Reimagining capitalism—as principled, patient, and truly social

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While the global financial meltdown and its aftershocks have unleashed a flood of indignation, condemnation, and protest upon Wall Street, the crisis has exposed a deeper distrust and implacable resentment of capitalism itself.

Capitalism might be the greatest engine of prosperity and progress ever devised, but in recent years, individuals and communities have grown increasingly disgruntled with the implicit contract that governs the rights and responsibilities of business. The global economy and the Internet have heightened our sense of interconnectedness and sharpened our awareness that when a business focuses only on enriching investors, managers view the interests of customers, employees, communities—and the fate of the planet—as little more than cost trade-offs in a quarter-by-quarter game.

It’s time to radically revise the deeply-etched beliefs about what business is for, whose interests it serves, and how it creates value. We need a new form of capitalism for the 21st century—one dedicated to the promotion of greater well-being rather than the single-minded pursuit of growth and profits; one that doesn’t sacrifice the future for the near term; one with an appropriate regard for every stakeholder; and one that holds leaders accountable for all of the consequences of their actions. In other words, we need a capitalism that is profoundly principled, fundamentally patient, and socially accountable.

This isn’t a new challenge, but it’s more urgent than ever—not just as an effort to escape reform and regulation from the outside, but to restore the public trust, to repair the moral fabric of the system, and to unleash the innovation required to tackle the world’s most pressing and important challenges.

That’s why we’re eager to announce the third leg of the Harvard Business Review/McKinsey M-Prize for Innovation—the Long-Term Capitalism Challenge. With this challenge, we hope to accelerate the shift toward a more principled, patient, and social accountable capitalism—one that’s truly fit for the long term.

Specifically, we’re looking for Stories (real-world case studies) and Hacks (boldly original ideas) that offer up the most progressive practices and disruptive ideas that tackle the challenge of making our organizations more:

PRINCIPLED
Capitalism degenerates into narrow self-interest without a strong ethical foundation.

  • How do we focus the entire organization on a higher purpose and embed such virtues as generosity and selflessness into everyday interactions, evaluations, and reward systems?
  • How do we measure the ethical or moral climate of a company, and what is the dashboard?
  • What does it mean for individuals at all levels to act as wise stewards of organizational values, resources, and stakeholder well-being?
  • What kind of a forum or process could we create that would allow individuals to freely share and discuss ethical dilemmas?
  • In what ways might extreme transparency preserve and promote the highest purpose of the organization?

PATIENT
Vision and perseverance are critical to value creation-- and highly vulnerable to short-termism.

  • How do we stretch management timeframes and perspectives?
  • What does it mean to articulate and instill a vision compelling enough to inspire sacrifice, stimulate innovation, and hedge against expediency?
  • How might we rebalance compensation and measurement systems to provide incentives for long-term value creation along with short-term performance?
  • What tactics or capabilities might we develop to earn some slack from investors?
  • What kind of incentives and measurement systems could we devise to encourage internal entrepreneurs and nurture a varied portfolio of opportunities?

SOCIAL
Capitalism cannot operate in a social vacuum and profits and shareholder return can no longer be the only measures of a company's value-added.

  • How do we eradicate the pervasive zero-sum mentality in business and embed the positive-sum view of stakeholder interdependence into operations at every level?
  • How do we build the consideration of social return into every conversation and every decision at every level in the organization?
  • How could we embed social goals into an organization’s innovation agenda and processes? In other words, how might we encourage not just social responsibility, but social entrepreneurship?
  • What kind of measurement and reward systems would give significant weight to social impact created by individuals and the wider organization?

Polly LaBarre contributed to this story

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Gary Hamel
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Gary Hamel is a leading expert on management, recently ranked by The Wall Street Journal as the world's most influential business thinker. Hamel's landmark books, Leading the Revolution and Competing for the Future, have appeared on every management bestseller list and have been translated into more than 20 languages.
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19 Comments

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Brett Lentz | March 20, 2012
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I believe a key problem is a fundamental misunderstanding of business, of which Milton Friedman is partly responsible for perpetuating.

