Capitalism for Good

What’s the endgame of capitalism as currently practiced? According to a Native American proverb:

“When the last tree has been cut down, the last fish caught, the last river poisoned, only then will we realize that one cannot eat money.”

It’s a message against profit-driven reckless consumption of resources. Capitalism, the foundation of our global system, is also indirectly implicated. Beyond just warning us of the consequences of unchecked greed, this saying advocates for sustainable management of the environment. 

However, if capitalism as a practice is not socially conscious and sustainable, much more than the environment will be at stake. You only need to look at increasing socioeconomic inequality worldwide as another rallying call for something to be done about capitalism. As businesspeople, stakeholders in society and active participants in the economy, that “something to be done” needs to start with us. By practicing sustainable wealth creation, we can make social capitalism a force for good.

What is Social Capitalism?

To understand social capitalism, let’s start with capitalism. The system is intended to temper the greed of human beings, and on that aspect, while too often flawed in practice, it has its foundation in reality. Unlike the theoretical allures of utopian systems like socialism and communism that go against human nature, capitalism may be honest and ugly, but it has been tried, tested and proven to work. In contrast, the influence of Soviet-led communism on economic practice has faded into irrelevance.

The worst excesses of the capitalist system indeed ought to be criticised as an example of how it has failed against unchecked greed. That should not be taken as a call to abandon a system that has created real quality-of-life gains for people all over the world. Yet it is clear that the status quo of capitalism can and should be changed for the better.

I would even argue that social capitalism is true capitalism. At its heart, the system is meant for wealth creation. This happens when money is made, in exchange for products and services you sell to others. How do you then make more money? You would need to sell to a wider group of people who can afford your goods – the long-term rational action for business folks would be to help push people out of poverty into the middle class. If the poor stay poor, they don’t have the money to buy what you’re selling, which is a lost profit opportunity. That is why it is true capitalism – not because of any appeal to idealism, but because social capitalism creates more opportunities to earn money. 

In some other countries, you can see crony capitalism at work instead. Instead of championing free, healthy markets, when governments ignore the poor and opt to cannibalise from existing markets, the result is a top-heavy, dysfunctional economy. The wealth would have been redirected to the elite classes, to the detriment of the entire country’s performance. 

Take Zimbabwe under Robert Mugabe for instance – under repressive policies, its people experienced a fall in living standards and the country lost US$38 billion in potential growth from 1980 to 2017, while Mugabe had assets rumoured to exceed US$1 billion. 

Conversely, in a country that believes in pro-business initiatives and social capitalism, its people can not only aspire to make money and achieve a better life, but also find the means to do so. At the same time, a social capitalist system ensures that disadvantaged people are taken care of, whether it’s in healthcare or education. Even in developed countries with some of the highest GDPs, these crucial public goods may be inaccessible by those in poverty. 

The key lies in striking a balance between business-friendly attitudes and lifting people up. When you ensure that people have their basic and educational needs met, you also allow business within the country to flourish. That’s why it’s called sustainable wealth creation – when the system allows people to improve themselves, it also boosts their purchasing power, directly contributing to the health and stability of the economy.