What makes Capitalism stick and why is it dangerous?

Capitalism is an economic and political system based on the private ownership of the means of production and their operation for profit. As critics point out, capitalism can cause inequality, market failure, damage to the environment, excess materialism and other challenges. Although these problems can be seen as endemic, it is still one of the major systems across the world. It is seen as broadly winning against communism, and even socialism. But, if it’s successful, as even adopted by many countries, why is it seen as dangerous? Does it have to be dangerous? What makes it stick? Pondering these questions makes me think of human nature. The famous parable of ‘A pond full of milk’ where the king asks people to put milk, but everyone puts water. It explains the innate nature of humans, where they think 'I don’t have to put the milk, someone else will do it.’ Conversely, let me explore the question of capitalism.

What makes it stick?

Capitalism gets into human nature and biology where it inclines and gives a purpose to the people. One of the main characteristics is the ‘private’ attribute of capitalism. This ‘private’ attribute can be focused at various levels, i.e. individual, family, community, village, state, country and the world. A ‘private individual’ is more or less a selfish person who does any work for their self-interest only. Self interest can include accumulation of money, property, wealth, education, work, etc. When this goes beyond the individual to the family, it can be seen the priorities of family takes precedence over the individual. Sometimes, this can also be seen in crude forms, where a family prefers ‘honor killing’ of one of theirs in certain instances. When this crawls further towards the community and village, some self-sustaining villages and localities can also be found, may not be perfect, but still trying to work in their own interest.

Understanding this aspect of ‘interest’ at various levels is of curious nature. At the individual level, a ‘self-interested’ person can do less harm to others and by far means have to follow the largely accepted rule of law. So, if there’s an aberration, it is likely seen as the ‘individual’ being punished for their actions, or the individual will likely not commit intending of punitive damage. But, as the number of people increases from individual to family to country, the responsible ‘entity’ changes, and the likelihood of free and fair justice deteriorates. One example could be Holocaust. While Adolf Hitler was the proponent, the actions and implications of him reached across the country on the ‘private interest’ of the country. Maybe, it even touched the ‘private interest’ of the individuals. Although there are exceptions, like Oskar Schindler, who saved 1200 Jews during the Holocaust, his actions can be viewed as going against the ‘self-interest’ of the country. As such, a person fearing for themselves, or their family or country is likely to do anything to overcome that situation. It is very similar to the interests of Allies in World War 2, where they acted in their ‘interests.’

The sticky nature of capitalism can be correlated, maybe not causally, to the belief that it acts in their best interest. While the trust factor in such instances is very high, it may not be for other forms, where the trust factor may not be high. For example, if a police station or a government institution is continuously failing to protect its citizens against crimes, the individual believes it is in their interest to guard by either taking a gun or hiring a guard. Conversely, if the government does a better job, the individual wouldn’t mind transferring the onus to the government. The ability of an individual-entity also makes an important factor, where certain tasks are beyond their ability. As such, the trust and tasks are transferred to the entity which works best. For example, an individual feels the government or a private entity is certainly the best in certain aspects, such as building roads, infrastructure, etc. maybe because of lack of knowledge or money or any other factor.

The biological nature of ‘survival of the fittest’ also connects to capitalism, where one has the need to act in their own interest for survival. With food as the main source of continuum for survival, it was mostly amassed when hunter-gatherers shifted to agriculture. But, later this evolved into more intricate forms, where the system of ‘money’, gave not only access to food, but much more. So, the ‘human’ who was content and looking for food, has now started to pursue ‘money’ which allows them to pursue more diverse interests. With no limitation on accumulation or higher limit of money, nothing seems to satisfy the human. And, connecting further is the consideration where a person always compares with the other and sees if they have a better life. This ‘better life’ is again translated to amassing more money. The money is intricately linked to the capitalistic model. 

The stickiness emerges from the volatile nature of money along with the ‘self-interest’ nature of the human being. This model suits the best. But, the resources are limited, and the wealth-resources amassed are unequally distributed among the people. This unequal distribution over a continuous period of time has caused inequity across the world. If these resources are distributed equally to people, the question arises from the people who worked hard to achieve it, ‘why should I distribute something which I worked hard to own?’ So, the fundamental nature of capitalism has driven to providing ‘equal access to opportunities’, where ideally everyone should have an equal chance of getting something. But, this doesn’t translate into reality as the person who already has amassed wealth continues to grow exponentially, while the person who didn’t amass starts to have logarithmic growth. This can also be seen in the ethos of the USA, one of the main proponents of Capitalism, which  is ‘American Dream’, where it is often referred to as ‘land of opportunity.’ 