Profit isn't the purpose of a business. Profit is a CONSEQUENCE of effectively doing business. The purpose of a business is to obtain customers by providing and delivering something of value. If what the business produces is valuable to its customers, it will profit.

By being hyper-focused on quarterly profits, many businesses put the cart before the horse. This over-optimization for the short term sacrifices significant long term value and has far reaching consequences.

So, while I agree with the thesis, I fundamentally disagree that it's a "new Capitalism". If anything, it's exactly the kind of Capitalism that folks like Deming and Juran were insisting was important more than 30 years ago. I think one of the larger causes of modern issues is that educators have been under-representing this way of viewing business and capitalism.

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Shayde | March 27, 2012
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I think you have a point. But "Uncle Milty" spent decades making that same point. He was just being blunt about it. Greed is fine but it has to be smart.

Unfortunately too many people realize that there is so much out there to be had that they also realize they can lie, cheat, steal and coerce others to get money/power.

What we have learned from history is that these sorts of situations are measured. they WILL COLLAPSE because they are inherently unsustainable. Each economic actor must be willing to act honestly in their transactions. In that case the "greed" works to the advantage of ALL actors. Not just the greedy one.

Again I also agree that changes need to be made. But the changes do not have anything to do with "creating" a "new capitalism" rather those changes have to so with instituting ACTUAL capitalism. A post I made in response to your responder explains my resoning on that a bit more.

But good comment.

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Shawn H Corey | March 20, 2012
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No, forget capitalism. Capitalism is based on the assumption that the most fit is the most ruthless. This despite the fact that altruism is a more powerful force in nature and the more altruistic an individual is, the more successful they are (at any endeavour). As long as you keep capitalism around, they will be those who insist that altruism has no part in the business world. So, get rid of it.

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Shayde | March 27, 2012
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No, capitalism is principled on the basis of honest actors exchanging to mutual benefit.

If one actor is dishonest the other actor will either get the product somehwere else or do without. In the case of necessities, it is rarely the case that one actor controls the all the necessities and it is almost always the case that the both actors control something the other needs. Thus the "honest actor" thing.

Where we have a problem now, with the "fall of capitalism", is that we have not had capitalism with its necessary "honest actors". Governments use their power to promote the interests of the families and friends and business partners of the sitting gov't officials. Those with large amounts of resources collude in cartels to stifle innovation and payoff gov't officials to make laws that protect the interests of the already rich and powerful from the innovations of smaller companies.

This is NOT capitalism by its very definition and nature.

Capitalism is by its very nature the MOST SOCIALLY RESPONSIBLE SYSTEM. Because it is based on meeting the needs of all actors by the quickest, cheapest most efficient means possible it engenders not just competition to find ever more efficient modes of production and distribution but it also promotes cooperation on such a massive scale it's quite literally beyond comprehnsion.

Capitalism IS open source.

Centrally planned/controlled economies are closed source and stifle/punish innovation.

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RJP | March 21, 2012
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OK this "survival of the fittest" narrative is really annoying.

But it's equally annoying whether it's used to justify or criticise capitalism.

Evolutionary theory - from which the idea comes - does place organisms in a context of competition for resources. But natural selection (a complex mechanism in which fitness and competition play only a part) applies to species, not to individuals.

Capitalism competing against communism is more suited to the metaphor. One business or individual competing against another not so much.

As to the idea of 'fitness' - well that has to be a contender for the most miss-understood and miss-used scientific concept in human history.

Darwin did not mean 'fit' the way a runner or a boxer is fit. It has nothing to do with strength of power. In his theory, the strong did not muscle out the weak at the food trough. Rather he ment 'fit' as in 'suited' or 'adapted' the way we use it in the phrase 'fit for purpose'.

