Is Capitalism a degenerative system?
Some dots out there have the capacity to twist our perspective on how we see everything
For the last 170 years Capitalism has evolved to become the most prevalent and successful economic system, pushing the frontier of technology and science, but also rearing its ugly head as we have seen exploitation of the working class, inequality, environmental damage, and short-sighted vision that may undermine most of the social accomplishments of humanity.
There is certainly no shortage of criticism to make the case that Capitalism is a degenerative economic system. Nevertheless, there is no doubt that it has been a determining factor for the development of society and the betterment of living conditions of humanity[1]. Also, it has encumbered into politics and has been an overwhelming influence for the deterioration of the political arena in the last century. However, it is my argument that both the good and the ugly we have seen are nothing more than Capitalism in its early stages of development, regardless of all its accomplishments and devastating other mishaps. Like a teenager, it is flexing its muscles, figuring out the limit of its boundaries, and finding its way in a world it wants to make its own.
CAPITALISM’S TAG BACKGROUND
Let’s review the background of how Capitalism came to earn the negative tag of degenerative. The basis of Capitalism is that it focuses on capital as its main resource and objective, exploiting and seeking it. What is capital, but an asset we can freely exchange. But for it to be freely traded, goodwill and trust are essential, because without them all capital depreciates and loses its capacity to advance society. Let’s stretch the concept for argument’s sake; ever since the first Homo Sapiens evolved, a form of proto capitalism emerged. With the emergence of consciousness, a stumbling process began, leading to our understanding that our decisions and actions could alter our lives. An abstract concept of time emerged: the future! If 500,000 years ago, our tribe had eaten all the hunted mammoth without saving some for later or sharing it with other neighboring tribes, they would have gone hungry the following week. Mammoth-sharing today would mean tomorrow they could have mammoth too[2]. That “generosity” was an asset that would create trust and allow for a free and fruitful exchange between tribes. So, our ancestors’ sense of economy, “politics”, and self-determination for their betterment was based on trust and goods or future assets they could exchange. In prehistoric times we had an economic and political intuition based on a crude form of capital, driven by individuals ever since we became fully rational beings…it is the premise of goodwill and trust that has evolved until it became abstract and concrete to make it into coined or paper money. However, even when we first coined money, it evolved to be an end in itself, undermining what makes it valuable, which is trust and goodwill. Therefore, coveting mammoth or capital is an obstacle, it is the free interchange of an asset that allows for dinamic social interaction and betterment of the individuals and society.
THE UNRAVELING OF SOCIALISM
It is commonly sustained in high school textbooks that Capitalism sprang from Adam Smith’s treatise Nature and Causes of the Wealth of Nations. However, the spirit of the Enlightenment movement of the 17th Century found its way into Smith’s proposal of the economic system, when he recommended the state allow capital interest to flow without restrictions because it would find its own regulation in the “market”. It was a bold proposal, but during the industrial revolution, in mid-19th Century England, laissez-faire clashed with the ugliest face of “social exploitation” of industrialists seeking economic gain. It would take Marx’s denouncement and perspective of events to set the stage for the idea that Capitalism is opposed to and insensitive to people and true social evolution.
This was a belief that took root in the sentiment of social “injustice” and resentment that had accumulated since the emergence of modern cities ever since the Dark Ages. Some historians date the commencement of Capitalism back to the late Middle Ages in England and the Netherlands, when the ruling class and landowners came to a crisis point with the agricultural producers and serfs due to tense relations over land and their spoils. However, the strain between haves and have-not has probably been present since the dawn of our civilization; as reflected in the biblical story of Cain and Abel, which is most likely of oral tradition thousands of years old. Therefore, the social conflict that resulted in social upheaval in mid-19th Century England and expanded throughout Europe was probably caused less by the development of the textile industry and more likely by Marx’s poignant thesis and distribution of pamphlets and revolutionary ideals.
From my understanding, Capitalism being a degenerative system is a shallow criticism and purposely intended at that. Capitalism has evolved as a complex human-interaction system and as such it is only natural that it reflects the collective undertones that humans show when acting in the world. Consequently, Capitalism is at a stage of adolescence, it tests and pushes boundaries, trying to find the limit of it all. True, in the 19th Century crisis, that limit involved human lives and livelihoods, it created misery and destitute families. But did it? "After prolonged wage stagnation, real wages, (...) nearly doubled between 1820 and 1850. This is a larger increase than even past 'optimists' had announced"[3]. Social conditions in urban life then are too complex to address here, what is relevant is that maybe the industrialists did not exploit the former land workers when they were seeking better wages in the cities. Rather it was Marx’s thesis and Communist Manifesto that tapped into social resentment and what made it into a fully-fledged social conflict. One idea can change the world.
