Capitalism – Adam Smith’s Blind Spot

I recently engaged with ChatGPT to collect my thoughts on Capitalism in the 21st century. ChatGPT provided me with some insights and data into areas I was curious about. As someone who supports the basic tenants and principles of capitalism, it is without a doubt, a force that when used for good, creates enormous wealth, and when it is used by Government, it is a force that insures despair.

I take a dive into some of the outgrowths of capitalism, and they're not so positive impact on America. The following is excerpted from a larger writing project entitled " Is this the best we can do?" where I am collecting my thoughts on what comes after capitalism ... something I refer to as "Prosperitism". This is where we put capitalism on equal standing with the individual. More on that later.

enjoy!

A. Capitalism is a monetary philosophy that has gone from theory to a social-economic-political system that underpins the American Experiment.?It serves as the basis by which we generate wealth, via buy-sell transactions, it’s how communities prosper, it serves as the motivation behind investing capital to make more capital, it is used to shape how we think of each other, how we raise our children and view our place in society. It indeed is the primary means for the wealth of nations. However, as the years of capitalism played out, and the various actors partook within capitalism, certain negative qualities or out growths of capitalism began to emerge, some of which I identify here.

?????????????????????????????????????????????????????i.???Capitalism's Slippery Slope – capitalism has given rise to selfish behavior that is seen as normative in our language; phrases such as “what’s in it for me” serve to remind us that we will only do X if Y is worth it to me. Then we have “everyman for himself” as a response to a dog eat dog mentality where charity, fairness and doing the right thing gains you nothing – Leo Durocher once said, “Nice guys finish last” as a way to justify how to play the game of baseball.

I asked ChatGPT about this phrase.

From ChatGPT, we get this about the phrase. The phrase "Good guys finish last" is often attributed to the American baseball manager Leo Durocher. He is known for using this expression in 1939 while discussing the competitive nature of baseball. Durocher's statement implied that those who are virtuous, fair, or follow the rules may not succeed as much as those who are willing to be ruthless or prioritize their own interests. Over time, the phrase has been used in various contexts to convey the idea that being morally upright or honorable can sometimes result in being at a disadvantage in competitive situations.

We can see how even the most benign of simple statements can form thought and behavior at a societal level. Here it is nearly 84 years on from that utterance in 1939 and it continues to linger in our American lexicon.

Even worse than the above two examples is this which we hear over and over again, and played out in a huge and disastrous manner during the Covid 19 lockdowns and pandemic. “..its not my job or not my problem.” We can see how this too seemingly benign sentiment permeates across the American culture. Let me ask my co-author of this paper ChatGPT and get its perspective on the question.?

Chat buddy, What is so harmful about this statement? “It’s not my job, not my responsibility or not my problem” from a civil society perspective? Is there a moral issue or problem with these sentiments?

ChatGPT responds.

From a civil society perspective, the statement "It's not my job, not my responsibility, or not my problem" can be seen as harmful for several reasons:

Lack of accountability: In a functioning civil society, individuals are expected to take responsibility for their actions and contribute to the collective well-being. When someone consistently denies their role or responsibility in addressing issues or challenges, it can lead to a breakdown of accountability. This attitude can hinder progress, problem-solving, and collaboration within communities.

Neglect of communal needs: Civil society thrives on the active participation and engagement of its members. When individuals adopt a mindset that disengages them from shared concerns or problems, it can undermine the collective effort required to address social issues, promote justice, and improve the overall well-being of the community. It may contribute to apathy, social fragmentation, and a lack of solidarity.

Ethical considerations: From a moral standpoint, there is a question of empathy, compassion, and solidarity. Ignoring problems or shirking responsibilities can reflect a lack of concern for the well-being and rights of others. It disregards the principles of fairness, reciprocity, and social justice that are crucial for fostering a harmonious and inclusive civil society.

Stifling progress and improvement: Civil society thrives on active participation, problem-solving, and collective action. When individuals consistently disassociate themselves from addressing challenges, it can hinder progress, impede social change, and perpetuate existing social inequities and injustices.

