Capitalism. It’s such a polarizing concept. It seems if you’re not for it, you’re against it. You’re either a capitalist pig or a communist pig. I know, I know…some say the more accurate opposite of capitalism is socialism, but I don’t think I’ve ever heard anyone being called a socialist pig. (And can we just take a minute to feel a bit sorry for pigs who get a bad rap no matter which side you’re on?)
Anyway…back to capitalism. Whether it’s a concept you revere or revile, capitalism is deeply embedded in our current economic systems and cultures. Indeed, it’s the only system most of us living in Western societies have ever known. On a global scale, much of the world’s history over the past five hundred years has been influenced by the development of capitalism, as it first lifted Western Europe out of feudalism and then, with the rise of colonialism, was exported broadly around the globe. So with such a long and deeply rooted history, it would appear that capitalism is here to stay…or is it? When you think about it, 500 years in the whole history of civilization is a mere fraction. So I’ve often wondered, in an evolutionary sense, what could come after capitalism?
First, let’s start with defining the term. The top result from a quick web search said this for Capitalism: an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. The last part of this definition is the key, I believe. The part that says “controlled by private owners for profit, rather than by the state” especially “private owners for profit.” As soon as I typed that phrase, my mind went straight to Milton Friedman and his exhortation in the 1960s that the only social responsibility that a corporation has is to maximize profit for its shareholders. So let’s break down the definition above even more and focus just on profit. This seems to be the lynchpin to capitalism…it’s all about profit.
Profit, in and of itself, is not a bad thing. There are many positive connotations that go along with profit, like self-sufficiency and prosperity. Indeed, if you look at one of the most widely used tools in business evaluation – the P&L statement – Profit is the positive side of that pair, contrasted by Loss. Who wouldn’t want profit over loss, right?
So what’s wrong with profit? Nothing inherently, but it’s complicated by things such as who benefits from the profit – and the corollary question, is anyone harmed by the profit? This is where capitalism and traditional capitalistic practices need to be called on the carpet for a broader and more transparent accounting of their actions.
What if we re-define “profit” to shift the myopic focus on financial gain to include broader impacts, such as the minimization of harm (to humans, animals, the planet, etc.) and the sharing of financial gains with all who contributed to the effort in creating them (not just those who provided the initial capital)? Is it possible to think of profit in non-monetary terms? Actually we don’t have to look too far to see examples of this. We see it in cooperative business ownership structures like ESOPs and member-owned co-ops, also in mutual banking institutions and credit unions. But can we still call these types of businesses capitalistic? Why not? In a co-op or credit union, the owners are private individuals, not the state. And if the business is operated with an eye toward minimizing harm to the environment, its community, anyone who has an interaction with the business…in other words, in a sustainable and socially responsible manner…and still makes a profit that it shares with its stakeholders for the betterment of the many rather than the few, isn’t that a good thing?
So I think I might have at least the beginning of an answer to “what comes after capitalism” and it’s not another -ism…it’s just a kinder, gentler form of capitalism. One that’s inclusive and far-sighted, and recognizes that capital means more than money. Human capital, natural capital, and financial capital can all work together for a better system.