The basic ‘food’ of hunter-gatherer has now extended to a much broader definition, where the human sees anything which can be acquired with money as food. So, the obvious plan is to increase the share of money available, preferably by the methods of rule of law, if not use loopholes, and lastly maybe even break the law. It also makes the human think that we are the ones who created these norms and rules, so why can’t I change it? Although it is seen as a given, it is not absolute. 

Why is it dangerous?

The dangerous nature of capitalism isn’t about the objectives of free enterprise or profit motive, but more on the conflict and ‘self-interest’ of a perpetuated group. For example, if profit is made out of an activity, ‘who is getting that profit?’ is a valid question. Some of the actions of Tata Group can be seen as more supportive to the people, than some so-called ‘communist’ and ‘socialist’ governments. Although they are a private entity, and work on the motive of ‘profit,’ they can’t still be considered as ‘dangerous.’ If Tata Group prioritizes certain actions which can go against the best interest of their stakeholders, it can then be seen as ‘dangerous.’ So, the danger aspect is related to ‘crony capitalism,’ where there is collusion between independent entities, where some ‘profit,’ but many others, including nature, lose. But, this is still in the ‘best interests’ of a certain individual-entity, but not for others.  

The eroding nature of trust among institutions, the collusion among them and loss of agency of people are some of the primary factors which makes capitalism dangerous. Capitalism has driven people and countries to give their best, achieve things which people couldn’t fathom, whether it is starting with a steam engine or now venturing towards Mars. As long as this ‘interest’ is synchronizing with the larger group of people and acting in the larger best interests, capitalism cannot be dangerous. While the question of utilitarianism and morality emerges, where there’s always going to be some collateral damage or loss, the objective is to strive to minimize the loss with maximum possible effort.

This is a philosophical interpretation of capitalism, connecting the biology of human nature towards capitalism. ‘Self-interest’ is never wrong, but how we approach that ‘self-interest’ is a question. Are the actions and activities just and moral? Justice and morality are dynamic and evolving terms. They are not the same for everyone. So, what’s correct for an individual could vary to what’s correct for the country. ‘Fear and greed’ are well-appealing and easy words connecting to capitalism, but people in ‘socialism’ and ‘communism’ also have ‘fear and greed.’ That indicates it's human nature, rather than the capitalistic environment. Although, the capitalistic environment is more conducive to ‘fear and greed.’ And, why are they greedy and what do they fear? Money power is the intrinsic principle of capitalism itself. In fact, there is very little distinction between capitalism and money power. So, this further connects to what is moral, just and what is right? Inequality is one of the basic principles of capitalism. There are finite resources. So, if one person or a group of people are working more towards those resources, then obviously, they would have more than the other group. So, this further connects to equal access to opportunities and equity, which connects to my previous interpretation of the USA as ‘land of opportunity.’ 

The institutions, the people running the checks and balances, equal access to opportunities, just and moral laws, checking exploitation and vulnerability, etc. are some of the basic things which require capitalism to keep in check. Failure of one or more of these things can be directly linked to inequality and crony capitalism, where capitalism would be indeed dangerous. In contrast, it can be observed that the Scandinavian countries fare better, because it can be correlated and maybe even causally that these things keep the people and institutions in-check from over-exploitation. And, obviously, they have far more resources and less population while being educated and conscious as well. Indeed, this wouldn’t even be called ‘capitalism’, but ‘welfare socialism.’ It’s the evolution of capitalism towards the next level. And, capitalism is also sticky. For people whom this system is working, they like to keep it that way. Often, they have a lot more resources and ability to keep it as such. So, it makes it sticky. A person out of it sees it doesn’t work to change and challenge the status-quo, so tries to get in the capitalism system itself. But, history shows, the tipping point is ‘revolution.’

P.S.

This article was written as part of a course with Naya Daur, Nayi Kalpana (NDNK). I thank Sunil Chavan (one of the participants of the course) for his comments and this article was expanded by adding last two paragraphs to address his comments.