Capitalism isn’t our problem. It has proved it can work for the majority using a different version. Unfortunately for us, we have a particularly nasty version of Capitalism, with its associated systems and practices which only serve the needs of the wealthy. It’s this which we need to change, not Capitalism.
The popular belief is that we are capitalists, and therefore, the problems of economic inequality, and a myriad of other problems, are the makings of capitalism.
What if I told you that’s precisely what the wealthy one per cent (the capitalists) want you to believe.
You’d respond by saying “that’s crazy nonsense.” They defend capitalism all the time, telling us how beneficial it is.
That’s precisely my point. They want the debate about the pros and cons of capitalism to rage on, because, it’s a smokescreen, hiding the real cause of our problems.
Let me explain. Capitalism is an ideology. It is not a set of rules by which we run our economy. It represents a vague set of ideas about what and how our economy operates. Ask any number of businesspeople, the people who are supposed to implement capitalism, what capitalism is, and you will get as many different answers as people you asked.
As an ideology, and a vague one at that, getting the populace to believe our problems are caused by capitalism, means they will go around in an endless circle chasing their tails trying to pin the problems on a vague ideology. Naturally, nothing will come of this because of the difficulties in being specific about a vague ideology. More importantly, capitalism is not the problem.
By keeping this debate alive, the wealthy one per cent, have built a smokescreen, thereby hiding the real cause of our problems. It’s believed they fund both protagonists and antagonist in this debate, to ensure the fires of the smokescreen remain well stoked and the deception continues.
We can call ourselves anything we like. We can call ourselves a Christian, Jew or a follower of any other religion, or no faith. However, just by calling ourselves something does not make us who we call ourselves unless we practice what we profess to be. It’s the same for our economy and business. We can call ourselves capitalists if we want, but that does not make us what we call ourselves. What we are is what we do every day in our lives; the same for business. What we do every day in business tells us what we really are - what ideology we follow. What we do every day in business is dictated to by the measures we use. Measures dictate outcomes. We use a measurement standard called the Accounting Model; a financial measurement standard. It focuses everybody to create a profit for shareholders, at the expense of all other stakeholders (or participants.) It’s an adversarial system which is pitted against the interest's of stakeholders, only considering shareholder (owners of the business) interests.
By definition, this makes it a profiteering system. We define a profiteering system as one which uses an unfair advantage to generate a profit. The “unfair advantage” here is a measurement standard which does not consider the interests of other stakeholders. It only gives weight and credence to financial matters without due considerations to other interrelated participant needs.
We usually associate profiteering as an external activity where business profits from an external entity like a customer, competitor, or government, using some unfair advantage. However, in this case, it’s the worst form of profiteering as it’s “internal profiteering.” This is the worst form of profiteering because shareholders profit from those associated with them in trying to make them more prosperous.
So, we are not capitalists but profiteers - the worst form of profiteers, those who exploit their own stakeholders for profit. Understandably the wealthy one per cent want this kept from public knowledge because armed with this understanding, are you prepared to allow this harmful practice to continue?
Some people may respond by saying that’s precisely what capitalism is all about - profiteering from stakeholders. I would disagree, I hold a different idea of what capitalism is, or should be. We have become grubby, profiteers not because of capitalism, but because of our inadequate and inappropriate business measures. It’s the everyday practices, procedures and systems we use which dictates who we are, not some vague ideology.
The wealthy one per cent wanted this to be hidden from everybody because now, we can be specific in identifying the cause of our problems and call for change. Who has ever heard our inadequate and inappropriate business measurement standard blamed for our most serious social, environmental, economic and business problems? Nobody. That’s how effective their smokescreen has been, and yet it can be linked directly to these serious problems. Now, we can take effective action in reversing economic inequality and a host of other problems, without going around in an endless circle barking at the moon.
As mentioned earlier in the article, we all hold different views of capitalism. Mine is a positive one. Capitalism embodies the principles of free enterprise, which is the most effective way of improving our standard-of-living and quality-of-life. Free enterprise is not the principle responsible for creating economic inequality, or for destroying the environment. Therefore, I support keeping Capitalism but changing how we implement it. Free enterprise is the baby we don’t want to throw away with the bathwater. Capitalism can work for the good of all if we change our current bad systems, practices and procedures. There are versions of Capitalism with a much stronger social bias, such as the social market model, and the Nordic Model. They are the complete opposite of our current neoliberal model.
Business must become a social tool, a way to uplift and benefit all. It can no longer remain the means to enrich a few, at the cost of the many, as well as our environment. We want and need business to succeed and grow, but not at the expense of others. For a business to succeed and grow, it must make a profit, as shareholders, like others involved in the business, must be fairly and justly rewarded for their endeavours. If a business does not make a profit over the long-term, it fails, and we as a society lose the means to support and uplift ourselves. So, the profit objective and making money is not our enemy, but rather crucial elements for growth and development. Capitalism, free enterprise and profit are valuable concepts, provided we do not lose sight of the end goal and end up chasing profit instead. Profit is only a means to an end. The object is to improve the standard-of-living and quality-of-life for all while also protecting our environment.
The purpose or objective of capitalism is “to serve the needs of humanity in a sustainable manner through the ingenuity of man, allowed to engage in free enterprise.” The operative words are “sustainable manner.” This requires a balanced approach in meeting the needs of all business participants (or stakeholders.) An imbalanced system, serving only the needs of one participant cannot survive over the long-term and falls short of the fundamental requirement of serving all. While profit is an essential component of capitalism, clearly it shouldn’t be its objective.
Copyright © Adrian Mark Dore 2019.