The capitalist system rewards providers of capital and labour for their entrepreneurship and industry in meeting the needs of us all. It has changed the world for good and ill, and we have no alternative economic system that does as well.
But we still need innovation in removing its weaknesses.
The cycle of booms and busts should not be accepted as part of nature like the weather. Speculators make their fortunes by these, and help to produce them.
More money-wealth is made today from financial and land dealings than from production. More income is made from buying and selling stocks and shares than from dividends through providing capital.
The increasing differences between rich and poor are great social injustice. The rich get richer and the working poor cannot make a living without state help.
The worst problem is that continual growth is required, when the end of growth is a necessity for world equilibrium. Resources are the third element in production, but are not considered in capitalism yet, because capital and labour are all that are considered – now resources are finite. Pollution must be stopped.
Short term gains are aimed for – the long term gains or losses are not considered.
The expansion of capitalism means globalisation. That has advantages – and drawbacks.
Democracy is government by the people, of the people, for the people. We all know that. However, elections tend to be ruled by money – particularly the money for advertising. Those who are elected to the chief positions either have money or owe their position to those who have. The United States has a myth of origins of Presidents in log cabins, but all recent Presidents have been millionaires. It makes it hard for the defects in capitalism to be cleaned up by governments. The recent events in Egypt are welcomed as aimed at becoming a democracy – but we hear the English-speaking educated middle-class who have liberty as an aim. We do not hear the majority of Egyptian youth who are lowly paid or unemployed, and who seek economic aims first – jobs and bread. How can our economic system provide them with their basic needs?
Whoever fails in a business can have their lives ruined. Owning one’s home becomes increasingly impossible as mortgages can take a lifetime to repay instead of a few years.
This is a short list of some areas where capitalism must change its ways and its thinking.
Many possibilities are put forward. They must be trialled in small experiments because we do not know all the consequences.
For greed and power to be considered the only human motivations for progress is mistaken. There is desire to serve, curiosity, to use one’s talents, honour and status. The media, the arts and education have a role to play here, in arousing these motives – but the media is often in the pay of the rich. Glory and honours are not to go to those who collect most money for themselves.
Our economic and political leaders must be given every opportunity to see what is happening in the world. For this to happen, they must have salaries more like the common man, not more than ten times his earnings. Those who desire more, display their ignorance of the world, and are not fit to be CEOs of vast enterprises. Everyone must realise this. A cap on earnings is the first step to executives’ understanding of the world situation.
Governments must have power to regulate international corporations within their borders. In recent years, private corporations have demonstrated their inability to self-regulate in the interests of the wider public. How to stop the growth of bureaucracies of regulation is also a matter for innovation.
Economics departments in Universities need to have more interest in developing and evaluating innovation, rather than being identified with schools of thinking.
Regional currency that does not interact with national currency allows small businesses to start up and money to circulate within regions without it all pouring out for imports.
CEOs of big corporations must be those who know the businesses, rather than whizzes in finance.
It is part of global capitalism that the cheapest goods are the most popular everywhere – regardless of the exploitation that may make them cheap.
Tax havens are iniquitous; it is not beyond the wit of man to eliminate them, to reduce the trend for the rich to become richer.
Huge riches are made by selling what harms – cigarettes, alcohol, junk food, armaments – and the advertising that pushes them, are promoted wherever the law allows.
Supposing stocks and shares had to be held for a year or more before sold on – what would happen? More emphasis on dividends, less on the selling price. The bear-pits where shares were sold in the blink of an eye would cease. Day trading needs to be illegal across the world. Among the benefits would be that the ‘new investors’, the small people who trust financial advisers, would be turned to long-term investing for dividends, which means more productive investments.
The spare money of the poor – and often the money that is not spare – often goes on money gambling; there have been attempts for the vast sums this resulting to go to more productive gambling, such as on the stock exchange, and premium bonds. This substitutes short-term aims for longer-term, but government oversight must prevent sharks taking advantage of the naïve punter.
The world is more expensive for ordinary people because ownership of ‘rights’ – as in land, water-rights and taxi-rights – makes housing, water, and taxis very much dearer than they need be. New owners must pay thousands of dollars to previous holders of the rights, and must make their businesses pay in spite of this. Here is an obvious way to make a difference.
If we change our goals from short-term profit, all sorts of developments are possible. If we can see all the problems together, it may be more possible to fix one of them.
As influences combine, a society can change direction, and still keep a spirit of entrepreneurship and innovation.