In a fundamental sort of way, this blog is really not about capitalism, or socialism, or any other -ism at all.
Really, it’s about changing how we approach the world, both in how we perceive it and in how we participate in it.
Most importantly, it’s about how we interact with the people who surround us.
Adam Smith, in The Theory of Moral Sentiments, said “And hence it is, that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature.”
That’s an important concept coming from the man who most people consider the father of modern capitalism. It’s especially unfortunate that most people’s understanding of capitalism is completely divorced from this concept.
If more people thought of capitalism as an exercise in indulging our benevolent tendencies instead of our selfish ones, I suppose I wouldn’t be talking about finding a system that’s “better than capitalism.”
When we think about the possibilities that come with a successful business, my model proposes a radically different metric for success. I saw in the news today that Zulily (think Groupon meets mommy-blogger) just sold itself for $2.4 billion. Although that valuation is a discount from its IPO price 2 years ago, it’s not a bad outcome for a company that didn’t exist 10 years ago. It’s founders and (hopefully most of) its stockholders will walk away with considerable money in their pockets.
What if the founders of such a company said to themselves, “one metric of our success will be how many family trees we can change before we exit.” It might mean paying employees more than strictly required. It might mean spreading equity ownership as broadly as possible, or trying to create as many millionaires as possible when the sale does happen. (Really rough math, that I know doesn’t actually reflect reality, tells me you could create 2,400 millionaires out of the Zulily sale alone. Talk about changing family trees).
This is not to say the founders of such a company don’t deserve their wealth. Most do. By and large, they put their own family trees on the line to build successful businesses and provide employment for others. And stockholders of these companies deserve the returns on their capital as well.
But there’s no need to impoverish founders and stockholders in order to indulge our benevolent tendencies. All it takes is for those of us who would be founders or stockholders to ask how much more we can do for those who are not yet founders or stockholders.
Can we teach them to understand better than they do? Can we use our position to influence them to reach for more meaningful pursuits? As they take more responsibility for us and our companies, can we reward them richly and in a way that inspires them not only to give more to the company, but to give more to others who need help?
Truth be told, finding what’s better than capitalism isn’t really about capitalism at all.
I have to disagree with you on one of your underlying premises. I don’t believe that the wealth large business owners and investors accumulate is deservedly theirs. If all employees were paid an equitable wage and the product was priced right, business owners would not make huge amounts of profit. The basic premise that someone deserves millions of dollars for their idea and that their work is worth more than others is a faulty premise. The employee that carries out the ideas of the owner should be making similar wages, in my opinion. If a company is making millions of dollars, then the item is overpriced and the price should be reduced in order to increase everyone’s well-being and avoid the huge discrepancies in lifestyles that currently exist.
Thanks for the comment Steph. I’m going to respond more fully to your comment in my next blog post. But, in short, I disagree with what you’re saying here. The problem with what your perspective is that it requires someone (other than the two parties to the transaction) to decide what is “fair”, “equitable” or “overpriced”. And once you make some third party the arbiter of those decisions you’re sacrificing freedom for an illusion of economic security which is really neither greater than what capitalism offers nor any more secure. In the absence of a divine Planner, I’ll take the problems of the free market over the “security” offered by a planned economy any day.