While there may be circumstances where individuals genuinely cannot take on certain responsibilities due to capacity or other constraints, consistently adopting an attitude of disengagement or indifference can have detrimental effects on the functioning and well-being of a civil society. It is important for individuals to recognize their role and responsibility within their communities and contribute to the greater good to build a more just and compassionate society.

I want to take exception to that last line from my co-author writing partner, “...contribute to the greater good to build a more just and compassionate society.” This idea of a greater good is a stealthy nuance tip of the hat to Communism and Communist ideals – that in order for the “greater good” to move forward, some sacrifice of liberties and freedoms are necessary in order for the greater good to be achieved.??Prosperitism categorically is opposed to such communist thought. All societies and groups consist of individuals; you cannot have a group of one. And this Star Trek Spock sentiment where he was willing to sacrifice himself so that the needs of many outweigh the needs of the few was firmly implanted as the right thing to do, a masked Communist idealism marketed via the big screen and probably went zipping over the heads of those who watched that scene.

????????????????????????????????????????????????????ii.???Capitalism Conditions Parental Behavior – because a return on investment is a derivative of capitalist ideology, our families are conditioned to put pressure on our children when they reach a certain age in life, its time to go. The opposite is also true that forces children to flee the home at a very young, and not so ready to take on the world age. See the Sound of Freedom to see just how some of all that plays out across America, when we push our children out of the security of a home and family early.

You see Capitalism's influence in starting a neighborhood lemonade stand, or when you start a lawn moving business to earn money at a very young age. We see it in how we earn an “allowance” by doing chores around the house to earn extra money for school or whatever. While there is seemingly nothing to be too concerned about, what’s missing is a healthy balance of “you/we/us” are all connected and in need of one another - someone has to purchase what someone has made in order for that other person to gain (investor/parent). As a child learns the value of money and hard work, via labor, in return for compensation, there is this subtle conditioning that the individual learns about the value of time – profit-cost and little to anything on what the impact to the community is or could be. Consideration for the wider community really isn't apart of the capitalist mentality, unless it is. Consider the growing number of YouTube channels of guys mowing lawns for free, as a way to give something back to the community - see SB MOWING and his 1.2M subscribers as a great example, for a LAWN MOWING CHANNEL. This is not to say, that the Lemonade stand should give out free drinks, but what if they gave out free drinks in-between the paid drinks, or if they put out a sign that said, for every 10 paid drinks, they will be delivering a free drink to the elderly folks in the neighborhood? Would this increase their business? Maybe, maybe not, but what affect would this approach have on the young-minded entrepreneur? What if the lawn mowing young businessman said to each door they knocked on while soliciting their business included a statement that said, if you sign up for 4 lawn mows, the 5th is free, or if you subscribe to a 6-month plan, we will mow 5 lawns for your neighbors that cannot afford the expense.?What capitalism doesn’t take into consideration is the impact on the recipient of the good will – image how the elderly feel about the younger generation who recognizes they are limited in what they can do and grateful for all they have done in their lifetime - what if we celebrated a Life of Achievement by sprinkling in more "pay-it-forward" into our offerings, imagine the good will and feeling you gave to that little ole lady or man!

Capitalism as a monetary system is devoid of emotion or humanity. Imagine the feeling of receiving a free lawn mow just because someone recognized you could use the help – what we do for others without expectation of anything in return has impact and distinguishes us from wildlife, we just can’t always know what lies beyond a smile or thank you - think of the serendipitous opportunities you might be missing. Adam Smith left the issue of morality within capitalism to be managed by the individual - because capitalism pays off better when you don't give up something for free when you can get others to pay for it. The hope that a moral capitalist will do the right thing gets pressured, and when pressured, profit margin rules the day. Sorry, can't afford anymore freebies.

???????????????????????????????????????????????????iii.???And this is my point, so you say, hey, but charity happens all the time. And I say, not enough, and it's not “embedded in capitalism”, it stands apart and is purely voluntary. It isn’t structurally connected to charity, although from a tax incentive, charity can be written off – but by and large, capitalism doesn’t drive community good by design or with intention. Yes, capitalism can be a force for good and it is, but its always an option and left to the capitalist to make that decision – what I am arguing for, is a system that incorporates the best of capitalism with the best of charity and the best in human nature.

