Why Capitalism Endures?

Discover why capitalism, despite its flaws, remains our best bet and how compassionate capitalism could shape a better future for everyone.

📚 History has taught us well

I never used to be a social critic who worried about ethical concerns. But when it comes to social economics, I highly support the capitalistic notion.

Why? Is it because I am right-wing?

Lol. No! I am not even entering into the debate of left-right wing.

Simply put, we just don't have a better alternative to capitalism.

Let me be just frank. I used to be a high-time believer in Communism, but after reading a lot about the past, I honestly feel that either communalism or socialism can't work in the long run. That's the beauty of knowing the history, I guess. You get to know about what works and what doesn't, and as always people say - HISTORY REPEATS ITSELF!

We have had socialism and communalism, but both have miserably failed in different nations due to various reasons. Russia and China, both countries, followed forms of socialism, specifically under the framework of communism as envisioned by Karl Marx.

But what happened?

Russia’s socialist system ultimately collapsed, leading to the dissolution of the Soviet Union and a transition to a market-based economy. And China opened its market to free trade, and it became one of the leading nations in the manufacturing sector.

One of the primary issues that socialism and communalism aim to address is income inequality.

However, I respectfully disagree with the notion that equal distribution of wealth solves this problem. Imagine, hypothetically, if we were to divide all the money in the world equally among everyone. Would the balance remain the same ten days later?

The answer is undoubtedly no.

Some people work harder or have greater skills, enabling them to double or even multiply their wealth. Others may be less financially savvy and could exhaust their share in no time. In just ten days, we'd find ourselves back to the original state of inequality. So, what is the true benefit of enforcing income equality?

Since every individual is unique in abilities, ambition, and choices, equal income would undermine the natural human drive for competition and self-improvement. Ultimately, it is this diversity in effort and talent that propels society forward, not enforced financial sameness.

"The problem with socialism is that you eventually run out of other people's money" 

- Margaret Thatcher, Former Prime Minister of the UK

Kerala and West Bengal's economic deterioration is a perfect example of how communalism fails miserably. Check out this video by Think School to learn more.

On the other hand, Capitalism comes with huge benefits, and when weighing them against a purely socialistic or communistic society, it becomes clear that we would be missing out on many advantages. For instance, in a capitalistic world, the average life expectancy has increased to around 70 years. However, if you look back 70-80 years ago in a socialist society, the average life expectancy was below 50, mainly due to famine, poverty, war, and economic instability.

Not only that, but Capitalism grants the freedom to start businesses and invent or discover new products. On the other end of the spectrum, consumers have the freedom to choose 'whom to buy from,' which incentivises corporations to create better products in a leaner and more efficient manner.

🧪 Is Capitalism the solution?

Then the ultimate question is - is capitalism the only solution we have?

Yes and No. Capitalism is also broken, and it has its issues.

It's not perfect. The rich get richer and the poor get poorer. Creation of Monopolies. No Safety net.

The 62 richest people in the world are worth more than the 50% poorest.

I highly recommend watching this video on How the rich are becoming Unstoppable?

But we don't have a better alternative to a capitalistic world. And of course, we need to fix the broken capitalist society.

Salary wage growth (most of the time) has lagged behind the Asset Price Growth. For instance, let's say the wages have grown by 5% in 2024, but the asset prices (let's say gold/real estate) have grown by 8% and as long as this is the case, the rich will get more richer since they have assets which are growing at a faster rate.

That's where the notion of Compassionate Capitalism was born. Also known as ethical capitalism or conscious capitalism, it is an approach that seeks to combine the wealth generation and efficiency of capitalism with a focus on social responsibility, environmental sustainability, and ethical business practices. It emphasises the importance of creating value for all stakeholders, including employees, customers, communities, and the environment, rather than solely prioritising shareholder profits.

In fact, that's how WEB3 and Blockchain were conceived, aiming to ensure that every stakeholder in the economy gets a share of the pie.

However, critics argue that compassionate capitalism may face challenges in implementation, such as balancing social objectives with financial goals, measuring social impact effectively, and ensuring accountability and transparency in business practices.

There are a lot of resources on compassion capitalism. I highly recommend checking out this book - How Corporations Can Make Doing Good an Integral Part of Doing Well.