In Defense of Capitalism: Profit Is Not a Dirty Word
The Article originally appeared on Huffington Post
I make no apologies for believing in capitalism. I believe that the opportunity to generate and retain one’s own wealth is a driving force for not only improving our environment, but also for individual and societal advancements. I believe that when businesses that are respectful of the environment and advancing of the human condition are profitable, we all benefit.
To me, that is the very essence of ‘sustainability’ — creating and building that virtuous cycle so that the net gains outweigh the net costs of doing business.
In order to do this, we must evolve the ways that businesses — and we as individuals — do three things; we must learn to change the ways that we appraise, engage and enhance human, ecological and financial resources.
First and foremost, we must no longer be satisfied with status quo that ‘people are our most valuable asset.’ Instead, we ought to encourage and help businesses to treat people as their most valued assets. The difference is far more than simple semantics. When something is considered to be valuable, there are two courses of actions — save or spend. In the real world that often equates to putting something into a vault to protect them, or spending them in order to liquidate their value (to purchase something else). On the other hand, something that is valued is often showcased and allowed to shine, like a painting on a wall or a classic automobile that is driven and shown.
For companies valuing human assets often equates to keeping them in place in their current jobs (‘Bob’s an integral member of my team, I don’t want to lose him’) or burning them out through overwork (‘I always put Sue on every project because no matter what it takes — long hours, weekends — she never fails to deliver the goods.’) Human assets that are valued, on the other hand, are encouraged, advanced and allowed to fulfill their true potential. They are encouraged to take risks, learn from them and become even more valuable.
We also must change the way that many corporations (and we as individuals) value, engage and enhance ecological resources. Most people who work with natural resources are all too aware of their finite nature. The fishermen who work the Grand Banks of Newfoundland understand the need to maintain healthy stocks to maintain their livelihood. They don’t see reasonable conservation techniques as a threat to their future, but rather a guarantee. It is when fishing becomes mass-production, with large factory trawlers that are capable of denuding the ocean reefs as they seine the oceans for huge quantities that the personal connection is lost. Companies that rely on timber for their products recognize that reforestation is critical, not only for the planet, but to provide a continuing supply within proximity to their processing facilities.
This is a value that existed earlier in our history. Even when facing the seemingly endless bounty of a new continent, George Washington — perhaps because he was a farmer and had a deep connection to the land — left explicit instructions not to cut down live trees to build fences at Mount Vernon.
For too many people, compliance with regulations is seen as the extent of ‘fiscal responsibility.’ If it is not illegal, it must therefore not be wrong. This belies the important distinction, and gap, between what is right and what is codified into law. The collapse of the global economy was due, in large part, to actions that were legal, based on law that was far behind such arcane concepts as Collateralized Debt Obligation (CDOs). Good governance is more than simply not engaging in malfeasance.
Proper fiscal responsibility (including saving for our own retirements) requires us to understand the value and importance of money. Overvaluing money (above all else) often leads to morally questionable decision making. This lesson goes back to the New Testament; “The love of money is a root of all kinds of evil” (1 Timothy 6:10). Too often this is misquoted as “money is the root of all evil,” leading some to dismiss the desire to earn money as an inherent flaw within capitalism. In point of fact, wanting a better life for one’s self and one’s significant others is the strength behind capitalism. The quick-buck-and-the-heck-with-the-consequences attitude that became so vogue in the dot.com era was not and is not typical. For most of the history of capitalism ‘built to last’ was the norm.
Most companies, it should be noted, operate with both short and long term goals and plans. Ultimately this should be built in, because companies — particularly those that are publicly traded — must meet the needs of both buy-and-hold investors and day trading speculators. A review of the portfolio of most major successful enterprises reveals that the majority of people who are investing in the company are looking for the longer-term results. That includes employees who, while they may not have shares, have a huge investment — themselves — in the company’s long-term viability.
The link between profitability and prosperity
Individual wealth creation — the ability to earn and retain capital — is a tremendous force for change and demonstrates the concept of a virtuous cycle through the overlap between these three (human, ecological and economic) sets of assets. Critics are all too eager to point out that successful capitalism changes the way the environment looks; as anyone who has seen a factory and the environs nearby can attest.
But they may be too quick to overlook the many benefits that are associated with that same operation, including increasing quality of homes that people live in, the schools that can afford to pay qualified teachers, the influx of skilled labor opportunities to support the operation — and the community — and the medical professionals that serve to improve the health and well being of everyone.
Another benefit of a wealth-generating population is the link between individual and public gain. Companies that are profitable pay more in taxes, as do individuals. That allows for improvements to the infrastructure and the general living conditions of everyone in the community. Schools, roads, transportation linkage to other towns and cities are all tremendous benefits to the community at large.
Economic independence fosters freedom
There is another major benefit of capitalism — freedom. It is important to note that capitalism is an economic, not a political model. However, the ability to earn and retain one’s earnings is hugely empowering for anyone seeking a better situation in life. Immigrants who could afford even the cheapest passage came to America in droves on ships to escape religious, political and/or economic oppression. The phrase ‘the land of opportunity’ describes the optimism that spurred them across the open seas to an unknown future.
Today the ability to earn and retain the financial fruits of one’s own labors continues to be a driving force that changes lives and societies. It may be a factor in the low marriage and high divorce rates in the United States, as women no longer rely on a ‘breadwinner’ they can stay independent longer, and are not tied economically to stay in oppressive marriages. As those fiscal pressures ease, societal norms change. While it is true that we still have a long way to go to achieve economic parity, the roles of gender in the workplace and our society have transformed radically since the days of World War 2, when the men went off to fight and women first entered the workforce in massive numbers.
This ultimately is where people, planet and prosperity come together — when we change the way that we value and engage with human, ecological and economic assets — we live a more deliberate and conscious existence, knowing that we cannot take any for granted, else they may be gone before we realize what is happening.