Lot's of little random natural changes (variations) occur in a species. Blonde hair versus Brown for example. They are insignificant. But if something in the environment changes that means those with or without a particular trait will have trouble getting to breeding age then their will be a slow multi-generational change as the species adapts and once again becomes adapted 'fit' to the changed environment.

We now think Europeans are white because continental Europe is, in fact, the gloomiest, least sunny continent on Earth - and has been for a long time.

When people first migrated there, they found lots of food, but unfortunately had skin that was too dark and suffered from vitamin D deficiencies. Those who were naturally paler did a little better and eventually we white-folk ended up with very white skin - which optimises our ability to produce vitamin D with less sunlight - and was therefor more adapted (more "fit") to the weather.

At no point in that process did a darker individual 'compete' for resources with a lighter individual and lose because of their skin colour. Paler people just had slightly better luck at breeding that the darker ones - over such a long time I doubt anyone ever noticed a thing.

Hardly the aggressive utilitarian dog-eat-dog metaphor of a fight-to-the-death for resources that people use to describe, support or critisise capitalism.

Capitalism is many things - what it isn't is the inevitable expression of a natural principle. And it isn't a good or bad thing in it's own right. It is at base a social contract, established by a network of laws and conventions that extend the concept of ownership beyond the scope of how many possessions or how much land you can personally claim by chasing others away with a stick.

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Shawn H Corey | March 21, 2012
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Capitalism is justified by "survival of the fittest," so annoying or not, you're going to hear a lot about it. Capitalists also lie a lot to justifying their abnormal behaviour. It is not a dog-eat-dog world; dogs only eat their own kind when they can't get any other food. And they help each other hunt. And they help care for the young. In other words, cooperation makes them more fit. Cooperation is more powerful than greed. Capitalism is little more than a lie.

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Shayde | March 27, 2012
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Hmm interesting but erroneous line of reasoning. And your ability to create hyperbolic non-sequitor is amazing.

Capitalism, as you will notice reading my other posts, is based on exchanges between honest actors. It encourages those most resources to be distributed to the places they are needed most by the most efficient meeans and to be produce, similarly, by the most efficient means. Increased efficiency means increased profit to the producer. Increase effenciency means increased production and that means increased availability and thus cheaper rates of exchange for the consumer. Eventuall it all balances. Actors are allowed the freedom to anticipate changes to the staus quo and prepare thus increasing the likelyhood that all goods and services will remain available even during times of scarcity. Actors are also free to innovate processes for production and methods of distribution that are more efficient. Again leading to the downward pressure on prices.

In order to acheive this actors must act "rationally". That is they must understand they must be honest in their interactions or their position in the ecomony will be usurped by another more rational competitor.

This mby its very nature means Capitalism provides the greatest net benefits to all actors and allows for improvement in production and distribution as a "rational" and desirable attribut.

NO OTHER ECONOMIC SYSTEM encourages such efficiency, innovation because all the other systems rely on a few "elites" to decide what goes where when and what is more important to "their" interests. There is not way a few insulated and isolated individuals with no experience in the particulars of such minutae could ever make such innovations or improvements. Thus in every centrally planned society in history progress is either stalled or excruciatingly slow.

So, Cpaitalism is by very definition and fucntion the essence of Cooperation and the thought it is otherwise is the real "lie".

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Pavel | March 21, 2012
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Capitalism (+ free market) is just a most effective way of delivering what society - people - customers want (are willing to pay for). You can't blame capitalism from having needs and attributes you don't like 'cos it doesn't have any - only people do.

As soon as people are 'profoundly principled, fundamentally patient, and socially accountable' - capitalism will become such as well.