B.???The rise of the Non-Profit Corporation

?????????????????????????????????????????????????????i.???Smith never saw this coming, an entity that was designed to never feel the force of Free Markets – according to my AI co-writing partner, there is no indication that Adam Smith was ever aware of or considered such a corporation. The NP or NGO was created to solely exist to provide some form of society benefit,?like services to the homeless or aging, when in fact many of them have been used, or co-opted to promote self-interest acts that perpetuate problems or invent and promote problems that are Hegelian in nature, see Covid, pandemic and lockdowns for reference.

Create the Problem, Promote the Problem and Provide the self-interest perpetuating solution that keeps the status quo from being effectively replaced. Cancer research – solving cancer is not in the best interest of the organization that is raising funding to insure its self-interests remain in the forefront.

C.???Smith’s influence from Biblical teachings, moral philosophies of his day.

?????????????????????????????????????????????????????i.???Smith misunderstood the true nature of man

1.???His?"self-interested man" as a fundamental basis for capitalism was flawed in my opinion as it gave way to a "Every Man for Himself" mentality.

“This idea (speaking of Capitalism) is often summarized by Smith's famous quote: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." ChatGPT

I don’t think this is a correct observation for the motives of a butcher, brewer or baker as being benevolent service providers, as in all three of these providers, we do not need them in order to have our dinner, but of convenience, rather than out of necessity. Still the point being made, is that because the butcher, the brewer and baker were self-interest guided that this was enough to insure community prosperity is missing the mark.

I understand what Smith intends to mean, but our nation, after 246 years of Smith’s Capitalism, has seen the rise of the self-interested man become a lonely man. There needs to be a bigger, deeper and broader understanding of what it means to be a brewer, butcher and baker in our communities – these 3 businesses are woven into the fabric of a community which supersedes their self-interests. There is more to a mere transaction that validates a business, ever sponsor a softball team? Is that a capitalist motive, could be, right, should it be?

My issue with self-interest motivation missing the mark, is because it frames the discussion around, "whatever is in the best interest of the man or business will somehow elevate the best interests of the community". This is the rub. Are cannabis dispensary’s self interest in the best interests of a particular community? Is a gaming Casino self-interest in the best interests of the community, is the local brothel self-interests in the best interests of the community? Maybe yes, maybe know - take a look at what our inner cities look like and you tell me, whose interests are being served well?

Smith’s capitalism isn’t fundamentally wrong, it just isn’t strong enough or well designed enough system to not just create wealth or protect the self-interests of man; but it fails to embed into each of us an economic benevolence persona for our fellow man or wellbeing of the community. It lacks an appreciation or recognition that we are all interdependent on each other. The butcher, the brewer and the baker depend on a healthy society to produce new consumers. Anything that impedes a healthy batch of consumers should be the collective concern of all self-interested men and businesses.

????????????????????????????????????????????????????ii.???Man is far more Self Aware of Others than either Theology or Economic design give credit to.

Educators, First Responders, Artist’s, Philosophers, Soldiers, and Service professionals prove this out that awareness of others, demonstrates, that a focus only on THEIR needs first would necessarily mean they would not naturally seek to be in service to others.

The point that I am trying to make here, is that we need to make the interests of others a higher priority within a capitalist society without introducing the slippery and deceitful nature of other "isms", like socialism and communism from creeping into our communities as so much of it has. Think of the human capital sacrificed and left behind from the wake of Mergers and Acquisitions, think of the lives impacted by Marxism ideology during the pandemic and lockdown. Pretty 1984 stuff.

a.???Blind Trust in Free Markets Hidden Hand

?????????????????????????????????????????????????????i.???????Two points: Smith never saw consumer willingness to pay higher prices, nor just how hard his enemies of capitalism would work so tirelessly to exploit its value proposition and deem the acquisition of wealth as evil, and would work to redistribute a nation's wealth from the hardworking earners to an army of underachievers - American taxpayers are literally funding our own demise.