BACK TO BASICS
A further point to consider is the concept of part-whole theory as it pertains here; the whole is much more than the parts that constitute it. In the case of complex systems like a Capitalist Society, the whole may be the multiplied exponential effect of the parts that form it. So, if the constituents of the whole are corrupt, no pristine product can come of it. How can we blame a system for not delivering what none of the parts are willing or able to? The only way for the capitalist system to evolve depends solely on the evolution and conscientiousness of its constituents and integral parts, the individuals in it.
There is no shortcut to greatness!
Capital is not the end objective, it is an interpersonal tool to achieve social bounds and integration, like what happened when our ancestors hunted mammoths. The prism of Marx’s theory in the Communist Manifesto influenced our cultural perspective. We have “seen” the capitalist mentality as based on investing the least, producing at the lowest cost, distributing with the broadest margin, and getting the largest return as the greatest objective. We have only seen what we are aiming at through Marx’s corrupted tag given to Capitalism; and the 20th Century Milton Freedman’s “prevalence of the shareholders supremacy” theory[4] did no service. It helped confirm the tag and further the misalignment of Capitalism with social mistrust and degeneration.
To further the analogy of Capitalism as a “teen in the process of development”; is it any different to the harm a fully-fledged and troubled teen can bring to a family? The pain, the conflict, the shame; it’s all the same for a family as for the society that saw Capitalism’s “new way” find its ground in the 19th Century. Just like with a teenager no one can make them “see reason” or act consciously by imposing strict rules; nor can anyone expect the most powerful economic and social modeling system to be solely “controlled” by laws. If not for any other reason than the process to establishing laws that regulate social interaction take longer spans of time than businesses trying out their innovating ideas. Only time and life-experience of a teen can bring sense and serenity to them and hopefully peace to the family, as it will when we mature as individuals in the midst of this postmodern world.
A teenager enters their circle with curiosity (end of the 19th Century), if they are bold, they venture with decisiveness into the world, making mistakes and sometimes not acknowledging them, or even accepting criticism. So far, our teenage-Capitalist system has had quite a run and caused lots of trouble as well as some good things too. It is my contention that at the mature stages of Capitalism, players of the system will deeply understand that the most fundamental capital asset is trust and human resources. Resources that need investment, may it be by advancing in benefits through the company’s HR department or to the stakeholders[5] other than investors and shareholders. The transfer of benefits to the stakeholders will exponentially multiply profits for all players in the system. In other words, in the final development of Capitalism, producers and distributors will clearly understand that everyone needs to benefit from what they are generating. However, who will start this process and tell their shareholders – we will meet the quota in the long run – (?). Ah, there is the rub.
The more I give, the more I have.
If I only knew how much I can receive by giving
… I would give it all!
I know everyone knows this deep down because Capitalism and free societies are a learning system and they have altered our way of understanding real benefits. Nowadays it is a clear marketing strategy to “first offer value, then capitalize on it”. We’ve seen excellent examples of a more mature capitalist enterprise in the podcast format of self-help and leadership and the online marketing and communication industry.
Why then you may ask should I make this long argument at all? Because we are an integral part of a system that needs uplifting, because it needs us to be bold and act courageously to push forward. The capitalist system is in a juvenile mode of seeking immediate satisfaction and jeopardizing long-term benefits and wealth. We are part of a long history of mankind’s attempts to advance collectively and be fruitful… know how you are part of this system, be braver to act, and be a solid dot to advance our history.
[1] UN Report: Resilient People Resilient Planet, a Future Worth Choosing 2012 – http://www.acp.int/sites/acpsec.waw.be/files/GSP_Report_web_final.pdf; pages: 20 to 23. Interesting document that trashes the idea that we are living in the most segregated, discriminating, and bias time in history.
[2] This idea I heard for the first time from Jordan B. Peterson, he has innumerable references about the emergence of consciousness. Example: https://www.youtube.com/user/jordanpetersonvideos
[3] Lindert and Williamson, "Living Standards" pgs.11-12
[4] The Shareholder Supremacy Theory “is a shareholder-centric form of corporate governance that focuses on maximizing the value of shareholders before considering the interests of other corporate stakeholders, such as society, the community, consumers, and employees”. https://corporatefinanceinstitute.com/resources/knowledge/other/what-is-shareholder-primacy/
[5] The Stakeholder Theory: Dr. F. Edward Freeman proposes that for a company to be healthy and competitive it needs to consider and benefit all stakeholders of the organization. He enumerates the following stakeholders: Customers, Employees, Governments, Investors and Shareholders, Local Communities, Society, Suppliers, and Vendors.