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Shayde | March 27, 2012
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Modern Capitalism, the variety that has failed, is not Capitalism at all. What has failed is the continued tweaking of the "system" by Socialist and Facist elites (depending on the country we speak of) to rig the system in favor of themselves or their supporters. Whether it's Communistic or Oligopolic in nature an econimic system cannot survive long when it's artificially "managed" because such systems are so complex that the actors involved, even when attempting to act honestly, tend towards a "Ctearis paribus" type of attitude or making BIG decisions based on a few smal indicators thta are most important to THEMSELVES. Only a true free-market can allow individual actors to anticipate and plan for exigencies that are all too commonly missed (or caused) by the myopic planned econimies that we have in common now. Currently, even in the most free markets (arguably the Us has been one of those) the very large businesses and social interests have gained control of legislatures and governors/presidents and been able to pass laws restricting small innovators from creating marketable solutions to modern problems using public interest as a guise. After crushing the upstart they then purchase the "rights" to the competing product and then either claim it was their innovation and market it as their own or they hide it to protect their current business. This is NOT capitalism. This is not a case of "honest actors" interacting. In a capitalist system such companies would not be able to compete whihc is why they "buy" off those in a position to stop their competition. Or they, if it is a Socialist/Communist regime, they regulate the competitor out of business (or prevent them from entering it).

What really gripes me is that the oppressors of humanity have been so successful in watering down capitalism with the specific goal to be able to one day say "See, I told you it wouldn't work!" But even very intelligent persons do not seem to be able to see it. they get bought off too. either with the promise of being part of the Academic Elite charged with making sure education is dumbed down enough that no one has enough facts to dispute their words (think of antebellum eductaion laws preventing slaves from reading and writing so they could be controlled) or being promised things they didn't earn if only they will vote for this person or that person so they can make a law to effectively point a gun at someone who has worked hard enough to get something, take it away and give it to the one who didn't work for it and then claim it "Social Justice" or "Economic Equality".

To put the point on the topic Capitalism is principled, patient and accountable by its very nature,when allowed to run it's course. But when governments begin messing with it in order to engineer social change or to promote one industry or objective over another and if they go beyond the simple job of insuring that economic actors operate honestly, it ceases to be Capitalism.

It doesn't matter how many people scream that capitalism failed; it's simple NOT TRUE. It wasn't even capitalism at all; it was cetral planning. And those screaming about the fundamental inequalities of the centrally planned economies thay have labelled capitalism, what do they want it replaced with?

Hmmm, a Centrally Planned Economy that will be fair and equal to all participants, just more fair to those who serve its interest in maintaining control and less fair to the individuals who make up the masses which are necessary to producing its necessities, and less fair to those who expose the unfairness that is inherent in that system. They want something just like what they have now only they want it to be official and out in the open so they don't have to hie it. They'll change all the history books, edit the accounting sheets, and hide all the bodies. And in a generation or two we won't know it was ever any better than it is.

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Brett Lentz | March 29, 2012
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+1. Completely agreed.

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rob | March 27, 2012
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See http://capitalism.org/ for a definition of true capitalism.
Thank You. You took the words right out of my mouth. I'm pleasantly surprised at the many commentators who actually understand that true, unfettered, free (as in freedom to choose based on your own criteria) market Capitalism is the most moral system (social and business) ever devised. Every other system requires human sacrifice, whether you want to or not, based on someone else's idea of what is good for you and society. Coincidentally, those leaders who claim to know and force you to act upon what's good for you rarely ever perform any self-sacrifice themselves. They are too busy planning and ruining, I mean running, everyone else's life. As it applies to opensource, rather than complaining that other companies are exercising their property rights by being propriety, closed-source, or profit-driven, highlight the advantages of opensource to a business' bottom line. These would include lower cost, lower ongoing maintenance/support costs, less expensive hardware required, the ability to customize as they see fit, lower licensing fees, quality/performance as good or better, and thankfully at present, ease of use. Please stop complaining that other profitable software companies are monopolies, as they are not forcing anyone to buy their products. This makes opensource advocates sound like a bunch of whiny sore losers. Those so-called monopolies are just usually providing what customers typically want. When opensource companies become the best sellers, and therefore most profitable, will you also derogatorily label them monopolies? Lastly, the true stakeholders of any company are those that put up the money to start it and pay the ongoing expenses-those people are called Owners. They are in it for the money, as no one starts up a business with the goal of not being profitable. However, if a business owner is a true Capitalist, she/he/they will provide the best product/service they can, at the best price which still enables profitability. In other words, to be successfully self-interested business owners, they must serve their customers self-interest. That is a win-win situation.

