What is the greatest weakness in the capitalist system?
What causes capitalist systems to fall to socialist and communist revolutions?
If capitalism is the most efficient economic system, as I believe it is, why the rising popularity of socialism, especially among the younger generations?
Capitalism may be the most efficient economic system but it is not a perfect system; it has an Achilles Heel.
Capitalism is efficient because it taps into the internal motivation of the individual, especially the individual who wants to ‘get ahead in life’.
Capitalism creates the playing field on which both entrepreneur and employee can play to win.
“Create the field and people will come and play!”
And play they do until a revolution or war destroys the playing field.
The Achilles Heel.
Self-interest is both capitalism’s greatest strength and greatest weakness.
Self-interest attracts the players onto the field. It drives the players to outwit, outplay and outlast their competitors. As the quality of the game improves, everyone benefits; the players, the spectators and advertisers.
And then a few big players begin to dominate, they take over the whole field and crush their competitors; literally take them out of the game. And they get bigger and bigger until nothing can stop them; well, almost nothing.
The rise of bullies.
Sport has its ‘big players’, those giants who dominate and crush their competition. But every great player is humbled by the fact that they will eventually be sidelined by the one competitor they cannot outwit, outplay or outlast; age.
At some point every sporting star has to make an exit; some departing more gracefully than others.
Not so in the economy, the giants keep getting bigger, keep dominating the field, sometimes for generations. And human nature being what it is, they cannot see that they are ruining the game for everyone else. Their entire focus is on winning the game, every game.
Unfettered greed is their Achilles Heel. Their lust for money has become the root of all evil.
Only when a government authority reins them in are they forced to stop muscling out the other players.
But what happens when they aren’t reined in by government? Revolution. Socialist revolution!
To the masses of sidelined players, revolution appears to be the only way to get the damn bullies off the field.
Unfortunately, revolution isn’t the answer.
The Parable of the Parent and Child.
Imagine a parent teaching their child to play chess or monopoly and the parent keeps winning. How soon will that child lose interest in the game?
A wise parent will find ways to allow their child to win enough times to keep them engaged and interested, increasing the challenge as the child’s skill improves. Eventually the parent and child compete as equals.
It’s a proud day for a wise parent when the child’s skill surpasses their own.
Now, a parable is designed to convey a single message and not stretched to its extreme. Let us be clear, there is no parent-child relationship in the economy.
The lesson in this parable is simple; the big players in the economy need to be considerate of the smaller players. They need to find ways to keep the game engaging and enjoyable for everyone while still striving to excel.
It is not an easy balance but it is an essential one.
The Remedy. Prevention is Better than Cure.
Given that wealth is the primary measure of economic success, the only way to strengthen capitalism’s Achilles Heel, is to address the question of wealth inequality as wealth accumulates in the hands of the big players.
I believe that Andrew Carnegie, industrial giant of the late nineteenth Century, offers one of the most effective remedies for capitalism’s Achillees Heel.
But first a short background. Carnegie’s family were plunged into poverty during the industrial revolution when his father’s business failed. But, through his own hard work and the kind mentorship of a few good men, Carnegie got his break and began to excel in business.
In ‘Wealth”, an article dated June 1889, Carnegie laid out his vision of a fair society, a vision that is just as relevant to our times as it was to his;
The problem of our age is the proper administration of wealth, so that the ties of brotherhood may still bind together the rich and poor in harmonious relationship.
In extolling the benefits of the law of competition, he argues that
“… the law may sometimes be hard for the individual, it is best for the race, because it insures the survival of the fittest in every department”.
After arguing against large inheritances, bequests for public purposes and estate duty, Carnegie proposes that those who have the skill to amass wealth should administer that wealth for the benefit of society, arguing that;
“in this we have the true antidote for the temporary unequal distribution of wealth, the reconciliation of the rich and the poor”.
Finally, Carnegie enshrines his philosophy in his book, The Gospel of Wealth, as follows;
"Surplus wealth is a scared trust to be administered by those into whose hands it falls, during their lives for the good of the community."
US billionaire, Mike Bloomberg, reportedly spent $500,000,000, half a billion dollars, on his failed bid to win the 2020 presidential nomination of the Democrat Party; that’s less than 1% of his $50 billion fortune, a mere drop in the billionaire’s bucket. And, having failed in his bid, he is reportedly willing to spend up to $2,000,000,000, two billion dollars, on behalf of the Democrat Party's bid to unseat President Trump; still less than 4% of his fortune.
These are mind-boggling numbers to the average person. All this money for a political race that is unlikely to alter the status quo in Washington? One might even argue, a political race to restore the status quo.
What good could happen if billionaires like Mike Bloomberg were willing to follow Carnegie’s example and administer their wealth for the good of the community?
Where does one draw the line?
If billionaires, why not millionaires too. And if millionaires, why not those of lesser wealth.
What if by ‘wealth’, we mean more than money? What about a wealth of knowledge and expertise too?
How could we ‘put our collective minds together’ as a capitalist society, not to dismantle capitalism as the socialists intend, but rather to protect capitalism from its own inherent weakness, its Achilles Heel.
Easier said than done.
In The Gospel of Wealth, Carnegie recognises that “it will be hard indeed, if not impossible, to teach the wealthy that surplus wealth should be regarded as a sacred trust to be administered during their lives for the public good”.
If it is indeed hard, we can do it; surely such hardship can be no harder to tolerate than life under socialism.
If impossible, the world stands on the brink of socialist precipice, the consequences unimaginable.
Whether hard or impossible, it’s worth making the attempt and pray it’s not too late.
Nothing is impossible, the word itself says 'I'm possible'! (Audrey Hepburn)
And those people who say it cannot be done should not interrupt those who are doing it.