A Thought or Two on Capitalism

Capitalism is a beneficial system in several respects, but it comes with a huge flaw.  It is obsessed with profit.

Now, there is nothing wrong with profit in and of itself.  But there is certainly something wrong with an obsession with profit.  Anytime you maximize one and only one value, you create a system that denies other values.   And capitalism, by maximizing profits, creates a system that denies other values — in fact, it denies all values that are in any way at odds with maximizing profit.

So, for example, capitalism becomes the enemy of sane ecological policies in so far as those policies interfere with maximizing profit.  Or the enemy of living wages in so far as living wages interfere with maximizing profit.  Or the enemy of anything — any other value — that interferes with maximizing profit.

At least that’s how I see it.  How do you see it?

25 thoughts on “A Thought or Two on Capitalism

  1. Perhaps that claim is too broad.

    Profit is one measure of success.

    Here are two examples of where I think capitalism is not “obsessed” with profit:

    1. Some companies, such as Chik-fil-A focus on core values above everything else. And, they lead by example in terms of customer service, customer value and employee benefits. They do make a profit. But, I believe the company’s success reflects it’s values and those are, at least equal with the financial profits.

    2. I won’t hold my own company out as an equal to Chik-fil-A by any measure, other than a focus on leadership and contribution to our community. We’re certainly profitable. But, we would never choose profit over a point of ethics, for example.

    And, it can be pointed out that Capitalism is the promotion of economic growth. So, that might make it a means, and not necessarily, an end.

    Cork

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  2. If only Chik-fil-A would focus on making palatable food, instead of funding Focus On The Family and Liberty University. It’s a case of capitalism warped by that other great destroyer of values, religion. Scratch that; capitalism IS a religion to many people who otherwise claim to be Christians.

    Adam Smith discovered a very important truth, but it is not the only truth in play. The relentless faith in the free market’s invisible hand runs counter to even Christian core values, and humanitarian values as well.

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  3. I don’t have any problem with capitalism. I have a problem with the market fundamentalist disciples of Ayn Rand who are the ideological equivalents of communists.

    I don’t think Adam Smith would be too fond of such “capitalists” either.

    “All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” – Adam Smith, The Wealth of Nations, Book 3, Chapter IV

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  4. Adam Smith also inherently distrusted business corporations . . . and for good reason. I suspect that future humans will look back on the two centuries in which we find ourselves and judge harshly the experiment of making corporations into legal “persons” and what it did to democracy, the environment and basic human rights.

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  5. We are at the end of capitalism’s usefulness. Everything that can be owned is already owned and it is a system designed for growth and expansion, as a result we are in a world where one ‘capitalism’ runs into another one over and over and violence, coercion and theft take over. Let us do away with capitalism and try democracy again.

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  6. Acknowledging Humes Ghost.

    I’m unclear how anyone can leverage Ayn Rand in the same breath as communist thinking. She actually lived under communist rule and was passionately opposed to it. I may have misinterpreted your comment, mind you. But if not, I’ll forge ahead… Her theories around Objectivism were founded with the idea of a hands-off government, and an emphasis on independent thinking.

    Thus Rand says:

    “The basic social principle of the Objectivist ethics is that just as life is an end in itself, so every living human being is an end in himself, not the means to the ends or the welfare of others…” [“The Objectivist Ethics,” 1961, The Virtue of Selfishness, Signet, 1964, p.27]

    Acknowledging George W.

    The Cathy family use their business (Chik-fil-A) as an example of good best-business-practices. I’ve met few members of the family that fail the leadership test. They are honest, true, hard-working, caring and compassionate. Their organization is profitable at every level. And, it’s successful in every respect. It’s a good example of of how capitalism can work for everyone.

    Acknowledging Paul.

    Democracy gave birth to the promise of Capitalism. Although neither is perfect (just like God made man), both remain the best examples available to build from.

    Cork

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  7. @ Cork: I hardly think Chik-fil-A pays it’s average employee a living wage. Do you?

    @ George: It’s fascinating how many Christians nowadays identify capitalism with their religion!

    @ Hume’s Ghost: Capitalism has it’s advantages, but I think it needs to be regulated and tempered least it become too ruthless in pursuit of profit.

    By the way, don’t get me started on Ayn Rand! People would be a lot better off if they read Adam Smith and burnt her books for winter heat.

    @ Dopp: That’s one of the best 50 word summaries I’ve seen in a long time. Surely you didn’t write that yourself? Can you imagine what happens if the American regard for corporations continues to go global?

    @ Paul: I agree that capitalism and democracy are two separate things which are not dependent on each other.

    @ Cork: If it’s true that Ayn Rand encouraged independent thinking, then how come the only group that thinks more alike than Randians are FOX News watchers?