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Patrick Anderson | March 28, 2012
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What is the origin of Profit?

Notice Profit is *undefined* when the consumer is the owner of the Means of Production...

The co-owner of a dairy does not buy milk because he owns his % already.

Profit measures the consumers lack of ownership in the Means of Production, and is 'Imputed' when that Property is in the hands of the person who will use those outputs.

We must protect User Freedom by helping each person become co-owner in the "Physical Sources" of that which they need.

Any business can do this by following these rules:

* Product is the Investor's Return.
* Profit is the Payer's Investment.
* Investments are Commitments of Sources and Skills.

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Shayde | March 28, 2012
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I couldn't agree more with your words although I suspect (correct me if I am wrong in my suspicion) that you connotation does not match my own. This seem evident give the alacrity with which you boil down the key point to irrelevancy.

This is what I mean:
-A Producer invests resources into making a product.
-A "Payer" Invests resouces into purchasing a product.
-The Payer's return is the usefullness gained from owning/using the product for its intentioned purposes or any other purposes it is employed to by the Payer.
-The resources provided to the Producer for the product by the Payer are re-invested by the producer into creating more product, creating more efficient means of creating the product, distributing the product, improving the product or maintaining the ability to continue providing the product in times of scarcity.
-And the great circle of life...er..capitalism continues.

To continue along the lines of you reasoning, I agree it would be WONDERFUL if we could all do that. If we could all make out own cheese, build our own homes, raise our own veggies and meat, assemble our own PC's or iPads, brew our own beer, manufacture our own anti-biotics, sheer our own sheep, spin our own thread, weave our own cloth, sew our own clothes, smelt our own ore, cast our own metal build our own car, distill our own fuel, program our own OS, do oir own heart transplant, or brain surgery and on and on into the realm of the absurd. . . Do you see where I'm going with this? We need persons to specialize in things that fit their talents, interests and abilities. Everyone has their own genius and we need to empower people to do so. Collectivism subsums individuality and strangles innovation so none of the reference improvements can be made or made quickly be cause no one can challenge the status quo.

This worship of every payer ACTUALLY owning a stake in the production is very interesting and almost beleivable in its fabricated logic until we consider other stakes we may hold in society and then the tables are turned. We shouldn't educate (or have a say in it) our own children, worship our own gods, or own our own property(with which we purchase goods BTW).

We also shouldn't have more than someone else because that's not fair. Nevermind the fact we worked twice as long, learned twice as much became twice as skilled and thus produce well over twice what the twit sitting back getting his 99 weeks of unemployment checks and turning down every job he's offered so he can keep collecting can or will produce.

The point being ->The resources paid by the Payer to the Producer are, in a very real sense, an investment in future products and product availability. So that satisfies the reality of the words you used.

Now, again I must stress we are talking real capitalism (Laissez-faire capitalism ) prescribing honest rational actors.

This CANNOT work in an environment with artificial barriers to market entry, regulated cooercion, gov't propped crony capitalism or manufactured "markets" such as those created by the recently passed US Healthcare legislation or the proposed "cap-n-trade" frauds.

Collectivism, communism, or what ever label you give to any social or economic system other than the above described capitalism is oppression. Pure and simple and it takes away right and liberties from people. And that is bad.

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Patrick Anderson | March 28, 2012
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Shayde wrote:
> If we could all make our own cheese, ...

