Ethical Capitalism?

Doing the right thing, making the hard choice, comes at a cost. Does it follow then, that in a world where costs have to be kept at a minimum, good deeds and ethical behavior have to be kept at a minimum as well? The answer is "yes", however crazy that may sound...

A week ago I published a post titled Calculated Evil. In it I explained that under capitalism's profit-motive widespread hunger and unemployment are necessary to keep prices up and wages low respectively. Hunger and unemployment are features of this system, not bugs, and therefore aren't to be solved. Another key aspect for maximizing profits and keeping capitalism running, is to minimize costs at all time. We're talking about economic costs, mind you, not costs to the environment or to society; reducing economic costs and thereby increasing profits, almost always means that social and environmental costs are increased. You may have heard the expression "Privatizing Profits and Socializing Losses":

Privatizing profits and socializing losses refers to the practice of treating company earnings as the rightful property of shareholders and company losses as a responsibility that society must shoulder. In other words, the profitability of corporations is strictly for the benefit of their shareholders. But when the companies fail, the fallout—the losses and recovery—is the responsibility of the general public.
_{source: Investopedia}

The above quoted explanation from Investopedia focuses on companies that are deemed to be "too big to fail", and the practice of government intervention either through bailouts or subsidies that are financed through taxation of the general population. But that's only one small aspect of socializing, or externalizing costs; it's done all the time and not only by companies that are too big to fail. The best and most obvious examples of this are the destruction of the environment and mass layoffs; these are costs for the society at the behest of corporate profits. Doing the right thing is incompatible with capitalism's profit-motive.

This is not hard to understand, and therefore it's also easy to understand why it's not possible under capitalism to engage in "socially responsible entrepreneurship". They call this "stakeholder capitalism":

Stakeholder capitalism is a system in which corporations are oriented to serve the interests of all their stakeholders. Among the key stakeholders are customers, suppliers, employees, shareholders, and local communities. Under this system, a company's purpose is to create long-term value and not to maximize profits and enhance shareholder value at the cost of other stakeholder groups.
_{source: Investopedia}

According to Investopedia, "supporters of stakeholder capitalism today believe this priority on all entities should replace shareholder primacy." That sounds wonderful, right? The problem is, however, that in this perspective the "shareholder" is only representative for the bulk of the profits. Profits in themselves aren't questioned at all. Under capitalism companies are still obliged to maximize their profits to survive in the marketplace, and it doesn't matter where those profits are spent. The profit-motive in itself is the problem that stands in the way of this fantasy of stakeholder capitalism.

The only way to make all of society a stakeholder, is to democratize the economy. Only when companies are governed by the workers themselves, the immense gap in wealth and power between them and the owners of capital will be gone. That in turn opens up the way to a society in which all other decisions can be made democratically as well. I don't know why this is so hard to understand for some people, but the entire premise of capitalism is ridiculous: the idea that if only every individual acts as self-interested as possible, there will emerge a society in which everyone's interests are served (you know, the "invisible hand"), is too stupid to even contemplate. And to say that that's just who we are, that selfishness is just in our nature, is also stupid as it completely negates the fact that we're social creatures at our core, that everything we've accomplished has come through collaboration, that individually we're helpless and unable to even survive.

So watch the below linked video; it discusses the scam that is stakeholder capitalism. Corporations are greenwashing and pinkwashing their image to sell to the consumer the dream of "ethical consumption": you too can contribute to a better, cleaner and more just world by buying our products! The rise of "ECG" (Environmental, Social, and Governance) investing is the latest attempt from the guardians of the capitalist status quo to appease the population. Billionaires are increasingly calling for some form of a UBI (Universal Basic Income), but not because they're suddenly concerned with our well being. It is, in the words of venture capitalist Vinod Khosla, "bribing the population to be well-enough-off. Otherwise, they'll work for changing the system." It's clear to me though that the system must be changed, or else we'll forever grovel at the feet of the winners of the capitalist game.

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