Capitalism 2.0 – upgraded for long-term thinking

We need a revolution of the social system!?  This is a sentiment that is often  expressed (either implicit or explicit) over the net, its a nice idea but  I have trouble believing that capitalism can be replaced by a better and more just system. Not because I believe capitalism is the best system we have but because its the only social economic system that has survived for the last 60 to 70 years, This is remarkable since major social economic systems like communism and socialism, have either collapsed or succumb to a capitalistic hybrid.

And I think Capitalism continuous survival goes much deeper than simple economics,  I did my bachelor thesis on Joseph Schumpeter, who coined the terms: entrepreneurship, innovation and creative destruction for the first time,  and he has a very interesting view on social economic systems. He beliefs they are evolutionary by nature instead of static.   But he makes another interesting point, that a social system can only survive as long as the people in that system identify themselves to the system, once that identification is cut than we, as people, want a change in the system but that change isn’t a revolution but and evolution of the system, Capitalism 2.0. The reason why he does not belief in a real revolutions is because we, the people, are also formed by the social system and we dictate the speed of  the evolution by our human attitude towards the system.

This has some far reaching implications, Schumpeter was heavily influenced by Darwin’s theory of evolution and the parallels to organisms and social economic systems are unmistakeable. One of these parallels is that an organism cannot revolutionize itself  from one generation to the next, change takes time. We do not belief that that a fish could changed into a fully functioning bird in one generation, so why do we belief this is possible for a social economic system?  It takes time to develop the necessary anatomy, but much more importantly for our discussion, it takes time for the creature to understand how it can express itself through its new anatomy. Similarly a social system cannot change from capitalism to a social system overnight and be able to survive in the long run. Off course its possible to change the laws and economics from one month to the next (= its anatomy) history has show that revolutions happen, but our human attitude needs more time to change and adapt, this is were the fallacy lies.

The problem that I have with articles and opinions that want a revolution of the social economic system is not that I wouldn’t want it to happen. But that we cannot radically change our social economic system and expect our attitudes towards the system to magically change with it. Human attitudes needs time to change and this change is much more fundamental than we like to admit and ignoring this is dangerous and more importantly, unnecessary.

Our attitude towards our social economic system can be summed up as follows:

to express our individuality through our innate talent and/or skill in our social economic system  and by these means acquire wealth for ourself and our family.

There are two key concepts here:

1) expressing our  individuality: we all want to be recognized for our work, no matter what your profession, we want to feel that we matter and are respected for it. A revolution to a more socialist system would likely mean that this part of us would be downplayed for the social good and this will be problematic in the long run.

2) acquisition of Wealth: We have been taught since childhood to acquire wealth, either a lot of wealth or simply enough wealth to lead a comfortable live. This is so ingrained that most people would simple be at a loss, if they would wake up one morning in a system that has no apparent ‘wealth incentive’.

Now it is no secret that the crisis we have in our current social economic system is the result of our short term thinking, we have a system that actively promotes short term thinking to the absurd. And this was ‘fine’ until we started reaching the limits of what earth can handle.  From then on we started to experience the effects of our action first hand. We tried to deny it at first but now that we use the word crisis so much on a daily basis, that denial is starting to give way to acceptance and a demand for change.

We have started to see the importance of long term thinking and want our social system to reflect that evolution of thought but at the same time our attitude towards our social economic system is much slower to change, its as if we want the problems to go away by changing from a fish to a bird in one single generation. I think that is the wrong approach,  we should cherish our  ability to express our own individuality and the acquisition of wealth, because they are the drivers of our current capitalism and more importantly they aren’t the cause of the of current problems, our short term thinking is.

In the past we equated wealth with money, wealth=money, so as a result we set up entrepreneurial enterprises or specialized our skills to acquire more money and our social economic system is great in achieving this in a short period of time. However, the problems it creates have now reached a critical point that the enjoyment of our wealth is threatened, for example: too much air pollution due to our cars, trucks and planes have made strolling the streets unbearably and in some cities a health risk, We have depleted the fish populations to such an extent that we have to make due with farmed fish which is far less tasty, we have spoiled our country side by wast and illegal duping and our beaches have become garbage collecting units whereby the coral is dying fast,  making diving less of an experience. There are numerous other examples to be used here, our short term thinking has in effect limited our ability to enjoy our money in the form of recreation and the simple pleasures of life.

I believe that in the long term thinking we will equate wealth with freedom , wealth=freedom, freedom is the ability to experience life without the restrictions we have been exposed to due to our short term thinking. In effect we want to solve the problems we have created the last 60 years and make sure that we are never faced with the same problems ever again, this is essentially the change (or evolution) we as a people want to see in our social economic system.

In a similar fashion our expression of our individuality is changing. In the (recent) past bankers and stock brokers were considered to be the epitome of success, so much so that people wanted to expressed their individuality by becoming part of that group. Now our ability to experience life has been so restricted by our short term thinking that our society has started to see ‘social’ innovators as the new epitome of prestige.To put it differently, we are starting  to give more prestige to an innovator who solves our (local) energy problem than to the  energy executive that currently provides it to us. We are changing our value system and our expression of individuality and acquisition of wealth changes with it, this is Capitalism 2.0.