Why would these owners not hire skilled workers?

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Shayde | March 28, 2012
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That's my point.

You need owners.
You need workers.
You need consumers.
NOT Employee owners who consume their own products.

Now I'm not proposing a forced segregation, just let the consumer decide if he will make it himself or purchase it from anyone he wants to. Or if he makes it himself he can decide to sell it too. If he he sucks at it no one will buy and he'll find something else.

The more advanced our technologies, the more varied the goods and services provided the greater the specialization needed for management and production and the larger a degree of separation exists between the "owner" and the "consumer."

In your suggested model we are all owners, even the "highly skilled workers". I love the idea, but in practice it doesn't work because everyone thinks they are the decision maker. To keep this from happening we end up creating a special class of worker owners who then begin exhibiting the very tendencies we despise by rigging the system to give themselve more benefits by taking from the rest of us. Ever read Animal Farm?

We all cannot have a direct "ownership" stake in every enterprise which produces a good or service we consume. At least not a a voting stockholder kindof way. But what we can do is make our preferences known by our spending habits. A free market will notice and react to that by providing what we want. A centralized planned economy (sometimes they are call cooperatives) will disegard what we want if it does fit the plan of that special class if it diverts even the slightest amount of resources from the plan. This will happen even if what we want is a need.

The only way an economy can be sustainable is if we, the consumers, are free to decide what we buy, when we buy, and how much we buy, and from whom we buy it from.

Otherwise we then conentrate the power to a few select individuals and THEY WILL OPPRESS YOU and take everything you have. Without question and without exception they will eventually do so.

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Patrick Anderson | March 28, 2012
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Shayde
> NOT Employee owners who consume their own products.

I agree. Worker-Owned organizations seek to perpetuate profit just like all other Capitalists.

Profit indicates property misallocation, and is eliminated (the product is not sold, and so price and cost are identical) when the consumer of outputs is the co-owner of inputs.

Property used in this way is an optimization that pre-allocates product to those who will finally consume it.

----
For example, imagine 1,000 milk-drinkers buy and co-own a dairy for the purpose of receiving at-cost milk.

The each must continually cover their % of the costs of production, including any wages.

But since Product is their "Return on Investment" (ROI), they each collect their portion of milk that they <strong>already</strong> own without buying it from anybody.

Because the final transaction has been eliminated, the Consumer/Owner cannot pay Profit, and governments cannot even collect sales tax! See http://en.wikipedia.org/wiki/Imputed_rent for a portion of the idea.

----
Production is for Use-Value when the Physical Sources are co-owned by those who will consume the outputs.

This is analogous to how the Open Source gives Users access to the Virtual Sources (code), even though it would seem of little worth - since most Users do not have the skills needed to 'operate' those Sources.

Capitalism is about Exchange Value, not Use Value.

But when the <strong>Consumers</strong> control the Sources, and accept Product as the natural return for that risk, the product is not exchanged (is not sold), and so Exchange Value is not even a consideration - except in the case of surplus.

> We all cannot have a direct "ownership" stake in every
> enterprise which produces a good or service we consume.
> At least not a a voting stockholder kindof way.

I disagree. Crowd-funded will become crowd-owned as consumers learn to buy and co-own the Physical Sources needed for production and so have absolute dominion over the results at the lowest possible Price.

Many people already have "Mutual Funds" that scatter investments across many industries but give them almost no say in how that product is made, nor do they ever receive the product directly as a ROI.

We will create a "Fund Mutuals" that scatter investments across many industries and gives each investing-consumer the same % vote as the % of co-ownership, and accepts the Products themselves as the natural return for the risk of property ownership.

Just as with Open Source, not all owners will see the benefits operating in this manner, and so adoption will be slow at first, when only a handful of groups will understand how this could help their struggle for autonomy and resilience.

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Shayde | March 28, 2012
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Interesting idea but impratical.

