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How To Fix Capitalism

How did we get to this point in history where 8 men control half of the world’s wealth? This statistic seems to always change slightly, but the reality is, there is an insane distribution of wealth within a very small and demographically similar group.

Problem 1: Capitalism Works For The Few, Not The Many

The word capitalism is used all the time and in extreme contexts; often as the source of all evil or the source of all good. Capitalism is the underlying economic system that makes the world go around. It is really just the term to explain the moment when you go into a shop and purchase an item that is owned by a private or individual company. When a consumer wants something (demand), then a company should have a product or service to meet their need (supply). So it could be said that if a consumer wants a more sustainable or environmentally friendly product and creates demand for it, then businesses should respond.
Now I hope I am not mansplaining this whole situation, but I really want to unpack the concept of capitalism so we can understand the role we can play to disrupt it. Truth is, capitalism as it stands today cannot continue in a way that serves people and our planet. It really only stands to serve the greedy, powerful elite who only give back when they need to atone for their ‘business sins’ or to change negative public perception.

Problem 2: We Lost Regulation with the ‘Free Market’

The free market is another term that is used frequently. Turns out ‘pure, free market capitalism’ doesn’t exist because it refers to the complete lack of interference from Government in economic activity. That means there is minimal tax and regulation imposed by Government on businesses. Traditionally, the USA has been the poster child for the closest thing we have to the free market.
Listening recently to the second season of Future Perfect podcast about philanthropy vs democracy, they presented an interesting conversation about the role of Government in business. Turns out about a century or two ago, Governments would often do deals with large corporations to be tax and regulation free in order to stimulate economic growth. The argument was that the rich should be taxed less to stimulate growth in the short term to in turn benefit society in the long run. There was the belief it would increase jobs, create products to improve living standards and increase education opportunities. This is called trickle down economics. Although, this is partially true, when we look at the reality that 8 men control half of the world’s wealth, it is safe to say this concept does NOT work.
If you ever hear someone say that we should tax the rich less or god forbid they say the words that trickle down economics is effective, slap them in the face!

So as business practices deteriorate, risking the health of people and planet, Government intervention is slowly being adopted. However, given the market freedom over such a sustained period, drastic measures need to be taken from regulation to complete business model shifts.

Problem 3: The Greed Now, Give Later Mindset of Leaders

Yes, rich people do good. But at what cost? We often look at the lump sums of money they give through philanthropic foundations, however the quantification of the issues they caused through environmental degradation, poor workers rights and other issues is not understood. For some context, from the Spectator Index, here is a % of wealth that the richest people around the world give away to philanthropic causes. Bill Gates is a clear leader in modern day philanthropy, however were his practices to achieve such wealth justified? I will leave that one up to you to debate.

A great example of philanthropy gone wrong is from Andrew Carnegie, who led the steel movement in the USA in the late 19th century. In the book Enlightened Capitalists, author James O’Toole shares the story of Andrew Carnegie’s questionable business practices. He was known as an eccentric business person who wanted to make money but be completely detached from the business. He also believed in social darwinism which is basically the concept that the most talented and smartest people should control the wealth including its distribution. This led him to cut wages of steel workers who were living in volatile and dangerous conditions. Instead, he built a series of libraries and community spaces for citizens because he believed that his employees should be well read, educated and well rounded individuals. Problem was that his employees were working 12-14 hour days just to make ends meet so with the little spare time they had, they were definitely not reading! They were sleeping, eating or trying to spend time with their family.

There are countless stories of people from Richard Branson to Henry Ford that show the detachment of business practices and their somewhat idealistic desire to do good.

Problem 4: Culture Eats Strategy For Breakfast

This is a commonly used phrase in the corporate world which means that you can have the best strategy in the world but if the people don’t have the behaviours, skills, mindset and collaborative abilities, it will ultimately fail.

When we look at the culture of many of the large companies around the world, it is clear that their strategy might have positive social and/or environmental intentions, but the execution is often lost to the ‘profit first’ mindset that has been dogmatically engrained into every facet of corporate life.

There is a term called shared value which was coined by Michael Porter and Mark Kramer which is a set of policies and practices that enhance the competitiveness of companies while improving social and environmental conditions around them. This is beautiful in theory. Change your core business to change the world. However in reality, shared value is at best a way for big businesses to increase profit and at worst a green washing exercise.
The challenge with shared value as a concept is that it often focuses on initiatives or products and not the system. I have seen companies that helped customers get out of financial hardship through mentoring and coaching and in the same building have been charging fees to dead people and taking advantage of vulnerable customers. This is not a product issue. This is a systemic cultural and governance issue. When companies do not address the capitalist culture of leaders of maximising profit at all costs leading to an increase in executive pay and bonuses, then concepts like shared value will always be a peripheral activity with limited impact.

