The challenges of late-stage capitalism - Activate World

The challenges of late-stage capitalism

Storyline:

There is a growing sense that the economy no longer works for many people. Globalization has brought huge benefits to the world as a whole. But middle-income people in rich countries appear to have fared poorly in recent years.

While ordinary people are struggling, those at the top are doing just fine. Income and wealth inequality have shot up. The top 1% of Americans command almost twice the amount of income as the bottom 50%.

An increasing number of people don’t feel they are getting a fair shot at being successful in business. Big corporations, including tech giants such as Amazon, Google and Facebook, seem to be monopolizing all the gains. Relative to the size of the economy, corporate profits have risen sharply in recent years.

As an indication of changing attitudes about our economic order, a 2016 Harvard University surveyfound that 51 percent of American youth aged 18 to 29 no longer support capitalism. Only 42 percent said they back it, while just 19 percent were willing to call themselves “capitalists.”

Karl Marx was a supporter of the capitalist movement and considered it to be the most revolutionary. He praised the system for being a driving force for technological advancement and economic growth. Marx also believed that cultural values reflect the prevailing economic order, and not the other way around. This is an important premise in a new book entitled The Happiness Fantasy by Carl Cederström, a business professor at Stockholm University.

Cederström traces our current conception of happiness to its roots in modern psychiatry and the so-called Beat generation of the ‘50s and ‘60s. He argues that that the values of the countercultural movement — liberation, freedom, and authenticity — were co-opted by corporations and advertisers in the ‘70s and ‘80s, who used them to perpetuate a culture of consumption and production. Our idea of happiness was transformed to make us better consumers and producers.

According to Cederström, “Like any political or economic ideology, capitalism appeals to something real about human nature. And the justification for capitalism has always been enjoyment and satisfaction — and that’s a powerful message. Human beings don’t have to be narcissistic and ultra-competitive, but if we’re thrown into a system that incentivizes these things, it’s obvious that we will be.”

Noteworthy:

  • Democratic Capitalism – the current form used in the U.S., can be described as a dynamic complex of economic, political, moral-cultural, ideological, and institutional forces.
  • For most of U.S. history, corporations sought to succeed in the marketplace but also recognized their obligations to employees, customers, and the community.
  • Late in the 20th century a new theory, based on the work of Milton Friedman, emerged that corporate directors had only one obligation: to maximize shareholder returns.
  • Maximizing shareholder value is being questioned as a sole focus. Instead, Conscious Capitalism, B Corporations, and even the introduced Accountable Capitalism Act broadens the perspective to include multiple stakeholders and a triple aim of people, planet, and profits.

Quests and Actions (Q&A):

  • Is the primary benefit of capitalism that every individual has some level of control over their own fate in life?
  • Senator Warren’s Accountable Capitalism Act requires corporate directors to consider the interests of all major corporate stakeholders, not only shareholders, in company decisions. As it’s based on the “benefit corporation” model, will this be effective?
  • How can we shift away from the consumerism that has become the organizing principle of American life?
Sources:  Forbes, NYTimes, The Economist, Time, Vox, WSJ
Photo by Madison Kaminski on Unsplash