A Way Forward Provided in “The Future of Capitalism”

In a very interesting book, The Future of Capitalism: Facing the New Anxieties, Paul Collier addresses capitalism and explains how it can work better.  Bill Gates provides an interesting review in his GatesNotes Blog, Is there a crisis in capitalism?, as does Bloomberg news in The Future of Capitalism, and the New York Times review, Saving Local Communities in a Globalized World.

To me, it provided many good ways to move forward so we are more likely to generate comprehensive benefits from pervasive, reciprocal, selfish, selfless, synergistic interactions so everyone and everything benefits. In the book he indicated that Social Democratic approaches worked from 1945-1970 because this was a time where these societies created policies for health care, pensions, education and unemployment. He suggested these methods moved society forward but it does not work anymore because our thinking became overrun by oppositional ideologies. In other words, as I noted in the post MLK Day FOR Everyone’s Benefit, people were more concerned about individual rights than benefiting the whole. He connected this with how many had adopted Milton Friedman’s proclamation that the only goal of an organization was profit. As we all now know, this type of thinking is incomplete and harmful.

He repeatedly emphasized how pragmatism, the practice of determining the best way to get things done, had been overtaken by the ideologies of “utilitarianism”, “populism”, and “Rawlsian”. From my understanding, utilitarianism is about maximizing individual parts without regard the whole and therefore does not account for system effects. “Populism” presents the people  as a morally good force and contrasts them against the elite who are portrayed as corrupt and self-serving. And “Rawlsian”, something I do not fully understand, sees fairness as equal basic rights, equality of opportunity and promoting the interests of the less advantaged members of society. He suggested that a problem with ideologies is that they often create an enemy and an us vs. them mentality. These ideologies make it difficult to find beneficial approaches.

He explained that ideologies are problematic because they are often blind and do not change course when reality does not match what the ideology predicted. For instance, although it has become abundantly clear that “trickle down” economics is ineffective, some ideologies still promote it as a solution. He explained, ideologies were incomplete because they generally offer either an incomplete headless heart or a heartless head solution. We are all in this together and nobody will make it alone so we must develop better ways to cooperate so we all benefit.

He cited that we must create a society that generates belongingness and esteem because these are our basic hardwired human drives. He also suggested we develop better narratives because it is stories, thus emotions, not facts, that move people because stories become the new facts. He also convincingly documented the need and benefit from government. We need regulations. Just as Dov Siedman analogized, we could not move on our streets without regulation. Governing signs and rules of road that we have all agreed to follow allow traffic to move much quicker and better than if there were no rules of the road.

With regard to his recommendations, he emphasized the need to reinstate reciprocal obligations. As he explained, obligations are to rights what taxation is to public spending. Obligations yield more revenue and more rights yield more spending. As W. Edwards Deming dictated,

Defend your rights, you lose

Reciprocal obligations, after all, help us feel that we are a part of society because we contributed. Fulfilling these obligations generates both belongingness and esteem, our basic drives. He even demonstrated how obligations, and the need to fulfill obligations, are more important than our wants. In many ways this parallels how workers now have greater and greater specialization. Paradoxically, specialization makes people more, not less, dependent on the complementary skills of others.

He helped me better understand our current big divide in people. He showed how the divide is now between the educated and the non-educated and how this then leads to higher and or lower paying jobs. These jobs also, because of automation, relate to the amount of contributions that they can make from their job which then impacts belongingness. When people are able to contribute to society, they feel more ownership in society. This also supports esteem. It also supports the need to protect what we have because of innate “loss aversion”.

Through the book he explains the need and value of an Ethical Family, Firms, State, and the World. Although many may disagree, he explains the current world is more ethical than the world of 1945. Even though it is better, to improve on our current state, he has many good suggestions.

To improve he suggests building commitment and putting more taxes on activities, such as financial transactions, that are zero sum interactions. With this he is suggesting when funds or assets are just changing hands to enrich the winner, these activities should have higher taxes than transactions that benefit society. To help close the divide, he also suggests we should work to build capacities of inequality more than address income inequality because if capacities are improved, the situation can right itself.

He supports capitalism because it is the only economic system that has been able to produce mass prosperity. Despite the value of capitalism, he says it needs to be put right again with more pragmatism and less ideology. Overall he suggests building relationships because relationships mean reciprocal obligations and reciprocal obligations can generate belongingness and esteem. To help make this happen, laws and regulations that had changed to favor the individual over the family and the “economic man” led to weakened employer/employee obligations. These laws can and should be shifted to support the use of reciprocal obligations. Along with these, he suggested it would be vital for leaders to share better narratives to build a shared identity. He cites a shared identity as the foundation for far sighted reciprocity.

His analysis indicates building belongingness and esteem with better laws and regulations will help people be more engaged and fulfilled.  Fulfilling these obligations can help generate comprehensive improvements from the creation of pervasive, reciprocal, selfish, selfless, synergistic interactions so everyone and everything benefits. The by-product…a Happier Society.

Be Well’r,
Craig Becker


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