CAPITALISM WHAT ARE WE TALKING ABOUT?

Because the subject of capitalism versus socialism as both political and economic systems have been in the news a lot recently, I thought I’d address this subject. Some on the extreme of the Democratic party have been promoting Socialism thinking is offers a better way to go. I don’t think it is and here’s my thinking about why that is.

First of all, what is it? What are we talking about? The idea of capital is that people can earn and save their money and then use it to create new products or services that can expand their income. The dictionary defines it as an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than the government’s.

The term itself comes from the Latin root of the word “capital” is capitalis, and from the proto-Indo-European word kaput referring to "head.” Once upon a time wealth was measured by the number of head of cattle that a person had. Capital today refers to money, hence financial capital, capital which serves as a resource for investing in businesses by which you can increase your wealth.

Yet there are many versions of “capitalism,” so it is not just one thing. If we put it on a continuum, we can distinguish degrees of capitalism. To the far left there is predatory capitalism and/or crony capitalism—a kind that developed back in the 19 th century. Without any controls, it degenerated into monopolies. Those in charge seemed to have no appreciation at all of human capital and so a ruthless form of capitalism emerged which unfairly took advantage of people.

___________________________________________________________________________

Capitalism generally refers to an economic and political system which allows the market of goods (supply) and a market of need and want (demand) to determine what an item should cost and what would be a fair price. Without too much intrusion by government and with an informed public, supply and demand has created a booming economy and the development of a very broad middle class in the US. When the government takes increasing control via regulation of the market, it becomes socialistic capitalism. The idea here is that the government knows best.

I also put Conscious capitalism in the middle — as a much more balanced and humane approach. Two books which address this subject have made the same argument that Abraham Maslow made back in the 1950s— which were made explicit in the 1960 book, The Human Side of Enterprise by Douglas McGregor. John Mackey and Raj Sisodia wrote Conscious Capitalism: Liberating the Heroic Spirit of Business (2014) and Fred Kofman wrote Conscious Business: How to build value through Values (2006). In addition, Maslow him wrote a book on this subject, one with an unpronounceable title, Eupsychian Management. It is now available with a new title, Maslow on management (1998).

The point with conscious capitalism is that we conduct our economic and political affairs— mindfully and consciously, that is, that we think through what we are doing and why. In this kind of capitalism we take into consider not only the money part of business, but also the human part. We consider what makes for healthy, ecological, and respectful economic relationships. Doing that calls for responsibility, awareness, feedback, ongoing adjustments, etc.

Now Socialism is also a political and economic theory of social organization. It is one which advocates that the means of production, distribution, and exchange should be owned or regulated by the government. What’s behind that? The assumption is that government can do a better job at deciding prices, industries, who should win, who should not, etc.

Among the problems I have with that is that it presupposes that we humans are a selfish race of bastards ready to take advantage of each other whenever we get the chance. That may be true of life in the jungle. But we have needs and drives beyond the basic needs. It assumes that humans are not responsible, do not want to be and, in fact, cannot be and that we still need a father or mother to tell us what to do so we don’t fight over the goods.

Capitalism and the Modern World Before capitalism, the human race lived in a world of depots, dictators, strong men, kingdoms (royal families), tyrants, etc. Then no one owned anything except those at the top. Then the king or dictator or whoever was in charge decided on the economics and was the political power. Then over the years (the centuries), with the Resonance, the Age of Enlightenment, the introduction of science— people overthrew the Kingdoms (or turned them into mere ceremonial entities) and became self-governing.

That, in fact, became the great American experience at the end of the 18 th century. Could a people govern themselves? Seventy-years later, Abraham Lincoln framed that as the central issue in the American Civil War— could this nation govern itself, determine it’s own future, change the old status quo, and launch into a new era? As that was being established, so also was the idea of a free market. Men and women could freely choose what to create and could forge relationships to do that business. This was the birth of capitalism.

What resulted from that? Capitalism became the world’s greatest source of wealth creation which it had ever known or experienced. The middle class was born, production expanded, entrepreneurs arose, and a century of prosperity began unlike anything previously experienced.