By Mostafa Sayyadi & Michael J. Provitera
Capitalism has encompassed worldwide admiration and criticism. For example, a note from an activist, former member of the Young People’s Socialist League, and senator from Vermont, Bernie Sanders posits that “capitalism does a number of things very well: it helps create an entrepreneurial spirit; it gets people motivated to come up with new ideas, and that’s a good thing“. And Sir Winston Leonard Spencer Churchill, a soldier, writer and former British statesman, says “the inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries“. However, capitalism, in its’ current form, requires avoiding fundamental errors that set it up to fail in the future.
Many economists, and political and business analysts look pessimistically at the steps taken to battle current global super challenges such as the climate change crisis. In contrast, this article takes a step forward and shows that the economic system of capitalism needs to become more systemic. In fact, capitalism by adopting a more systemic approach can play a crucial role in solving these global super challenges. Working harder coupled with thinking smarter to more effectively implement a systemic approach can create a better future for businesses and all the people across the globe. Now, the future of capitalism and also the future of our world are in the hands of both political and business leaders. Political leaders can particularly play a critical role in developing more effective policies for building a better future. And business leaders can improve business ethics and increase the social responsibility of their businesses to promote human survival. There is a set of responsibilities for these leaders.
Successful capitalism has solutions that are the key to its long-term survival. This article will look at these solutions for saving capitalism so that businesses can understand their responsibilities and thrive in their future business environment. Learning these solutions can also create success for businesses that are planning to better thrive in the future.
Reimagining Capitalism
Capitalism, the foundation of many nations, may need to use a more systemic approach to see if capitalism is the best way to provide welfare for humans. Countless articles and books have been published on the importance and role of capitalism in the economic development and material well-being of the entire society. Capitalism, as the driving engine of economic growth and the well-being of society, is not always admired by economists and sociologists. Although capitalism saved millions of people from poverty and increased their average lifespan, it is still a controversial subject. Today’s first global problem includes wide income inequality and the exclusion of minorities. Second, there is an ever-increasing growth of greenhouse gases that have upset the biological balance of our planet. Although the COVID-19 crisis has subsided, the climate change crisis is likely to become the world’s number one crisis due to ignoring the opinion of millions of environmental activists and experts. A crisis that is the result of prioritizing financial gain and ignoring collective interests such as the importance and necessity of survival for millions of people around the world!
The main goal of capitalism forgets to focus on both important indicators of social welfare and freedom equally. Capitalism is seen as a means of increasing social welfare. And the balance of freedom and prosperity has not been addressed with the same effort. This one-sided focus on welfare instead of a systemic approach to both aspects of freedom and welfare has led to ignoring the opinions and efforts of environmental activists. Thus, this may be the reason for the destruction of natural resources and suffocating our planet under what has been noted as the burden of climate change. This focus has changed the ethics and social responsibility of businesses. Many companies no longer think about the health of the market in which they do business. Some do not invest in healthcare and education as recommended as solid principles of business ethics.
Taking a systemic approach to capitalism and simultaneously paying attention to profit and freedom does not mean abandoning the importance of profit and shareholder value. On the contrary, this approach advises companies and businesses to pay attention to the system of preservation such as social and natural resources that they rely on along with profits.
The capitalist system focuses on a systemic approach when it employs all resources for all people from rich to poor and economies of scale and those that need development. A capitalistic system requires increasing public awareness and expanding a political and cultural movement that improves business ethics and increases the social responsibility of companies. There are many facets that need attention such as a more effective climate change approach and a welfare system. Social responsibility must be the core competency of both governments and organizations to promote human survival.
Organizations can guide innovations and government funding can help. Accepting social responsibility to combat existing super-crises certainly has a compelling reason even for profiteers. Countries such as Sweden and Denmark provide successful milestones in the important role of social equality on the effectiveness of the entire capitalist system. Extensive education and health care workers in Sweden and Denmark have influenced and accelerated this innovative social capital. These countries, such as Canada, historically have a higher Gross Domestic Product and a higher level of social welfare.
Private profit and public interest must be the new movement. Governments can encourage private sector companies to cooperate with other companies active in the same industry. This cooperation, along with keeping the profit motive, leads to the growth of social responsibility and common values among business sectors. ESG (Environmental, Social, and Governance) requires the education and awareness of capitalists about the importance of corporate social responsibility.
In Closing
The secrets of successful capitalism are no longer secret. Governments, companies, environmentalists, and all members of society can now take their responsibilities to revive capitalism and move towards a more systemic approach.