First of all, capitalism does not imply the lack of necessity for government. But government would be in a position to use its "power" to limit the actions of irrational actors. And no government is going to allow the dissolution of all taxes.

But the first glaring problem with your scenario is "where do the co-owners" get the initial investment.

The second problem is that your scenario employs a zero sum game. It implies that from start to finish there is no value added to a raw material. And thus the value of the finished good, regardless of the number of iterations of improvements or combinations involved, is effectively no greater than the value of the original sets of raw materials.

The other point is that you seem to include the "wages" involved as investment of the co-owners but in taking your model to its logical end there would be no distinction between the "workers" and the co-owners otherwise the system would devolve into a owner vs worker class system and eventual into some sortof psuedo-slavery at best. Is that the goal here?

To the comparison of Mutual fund with your model. I find that interesting. But your model requires that the co-owners be able to control the resources (I am assuming you mean raw materials from whihc products are made) but your analogy admits we do not control resources, decisions or practically anything. Most Mutual funds do not even allow a vote and if it does it is either a block vote of the fund (which I may disagree with) or is so insignificant as to be meaningless. Again this seems to contradict your goal.

I do understand that no curernt system or financial instrument meets you definition. So the contradictions in using a mutual fund as a model are not the faults of your model.

But still, it also seem you mean to elliminate currency. Sorry but that won;t do. Trading goods directly (or even moving them around in a collective economy or society) implies creating a common standard measure of value that can be applied to goods and services.

Sounds like money to me. I don;t care if it is made of coins, paper, standardly measured units precious metal, binary digits in a computer memory or triangular hashes on a clay tablet, whatever you label it, it's still money/currency.

Besides oyu still ignore that fact that in such a case there grows a elite class that increasingly controls the resources, until the individuals are denies property right, for the good of the whole and then efectively only the ruling class actually "owns" anything. They may tell you they only administer the public property but believe you me, they own it in every REAL sense of the word.

And finally I categorically disagree with the statement that "Capitalism is about Exchange Value, not Use Value." How the heck do you expect to calculate the amount of whatever type currency you are willing to "exchange" for the good or service if you do not first have some idea of its VALUE to you and the purposes to whihc you will use it. Capitalism is ALL about USE value and really nothing else.

I am a beekeeper. I will pay a certain amount of money to purchase 4 wood planks cut in a certain way to certain dimensions. But I will pay less for the same linear feet of a single board. And there ain't no way I'll pay the same amount of money for them. Why? Because the person who sawed those boards to my specification added VALUE to those board and made them fit for the use I wish to put them to. A plank of wood, not cut just so, does not have the same use value, because I then have to invest my time, skill and effort to create a similar finished good. And trust me, woodworking is NOT my greatest talent. It is MUCH more efficient for me to acquire such items made by someone more skilled than I. I get a higher quality item, I get to focus on my skills, the board seller gets to focus on his. I pay a little more to him than he raw wood plank cost me, but I get much more value from them.

ALL ABOUT USE VALUE!
I say again.
ALL ABOUT USE VALUE!

That realization is the reason why central planning, cooperatives and other such fantasies are just that, fantsies concocted by those who would enslave us or keep us enslaved, couched in terms of equality.

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anonym_x | April 3, 2012
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anyone that would want to effectively sell communism at a high level (as in: nation wide policies or the like), would have to call it capitalism, especially in the US of course. it does not matter how you call it, and neither who talked about capitalism in what way at which time (it does for practical reasons, but that is not what is discussed here).
call it capitcalism if you want, as long as it is doing the right thing, i would not care, but keep in mind:
the words are capital-ism and commun(ity)-ism.
if your true capitalsm is meant to enhance the "life" of everyone/everything, then the word is pretty ill-chosen, and you should better start calling it communism instead, or if you are too indoctrianted to feel disgust when hearing that word, invent some other one. calling it capitalism is pure stupid. even if a few understand it like you say, as in.. enhancing the well-beeing of everyone, most will not. especially not those who do not want to, those not willing to read a book about the topic, but rather rely on what their parents told them, what the general publics understanding of the thing is, or what the word itsself tries to say, when looking at it most naiively. and of course, everyone hating the bad/wrong capitalism of the past, will not ever accept soemthing called capitalsim. in other words, your true capitalism will never be understood and spread, if you keep calling it capitalism. and personally, i would not trust anyone that is so stubborn on keeping that word alive.