Ok, enough with the cynicism. There are some glimmers of hope as emerging young leaders are creating business models that solve social issues at the core through miraculous and revolutionary things like creating strong governance, paying fair taxes, treating employees well, minimising their environmental footprint as well as using products and services to increase equality across social classes and geographies. Unfortunately these businesses are not the norm yet and it is often hard to find these companies who are holistically changing the capitalist system.

What can I do?

We really need to ask ourselves, who are the leaders of these companies? How much are they getting paid? Are they paying corporate tax? Are they investing in the health and wellbeing of their employees? Is their board creating governance structures that look beyond profit and incorporate environmental and social oversight? Is the culture of the company one that empowers people and planet? If these questions are not being asked, then it is likely that the companies wont even bother to create anything to answer them.

We are more powerful than we think. Majority of us are employees and consumers. These are powerful when used well. A person said to me recently, ‘the trolley is our greatest combat weapon against capitalism.’ Meaning, every decision we make and every dollar we spent amounts to something of importance.

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Reminder: ethical consumption is not about perfection, it’s about progress and every ethical choice is a protest for the world we want to see! Like today a Spanish lady was about to serve me a coffee in plastic and I stopped her and said I would leave unless she put it in a mug. 😂 We had a good chat about the importance of stopping plastic usage and I enjoyed my coffee infinity times more!! Like to protest for a better future. Follow us for more tips and hacks to live an ethical life! And even though I couldn’t be at the @xrebellionaus protests to #stopadani I was there in spirit! Shoutout to @ethicalbrandz For the ripper pic! 💚 #protesteveryday #climateaction #climatecrisis #climatechange #ethicallifestyle #ethicalliving #ecofriendly #bethechange #sustainablefood #sustainability #planetbinsights #protest #adani #renewableenergy

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Solution 1: Use your voice

By acknowledging that capitalism is not working is the first step. Once we have really accepted this, we can find our voice.

Extinction Rebellion is a great example of the collective action to disrupt the capitalism by literally stopping the flow of daily life in big cities with civil acts of disobedience. Other than Extinction Rebellion, talking about these issues with friends and family, in person and via social media is important. Reality is, no one is really an expert in this space, and the best way to approach these topics is to start by asking a question. If we just ask questions and don’t act like we all know everything, then we can open up a conversation that is meaningful and worthwhile.

Solution 2: Use your dollars

Capitalism works on supply and demand. If we start shifting what we demand from large corporations, then they will need to change their products and services. Here are a few ways to change your consumption:

  • Buy from a B Corporation*
  • Go to local farmers markets
  • Buy and eat local
  • Choose Op Shops first
  • Clothes swap with friends
  • Donate to charities instead of buying gifts
  • Bring your own water and reusable containers
  • Wear good quality clothing until they fall apart. Then fix them!
  • Eat less meat
  • Use cars and planes less

* Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy. Check out the directory here.

But I know what you’re thinking. I’m just one person… Said 7.6 billion people! If we all start to work together to build these habits into our lives, then the capitalist system that hums on power, ego and greed will need to find a new source. That source will become sustainability, equality and justice.

Solution 3: Use Your Position

If you’re an employee, calling out behaviours, unethical practices and issues is important yet not an easy thing to do. The employer employee relationship can often be a challenging one. Starting a dialogue by asking the question laid out in this blog is a way to open up space for change. Having conversations with your manager and colleagues about the cultural challenges faced in the organisation is a healthy step forward. Also, look for spaces to take initiative. Could you help create a better recycling system? Could you lead team volunteer days? Could you create roundtable discussions with leaders from NFP, Government and Startups who want to disrupt capitalism? Or could you go and work for an organisation that is genuinely committed to disruptive change? Leaders are everything. When talented people walk out of big businesses, they will have to reassess their practices. If you do leave, make sure you demand an exit interview and tell them why you are leaving. Get it on the record!

Solution 4: Get Informed. Get Angry.

I love the saying ‘well behaved women rarely make history.’ That goes for men as well! If we don’t step up and disrupt the powers of this generation, then we won’t have a future generation! But we need to be informed.
Here are some of my favourite finds of late:

Books

Note: If you purchase any of the books from the Amazon link then Planet B Insights will receive a small commission! But make sure you purchase from your fave online or in store retailer, as that is more important to us!

Podcasts

  • Future Perfect
  • The Ezra Klein Show
  • Recode Decode
  • Against the Rules
  • Keen on Democracy
  • Radiolab
  • Future Curious

And of course, follow Planet B Insights on social media (Facebook, Instagram, Twitter and LinkedIn) for the latest insights about how we can disrupt capitalism and save our future.

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