains true, but its full benefits will only be appreciated when a measurement standard is introduced which supports its principles.

The problem with pro-Capitalist supporters is their almost flippant dismissal, of the “ills of Capitalism”. An attitude which suggests that because “the principles are right, the price is worth paying.” However, the ills presented by the anti-capitalists are real and life-changing and should not, and cannot, be brushed aside. It is almost with a mocking tone they dismiss anti-Capitalist groups as the “ignorant plebs.” After all, free-enterprise has brought about improved living standards for most. Furthermore, the ideology is not coercive, it is based on freedom of exchange - willing buyer, willing seller. So it’s a good ideology to follow.

Of course, they are right, but they should have delved a little deeper, questioning how an ideology supposed to serve us is not (with the evidence all around us.) It’s clear to all, whatever we are doing, we are headed towards a vastly changed and less favourable future for the majority. Instead, they go on the defensive, claiming Capitalism is not based on greed, self-interests and exploitation.

The reality just doesn’t support this argument. Yes - Capitalism does not support these principles, but the penny should have dropped by now - perhaps we aren’t Capitalists. They as the intelligentsia should have seen that Capitalism has been hijacked by our inadequate and inappropriate business measurement standard.

So, if I were asked to pick sides in this debate, I would say both parties are wrong, because, they both blamed an ideology we do not follow. However, I would suggest that the pro-Capitalists are the delinquent party, as it is their ideology, and they should have known it better than most. They should have been able to point out the obvious problem - Capitalism has been hijacked by our business measures.

It’s their indolence which has, and still is, costing us. Until they stand up an identify the real cause of the problem (our inadequate and inappropriate business measures,) the problems caused by our measurement standard will persist. They indirectly encourage the misbelief that Capitalism is our problem and needs fixing and that they somehow have a solution for us. By not addressing the true problem, the harm and hardship continue.

They could easily shift the blame to the real culprit but do not. Why, is this so? Do they want the myth of Capitalism being our problem to continue? Do they want this Capitalism smokescreen, which hides the real culprit, to continue? Are they part of the problem, as they are doing little to promote the solution by drawing attention to the actual problem? They behave in a manner which appears to maintain the smokescreen.

Let us be realistic - the problems we face are measurement related, so the solution must involve measures which address these problems. The naivety in believing that ideologies, or good ideas and a lot of talk will dislodge deeply embedded measures, which our economy relies on, is almost unbelievable. In my opinion, there is little, or no grasp, of the situation, for whatever reason.

Inclusion Capitalism, one of the pro-Capitalist organisations, has joined up with Ernst & Young on their LTV (Long Term Value) project, but this project fails to meet our two minimum requirements for a new measurement standard. As one of my earlier articles “Why are they trying to pull the wool over our eyes?” pointed out, the accounting fraternity has failed to identify the two minimum requirements for a solution, which they should have been able to do. The question then is - “Are they trying to pull the wool over our eyes?” Understandably, they have vested interests in maintaining the status quo. They are happy that confusion reigns as to the cause of our problems, and that the blame is placed at the door of Capitalism. Is the Accounting fraternity backing pro-Capitalist groups, who help stoke this fire of confusion?

Who knows? However, we do know it’s time to stop the farce by blaming Capitalism for the immense problems caused by our inadequate and inappropriate business measurement standard. It’s time to restore the good name of Capitalism and correct our measurement errors now.

Adrian Mark Dore

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