The Free Market allows for a newer, better-branded, and more popular strain of Capitalism to come: Social Capitalism.
Americans often view capitalism, an economic system characterized by private or corporate ownership of capital good and by investments that are determined by private decision, with the negatives such as “greed” and “exploitation” in mind. A 2016 Harvard University poll alarmingly illustrates capitalism as viewed favorably by 42% while viewed unfavorably by 51% of respondents. It indicates that 33% of individuals viewed socialism favorably. A key element of this poll, to be transparent, is its vague description of “socialism” and “capitalism.” Upon completion of the survey, respondents claimed that they did not reject capitalism as a concept, but rather “the way in which capitalism is practiced today.” Crucial to analyzing the data is the notion that Americans under age 20 have had little experience in the booming economy of the late 20th century where older Americans enjoyed promotions, growing wages, 40-hour work weeks, and employee benefits. In other words, minimal experience as working adults likely accounts for some of this distrust in the capitalistic economy.
Americans generally distrust capitalism because they feel exploited while the well-to-do reap the benefits. Lower class wealth decreased by 26.5% from 1998 to 2013 while working class wealth decreased by 52.7% over that same time period. From 1998 to 2013, the wealth of the top 10% increased by 74.9%. Wealth inequality is an issue due to a variety of economic reasons, including that of decreased worker morale. What incentive does the bottom 90% have if their wages are stagnant and promotions are less frequent?
Despite the staggering poll numbers and given my background in business and finance, I am confident that capitalism will continue to prevail. However, it will require an overhaul of the capitalist brand and a push toward Socio– or Social Capitalism, also (perhaps deceivingly) referred to as moral capitalism. In this understanding of capitalism, the focus is less on wealth and more on value, as Muhammad Yunus notes in his writings.
“A Moral capitalist is someone who has made a great deal of money, realizes they are set for life, but at the same time realizes that they can give back to society . . . He realized he made a lot of money, but at the same time, he realized he could help out and give to many poor families. He is not greedy. He is a Moral Capitalist! He practiced acts of Chesed (kindness) and Tzedakah (charity for the poor). He should be an inspiration for all of us,” claims Marc Alan Urbach in his book Believe: Do We Need a Third Great Awakening?.
Urbach incorporates the Old Testament when describing the difference between capitalism and Social Capitalism, “Oppressing workers is against the law—Torah Law. ‘You are not permitted to oppress the working man because he is poor and needy amongst the Jew and non-Jew in your community’ (Deuteronomy 24:14).” Many will attempt to smear the notion of a Social Capitalist as a socialist conspiracy; however, the profit-motive and free-market economic system can and must incorporate more compassion. The Millennial generation is not a socialist generation set on destroying capitalism, in fact, it is more likely that the current economic environment has caused this distrust of our current “capitalist” economy.
In The Wealth of Nations by Adam Smith, Smith makes the case “that the butcher and the baker do not provide the rest of us with food out of the goodness of their hearts…but rather apply their particular skills and industry to benefit themselves, which in turn winds up benefiting the rest of who need to be fed.” In The Theory of Moral Sentiments, Smith states,
“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”
It is important for free-market advocates to acknowledge the reality of Adam Smith’s work, in which he laid the structure for the greatest, most ethical economic system in the history of the world. According to Steven Horwitz from the Foundation for Economic Education (FEE), “the world is 120 times better off today than in 1800 as a result of capitalism.” Horwitz also states that “the competitive market process has also made education, art, and culture available to more and more people.” While our current economic structure has provided for every individual, Social Capitalism will be necessary to solve the issues of the 21st century such as climate change, wealth inequality, and universal access to health care.
Social Capitalism can, however, be implemented. “Shopping the places you truly believe are an example of Moral Capitalism is the beginning of the systematic transformation. No utilitarian business is going to change their business model if it is grossly profitable,” says Mercer May of The Hill. A classic example of Social Capitalism includes SpaceX, in which Elon Musk has invested his fortune. Musk pushes new technology and does not mind being “outspoken about serious, sometimes unpleasant issues facing humanity, and he certainly does not mind dreaming up big ideas and pursuing them.” Mr. Musk is an exemplary figure in 21st-century economics, and he may be used as a model for future entrepreneurs. It is time for the American people to reward the Elon Musks of the world, and to quit supporting companies that do not seek to improve their employees’ lives or communities.
Our current economic structure allows us to research business practices and choose which product or business we would like to support or not support. We can post to social media, write an article and so on, thereby impacting the company’s image overall.
Dallas Mavericks owner and Shark Tank host, Mark Cuban, for example, acknowledges the technological change affecting our society: “We don’t go find the news. It finds us…What they trust are their social media news feeds.” Cuban goes on to explain that candidates running for president have not been focused on this societal change. He explains, “Sociocapitalism is and has been capitalism for millennials. You haven’t been paying attention. Bernie has.” Cuban continues to explain how Shark Tank is indicative of a trend in start-ups. This trend consists of entrepreneurs seeking to make a profit while sharing their success with those less fortunate than themselves. Millennials are the driving force of Social Capitalism, and this generation will leave its impact on our economy for generations to come.