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  8. “Democracy, in the end, is always a case of two wolves and a sheep voting on what to have for dinner.” from http://www.daylightatheism.org/2008/10/elizabeth-dole-anti-atheist-bigot.html

    Christianity is a beneficial system in several respects, but it comes with a huge flaw. It is obsessed with ego.
    Now, there is nothing wrong with ego in and of itself. But there is certainly something wrong with an obsession with ego. Anytime you maximize one and only one value, you create a system that denies other values. And Christianity, by maximizing ego, creates a system that denies other values — in fact, it denies all values that are in any way at odds with maximizing ego.
    So, for example, Christianity becomes the enemy of sane (insert noun) policies in so far as those policies interfere with maximizing ego. Or the enemy of living wages in so far as living wages interfere with maximizing ego. Or the enemy of anything — any other value — that interferes with maximizing ego.
    At least that’s how I see it. How do you see it?

    Would this be considered plagerism?

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  9. Acknowledging Paul.

    I’ll challenge you with using the word: “only” is much to broad, and inaccurate as well. Corporate leaders will point to Rand as an example of challenging the status quo. Interestingly, this would be in-line with the original direction of this very post. College students embrace Rand’s “Atlas Shrugged” as a text book for both change and open-mindedness. The book is never more timely than it reads today. I’ll use myself as an example here, again. I coach business leaders. “Atlas Shrugged” is often on their bookshelves. My favorite college professor at Radford and my Grandad both put that book into my hands. In fact, Grandad called it: “a dissertation on the kind of thinking that shows how a single man can still change the world”. He (Grandad) was, in his own right, one of the most successful businessmen I’ve met. And, he was genuinely a true and goodly man with more than a fair reputation. I was so fortunate to have him in my life.

    With regards to Chik-fil-A… When it comes to their operators (owners of franchises) they give them the clear advantage in the marketplace. This includes bestof-class training and location -with a commitment to give them a lot of space between stores. If you need more and ever clear examples, I have them at the ready.

    Their hourly people are paid minimum wage to start. But, where the company clearly separates itself is increased pay based on merit- which is, in turn, based on clearly articulated expectations from managers. Chik-fil-A has one of the lowest hourly attrition (turnover) rates in the food services industry.

    The W-2 wage personnel are, in fact, paid at approximately 22% below market. However, their freedom to pursue outside interests such as extended family vacations, family care, mission work (please don’t get locked-in on that, Paul) and stay on payroll is hard to match. Also their healthcare benefits are amongst the best in the country. And, that is starting to be valued, and for obvious reasons as a ket draw for best talent.

    Chil-fil-A executives are rewarded handsomely based on bottom-line corporate growth. Their base pay is competitive; the benefits are first-class; and, their bonus is commensurate with corporate profits, market-share and growth.

    So… I stand firm they are a very good example of how and why capitalism can work for the good of everyone concerned.

    George W. made a comment suggesting he did not like Chil-fil-A’s food. That is, of course, subjective. A matter of taste, if you will. NOTE: In my household, we prefer home cooking and whole foods.

    Cork

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  10. @ Leguru: That’s quite an interesting application. I’m going to have to think about that one.

    @ Cork: Ayn Rands popularity is no guarantee of her quality. In fact, as you might even know, the most popular products — such as McDonald’s — are almost never the highest quality.

    Just as McDonald’s is what passes for a hamburger in this country, Ayn Rand is what passes for a philosopher. But both those things say more about American popular culture than they do about hamburgers or philosophers.

    I will give Rand credit for somethings, though. For instance, reading her has been described as liberating by several friends of mine — friends who grew up in environments where they were expected to sacrifice themselves for the sake of others.

    Last, it doesn’t look like Chik-fil-A does as much as it could to provide its employees with living wages. Pity. But only to be expected given the need to maximize profits.

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  11. “Stupid greed” is as much an enemy of capitalism as “false philanthropy” according the a very Capitalist writer and thinker, Frederic Bastiat. Sadly, too many people forget this until bankers, corporate execs, and others have walked away with our life savings, our jobs, our homes.

    Proper policing of the market place is no stumbling block for capitalism. It’s the only way to make the system work. If the current financial disaster doesn’t speak to this I don’t know what could.

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  12. The problems arise when the police and the capitalists are in bed together. When the regulators in Congress (Barney Franks and Chris Dodds) are encouraging activities that undermine good economics (pressuring the banks to loan to people who couldn’t repay the loans) you have a recipe for disaster. Obviously, we need men of good character in both the capitalistic community and in the policing community. The result of throwing out capitalism, i.e., communism or socialism, is similar to throwing out the baby with the bath water. If the baby (capitalism) is still dirty, why not simply change the bath water?

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  13. acknowledging leguru:

    We were bandying this about a bit last night. My daughter (who is thirteen) and a few of her friends were idling nearby listening in. She brought up an interesting point with perspective… She asked me if members of Congress are required to take a test, or if they go through screenings (she called it “stuff”) like credit checks.

    I’ll stop (only just) short of suggesting Capital Hill remain the bastion of the elite. But, there is something to be said for measures around qualifying standards. I wonder what type of Personality Profile would produce an optimum, and true Public Servant?

    This also has me thinking about fiduciary responsibilities. Today, the Board of Directors for companies are being held more responsible for performance. As sophomoric as the general notion is, I wonder if this is something we need to consider more deeply.

    Cork

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  14. just out of curiosity:
    what exactly does “Capitalism” mean to you?

