Corporations have found success in capitalism. We have just realized, that’s not what we wanted.
Corporations can be good. They help feed us, get us dressed, help us communicate across the globe and even binge-watch our favorite TV shows.
And corporations exist because of capitalism. Capitalism is great. I mean it CAN be great.
From a very simplistic, theoretical perspective, there is a lot of good that has come from capitalism.
Capitalism is the reason for many of our medical advancements. Capitalism has helped us expand production capacity. Capitalism is the reason we have social media platforms.
At the heart of it, capitalism is about competition and success.
But unfortunately, capitalism has become the devil. It is also the reason we have income inequality. Capitalism is the reason we have discrimination at work. Capitalism is the reason that we have accelerated climate change.
Money as the metric for success
As a society, at some point, we agreed that the metric to define success for a participant in the system of capitalism would be money.
Money would be the ultimate metric of success. And it very well should be. It is a universal metric. It costs me the same $3 to buy a loaf of bread, as it would Jeff Bezos because we’re both paying with the same money. In some ways, it puts me on equal footing with Jeff Bezos. That part is fair. (The unfairness stems from the fact that it took me a lot longer to make the $3 than it took him)
But now, there is this growing trend of judging success not by money, but rather by other acts, that are hard to assess and quantify. Acts of compassion to the people that the system employees. Acts of helping the environment and reducing the impact of climate change.
We’re expecting corporations to solve our macro problems in all areas, be it health, environment or labor.
If we view capitalism as a system, the input is labor and commodities, and the output is profit. If capitalism is a system that was meant to maximize profit from the inputs, then it is working!
But of course, there are now unintended consequences. These are consequences that the engineers of the system may be didn’t think would happen, or they might not have thought it would be all that bad.
Capitalism is not broken. But it needs to be rewired.
Corporations are trying to maximize profit from the inputs of labor and commodities. This means that we either did not build the system we thought we wanted or that we need to tweak the system to fit our new needs. We didn’t necessarily build a bad system. We may have just built the wrong system or an incomplete system.
We didn’t define the right metrics of success
For years, we’ve defined society to be measured by one metric of success: MONEY.
Work to make money, then spend said money to impress others with your big house or cars.
In recent years, that has shifted of course. Work to make money, and then spend said money on experiences to post on Instagram.
Capitalism has worked in that sense. There is more money in the system. So as a system meant to maximize profit, capitalism has succeeded.
We didn’t define the boundaries of success
A good system is designed to maximize output. If capitalism is generating more money, then by definition it has been successful.
What we wanted out of the system, was more money.
The problem was that we didn’t define the system as a success when more people have more money.
We discovered income inequality to be in some ways to be the byproduct of successful capitalism.
What we wanted was not capitalism to be a standalone success. We wanted capitalism to succeed so that it could be a catalyst for progress in other aspects.
We haven’t told the system our new expectations
Somewhere along the lines, the idea of the American Dream didn’t hold up. The richer kept getting richer, and the poorer are worse off today in many ways.
There is now a hamster wheel propagated through hustle culture. Work to play, play to work.
We didn’t tell the system is what we wanted.
We wanted to be a more level playing field for everyone.
We wanted to improve (or at least not harm) the environment.
We wanted to treat people with dignity and respect.
Don’t get me wrong, there are definitely corporations that are doing those as well. But we fault them too!
We hold those who do some good, to an unreasonable standard
Corporations are set up in business and legal terms to reduce liability. They shelter and create distance between the owners and the entity.
There is a growing trend for businesses who want to do good, in addition to making money. We can debate whether their intention is genuine or it is just a marketing ploy.
But for now, let’s assume that they intend to do good, for the environment, for the people or at least reduce the bad that would come from their operations.
We, as a collective, have now started to hold companies to be all good or all bad. This expectation of all or nothing is dangerous. If a company say streamlines their supply chain to be more 100% ethically sourced, we expect them to also be perfect in how they treat their employees.
They have to be good in all aspects! Or cease to exist at all!
So what can we do?
Well, for starters, we need to admit, that the system is not broken. But we do need to agree on how we expect this new or improved system to perform.
Maybe the system is incomplete. It worked as expected and it was, successful. But maybe now is the time to tweak it. It doesn’t mean the system didn’t work because which system works flawlessly for eternity?
We need to admit that the system did what we expected it to, but we didn’t program the system to what we wanted.
Or maybe we need to recognize it’s time to build a new system. And a new system will not be perfect from the get-go. It will need a few iterations of beta testing. It will need to go through user testing.
Or maybe we just need to give the existing system some boundaries. We need to set up a hierarchy that corporations need to follow, and give them boundaries to operate within them. We need to decide what that looks like — is fair wages more important than the environment, or vice versa? Are we looking for more ethically sourced products?
But ultimately, we cannot just say: corporations are bad. Now go do some good.
Corporations are not meant to be good or bad. Even if they are legally defined to be people.
We need to define what a good corporation is.
We need to define the metrics by which we will judge whether a corporation is meeting the definition of a good corporation.
And ultimately we need to incentivize corporations to meet these metrics.
If that is not clear, we cannot expect corporations to contribute positively to humanity, at least not the way that the system is set up today.