As the country grows increasingly frustrated over its worsening economic condition, the public points an accusing finger at the super rich, and capitalism which is often vilified as the principal cause of the problem. Frankly, capitalism is getting a bad rap by its detractors and, unfortunately, there are naive people who gullibly believe it to be guilty of a number of sins. The fact is, capitalism propelled America past the rest of the world by creating a substantial middle class thereby creating an engine to power the world's economy. Unfortunately, capitalism is misunderstood. Some see it as nothing more than focused on profits at all costs. True, the goal of capitalism is to be successful and profits are a measurement of success, but there is more to it than just profits, much more.
First, capitalism coupled with America's interpretation of freedom means the country is the "Land of Opportunity"; that everyone has the freedom to try and improve their position in life by working at any endeavor of their choosing, either as an employee of a company or to start their own business. Either way, capitalism means you have a "right to try", nothing more, nothing less. You may be successful in your efforts or you may fail, and both extremes are essential for capitalism to succeed. Failure is every bit as important as success. Without failure, or at least the threat of it, you will not appreciate the concept of risk and it is unlikely you will change how you conduct business. Risk, therefore, is an essential part of capitalism.
Today, we hear of such things as government sponsored "bailout" and "stimulus" programs which have saved American banks, mortgage lenders, and the automotive industry. Under capitalism, these mega-companies should have been forced to either close their doors, restructure their operations, or find alternative financing. As executives of their businesses, it is their responsibility to steer the ship, nobody else. Having the government preempt failure of these businesses is unnatural and anti-capitalistic, simply because they have eliminated failure from the equation. If these companies had closed their doors, new ones would have doubtless emerged, and much smarter than their predecessors.
As an analogy, I am reminded of the game of Craps as found in casinos. Understand this, in all casino games, the house enjoys a winning percentage. They are certainly not going to offer a game they know will consistently lose money. So the trick is to find the game with the lowest house winning percentage. Me, I'm a Craps shooter. I understand the odds and the risks involved; I will either win or I will lose. If I begin to lose, I will change my strategy and play the game differently, but one thing is for certain, when I'm busted, nobody is going to bail me out, least of all the casino. I am solely responsible for my wins as well as my losses. That is as vivid an analogy to capitalism as I can think of.
The golden rule of any business is to maximize productivity and minimize costs. Failure to do so will naturally result in failure. This brings up an important aspect to capitalism, everyone participating in business is responsible for his/her actions and decisions, and must be held accountable for them. There is no free ride. Accountability is an inherent property of capitalism. If you are successful, you reap the rewards; if you fail though, you lose. This naturally scares people who are afraid of risk. Others thrive on it, particularly those with an entrepreneurial spirit. Regardless if you are successful or a failure, capitalism requires people to be personally responsible for their own actions, and nobody else.
Regardless of the equipment and advanced technology available, we must recognize all work is performed through people. The smart capitalist, therefore, respects the dignity of the human spirit and the importance of each person to lead a worthy and productive life. After all, if companies invest heavily in the tools of their trade, it would make sense they also invest in the people who will be operating the tools. The challenge becomes devising a suitable corporate culture for workers to productively work and thrive in, a culture empowering workers to excel and create superior work products at competitive prices. This means cultivating workers in terms of their training and education, working in accordance to high standards of excellence and moral values, and to compensate them with a fair and competitive wage. Plain and simply, investing in people is good business, as any successful capitalist can attest to.
When a company begins to cut corners and sacrifices workmanship, not just to save money but to increase profit margin instead, then in all likelihood greed is slowly creeping into the organization. True, capitalism is not impervious to greed and corruption, but neither is socialism as greed is a human frailty. As long as management makes smart business decisions and maintains high moral standards, greed can be kept at bay.
In my travels through the corporate world, I have seen capitalism do some great things in just about every field of endeavor imaginable. It produces products and services the public openly embraces, it has built impressive buildings and other structures we take pride in, and it has created the standard of living we are all familiar with today. Capitalism has proven itself as a viable economic engine time and again, and is rapidly being embraced throughout the world, even in Communist states, both former and current.
The only thing that can adversely affect capitalism is when the government intercedes and tampers with the underpinnings of it, such as inhibiting failure or piling on regulations choking it from behaving naturally. By its sheer nature, capitalism is an evolutionary approach to business whereby the strongest survive and the weaker companies disappear. When unleashed, capitalism promotes innovation and invention naturally. When inhibited by government though, capitalism stagnates and businesses face extermination. Government's role should be nothing more than to open doors and check for unscrupulous business practices. Other than that, they should stay out of the way.
No, capitalism is not the problem. It is a proven economic system if it is allowed to behave naturally. So, when casting aspersions as to who is at fault for our current economic woes, the fingers should be pointed at the nations capitol, not Wall Street. We also share a piece of the blame ourselves as we have become apathetic and, in the process, allowed the country to morally deteriorate before our eyes.
I am proud to call myself an unabashed capitalist. The fact that our small business has survived for over forty years, has serviced customers all over the world, and made money in the process without cheating anyone is a testament to capitalism.
"No politico-economic system in history has ever proved its value so eloquently or has benefited mankind so greatly as capitalism—and none has ever been attacked so savagely, viciously, and blindly. The flood of misinformation, misrepresentation, distortion, and outright falsehood about capitalism is such that the young people of today have no idea . . . of its actual nature."
- Ayn Rand, "Capitalism: The Unknown Ideal"
Keep the Faith!
Note: All trademarks both marked and unmarked belong to their respective companies.
Tim Bryce is a writer and the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at email@example.com
For Tim's columns, see:
Like the article? TELL A FRIEND.
Tune into Tim's THE BRYCE IS RIGHT! podcast Mondays-Fridays, 7:30am (Eastern).
Copyright © 2011 by Tim Bryce. All rights reserved.