    Honestly, it’s not a tricky question, it’s not a mean question is just that I am confused by the multiple uses of the concept…

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  15. Ana, I think of capitalism in two ways. One is a bit more formal than the other — capitalism is a system in which the means of production are privately owned. The other way of thinking about it is to just observe its workings.

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  16. Hmmm, so I understand that a system in which the means of production are privately owned has its virtues.
    And of course if one owns the means of production, profit does motivate his actions. But does that imply that profit shall be the one and only goal of capitalism? Isn’t the profit obsessive approach to capitalism more the result of a culture of greed, rather than just a mere consequence of the system as it was intended?
    What I was trying to point out here is that capitalism per se is not the issue, but capitalism plus other cultural/ethical/ social factors are to be blamed.

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  17. You may be right, Ana, and yet capitalism is present in many different cultures while there seems to be no culture in which it does not result in corporations ruthlessly maximizing profits. So unless I am mistaken the problem of capitalism ruthlessly maximizing profits is a cross-cultural phenomenon.

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  18. Hmmm, would you consider the Netherlands (as they are today) a capitalist culture or not? (I was thinking about another post was talking about it as an welfare culture)

    I do not agree with the combination between this culture of greed and capitalism that I live in right now…but if I reject capitalism as a whole, what do I replace it with?
    I have a bitter taste of that experiment called communism, and I do not have a good view on Marxism-Leninism either…
    Socialism, I’d be ok with that if I understood where is the major difference between it and capitalism.But I don’t…

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  19. Socialism IS communism = the means of production are owned and controlled by the government. It works when the government executives are more altruistic than the capitalist pigs that now control the means of production. Problem is that no government on this earth has ever been blessed with altruistic executives, since they are all human like the capitalist pigs. The main difference is that it is easier to put a corporation out of power than it is to put a government out of power. THAT is why communism or socialism doesn’t work now, and never will. Democracy or Representative Republic governments are somewhat more responsive to the people, but only insomuch as the people become informed and active in said government. I can’t remember who said, “Democracy is the worst kind of government, except for all the others.” My wife and kids were survivors of Pol Pot and were scared to death at the rhetoric of the Obama campaign – it looked just like the communist campaign before Pol Pot took over Cambodia. They are even more frightened at the way the current administration is taking actions to nationalize the banks, the car companies, and health care. I cannot blame them.

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  20. Ana, I think the Netherlands have a mix of capitalism and socialism, just like the US, only with relatively more socialism than the US.

    Leguru, I do not agree with you that socialism = communism. I think your definition is peculiar to yourself, although these terms can have more than one meaning. But in practice, there are huge differences between the Nordic socialist states such as Sweden and Denmark, and the communist states such as China and Cambodia. If socialism = communism, then why are there such pronounced differences?

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  21. If socialism = communism, then why are there such pronounced differences?
    As I stated earlier, socialism or communism works if the government executives are altruistic. Hun Seng was a Khmer Rouge before he took control of the government. The size of the states is also a large factor. Even democracy works in small areas, like a city or village. There are additional factors, but whenever the corporation has little freedom, the people have little freedom. Tyranny, whether it is a monarchy or communist dictatorship, works so long as the people are willing to put up with it. American Revolution, French Revolution come to mind.

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  22. @Paul,
    I do favor regulated capitalism as well, but I am quite flexible –this is why I am asking these questions. I certainly appreciate your answers. And I do apologize for these long comments…
    @Leguru
    I am coming from a former communist country that was in Eastern Europe.
    I find your outlook on Obama’s rhetoric interesting. For I could pair the rhetoric of some republican candidates with Lenin speeches (for real- I just had to remove /replace words as bourgeois with liberal elites or kulaks with Muslims. This is why I consider all ideologies quite tricky. But I do not think that, in spite of the rhetoric, we could match the context with Cambodia or the Soviet Union to the same extent that we did it with a speech or another. It just means, I think, that one has to be considering the rhetoric as well as the cultural and social context and one tries to keep an open mind. And it is, obviously, a little bit difficult for me to fully grasp the social and cultural context at times, for I am still a foreigner and I will probably always be one.
    Now, my outlook on different goods (products and services) from the perspective of a western culture is that some shall be available to any citizen or legal resident of the country, some others are optional. Some of our purchases shall be based on preferences, some are based on needs. Thus, to own a car is optional – I prefer to drive a car rather than take a bus, walk or ride a bicycle. Credit cards, investments and checking accounts are optional as well. Thus the private ownership here makes the most sense: (1)it is the quickest way what is offered can match my preferences and change accordingly and (2) it is the only way I can “dictate” what is offered by imposing my preferences.
    Health care is not optional – health care is a service that shall be available to any legal resident of US. I need health care as much as I need education or legal representation. At the point where access to basic health care services is granted if one has health insurance (or can afford to pay thousands out of its pocket, which most of us cannot) – I see it as my right as a resident and taxpayer to ask for access to health insurance that my money can buy . This is why health care shall consider a public option, for the private ownership of health insurance cannot offer it.
    And I think this kind of approach is what makes the mix of socialism and capitalism in certain countries quite different than communism. But again, “isms” and rhetoric can be quite tricky at times.

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