maybe business students should have to do a 2 years practica in the open source community, before (<- very important!) learning anything about business at all.
that should have a huge potential for a change in the right direction. it has a huge problem though: if all business students would do that, then open source would collapse. :D

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Shayde | April 3, 2012
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I don't necessarily disagree with what I think you are saying here. There is a connotation that can be negative when using either word, "capitalism" or "communism".

But our lives are filled with little conundrums of that sort.

But at their most basic, capitalism and communism do seem to be getting mixed up. It seems selff evident that the idea of all persons acting as a community, each contributing their time, talents and substance to the whole allowing such resources to be redistributed as needed is a good idea. "From each according to his ability, to each according to his need." Sounds good. The problems happens when you start trying to figure out just who it is that will decide what goes where and then especially what happens to the surplus or even worse, what happens when there is a deficit? This very system attracts person who seek poweer to position themselves to power. It invites excess by an eventual ruling class.

Capitalism on the other hans, the pursuit of "money" seems greedy, selfish and altogether unsuited to the idea of mutual cooperation. That is until it is examined just what is involved in the successful practice of capitalism by a society. The members of a capitalistic society must be rational. They must understand that to take undue advantage of others (customers or suppliers) will lower the esteeem those other actors have for them and therefore limit their ability to trade. So it becomes a matter of "enlightened self-interest" to find a price point in every transaction at which both the supplier and the consumer consider the trade to be profitable for their ends, or goals.

Granted that such a system also invites those that would attempt to gain so much influence that they can eventually become "monopoly" and therefore control the market and then balance transactions in their favor putting other to disadvantage and therefore upset the market. But, unlike a centrally planed system where the actors of influence are not true participants in the economy and can drain the economy without feeling its effects and without allowing the vast majority of the economic participants a chance to have influence, capitalism by its very nature allows the whole to act in concert. In a truly capitalistic society, sans the undue influence of laws or regulations limiting the market reactions to such events, the non-rational actor is isolated by his actions and prevented from adequate trade to maintain his advantage. The wholle acts as one to correct the imbalance. Communism has no mechanism for such correction. But capitalism does because many other actors notices the imbalance and take actions that are in their self-interests, correction the problem.

So in reality, you may be correct that we actually have the terms mixed up, when you consider the root meaning of the words "capitalism" and "communism". For what we term communism is actually based on a very few individuals gaining control over all the "capital" for the purposes of redistribution. And what we term capitalism is based on a "community" of rational (honest) actor acting as a whole to benefit all members of that society and maintain a balance.

The problem is that we often are not in a position to change the terminology. Just as "art" and "fart" have nothing to do with each other (unless you are a candidate for an Endowment for the Arts grant from the US govt) I think the tems are here to stay. What we might want to focus on is educating persons about what true capitalism is rather than fight the other fight.

Those elites who want the world run under a socialist/communist system are committed to the extreme to the idea of getting the power over the production of billions of people. They are focused and they are committed. And they will not stop using any means necessary to disambiguate and distort what ever that must to make their coming to (or remaining in) power more palatable to us. The problems is most of us actually involved in "capitalism" are doing it just to support our selves and families and we are so busy working and producing goods and services of marketable value that we don;t have the time to spend creating crisis to gain power and don't have the desire to oppress and destroy others. We capitalists are too busy trying to cooperate and work together and keep things moving forward.

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