I have read a lot, thought a lot and talked a lot about what is wrong with the world right now. As we evolve as humans we are continuously reinventing our social paradigms and structures, and for the past few hundred years, capitalism as a form of economic framework and democracy as a political and societal structure has been dominating. Yes there are others with socialism, communism, totalitarianism all been given a try.
These have all failed. Communism and Totalitarianism is brutal in the way it has to ensure compliance to the central control. Capitalism with its political twin, democracy seems to be the most fair and theoretically best systems. So why is it not working.
Thomas J. O'Halloran, photographer - Floor of the New York Stock Exchange This image is available from the United States Library of Congress's Prints and Photographs division under the digital IDppmsca.03199
Firstly, the premise of using capitalism is that the market best know how to allocate resources using demand and supply, combined with the profit motive. There is no one system of capitalism as it is practised, and the purest form, the free market capitalism does not exists anywhere of any significance.
Where ever you get the hand of politics and central control, you start venturing into dangerous territory. While the initial rationale may even be to improve the lot of people’s lives, something a Marx , Gaddafi, Fidel Castro or others have set out to do, not before long the focused power that brings to one or a group of people leads to pain and misery. Absolute power corrupts absolutely.
The Western civilisation has probably created the most egalitarian society during the 1800 and 1900’s, with massive increases of general wealth, and while powerful and rich few still exist, the middle class was quite content and happy.
This seems to have changed significantly in the last 2-3 decades. My theory is that a key part of this change was the various crashes experienced starting with the 1930’s Great Depression. This has caused hoarding behaviour, not just with people but organisations as well. This stops a key important part of the capitalist mechanism, money must flow from one to another, and if this does not happen, then wealth creation slows down. Reading Warren Buffett’s biography recently it was a clear confirmation of this, with massive wealth tied up in one person’s hands, and little of that being actually applied to create wealth for others. Banks, large financial companies and of late many tech firms does the exact same, calling the money they nestle away “war chests”, “buffers” or reserves”.
The role the banking system plays in this is massive and with the challenge that Bitcoin brought to this system, one can ask. “COULD BITCOIN SAVE CAPITALISM?” It is early days, and there will be many challenges, but it could maybe just do that. Of course time will tell.