????????????????????????????????????????????????????ii.???????1) Once the hidden hand was understood, powers to be figured out how to steer its outcome ensuring that capitalism would never be allowed to be seen as a collaborative framework but rather a focused framework on what’s profitable in the moment.

What I mean by this is capitalism needs a softer side, a more compassionate response, as my across-the-pond buddy Geoff Todd likes to call it "Compassionate Capitalism", to communities in need, where community need is deemed more valuable at this moment in time than the need for greater profit. Can you say Credit Suisse Group job losses after the UBS acquisition.

What profit a corporation if the community fails around it, oh, that's right, it relocates to the next, until it's time to move again. Can you say Pittsburgh, PA or Birmingham, AL as once upon a time industrial giants, only to fall into disrepair as capitalism pressured their communities by outsourcing their jobs to foreign countries who never were ever going to share our values.

???????????????????????????????????????????????????iii.???????2) This idea that consumers should not care where products are made or come from is to ignore the indirect tangibles of prosperity, whereas price is one of a multiple reasons why a good or service is chosen. Low cost is no longer the sole driving force behind consumer reasons for purchasing a product. Attributes such as shared values and sustainable manufacturing processes were not a consideration in Smiths model for prosperity. In 2023, consumers seek to use their purchasing power to choose products and services that reflect their own sensibilities and buying products at a higher price from a source that shares there values is on the rise.

Here, I am taking a bit of a shot at Smith's lack of foresight. As a renown academic, he should have seen even in his day, that cost was not always the sole driver determining the purchase decision. While Smith never was a business owner, had he been one, he would have had a chance to think like an owner, and realize there are other reasons why consumers might purchase a good or service - and in fairness, while I am not a Smith expert, I am curious to know what he thought of how much value convenience would come to play in a purchasing decision, let alone in the final determination of what to charge for a service or product?

b.???Circular Capitalist Economic Model

?????????????????????????????????????????????????????i.???Legal, judicial, penal and probationary systems have enslaved the fallen in our communities and utilize a capitalist framework, as these institutions have incentives to maintain status quo rather than seek the best interests of the individual and society at large. A penal system that doesn’t take the life of an individual, should be designed to safely return the individual back into society, at least able to return to some form of self-reliance. Instead, individuals return to jail or prison the penal system remains healthy as it feeds off of the return of previous individual are caught in a vicious riptide or what I think of a circular capitalist economic model that seeks to feed itself working against the best interests of the individual.

Government has embraced capitalism and uses how it penalizes its citizens from a capitalist frame of reference. Consider privatization of prisons; consider welfare departments that only continue to grow, look at our Public School system and how it has more administrators than teachers, these are all out-growths of capitalism run amok. The use the language of capitalism, Return on Investment as a cloak to argue for more budget money to remain in power, while their organizations continue to expand, so does the problem. These organizations within Government and their cousins in the Non-Profit sector should be designed to eliminate themselves by virtue of doing a great job - they should become obsolete because of their success.

The point that I am trying to make is that Government and how they operate should not be from a capitalist point of view - if they opt'ed for say, Prospertism instead of capitalism, I would argue that you will have a significantly smaller Government due to its effectiveness in solving problems including military.

????????????????????????????????????????????????????ii.???Individuals who are endowed at birth with unalienable rights from God, are never lost. These rights, life, liberty and freedom can be suspended due to bad human behavior, and unless the individual is sentenced to life or death in prison, must have these rights restored when the price has been met, and if they can be restored, then they must be returned to a place that is better for the individual than where they were when they first entered the penal system. This may not seem right, but if we are to be a prosperous nation, we must work to ensure that all individuals have equal opportunity to remain free from incarceration and the best way to achieve that is to invest in the individual’s potential that all have but not all have been able to successfully utilize or leverage to a life free from incarceration or poverty or other social illness.

My primary point is here is that too many people exit our penal system in far worse shape than when they entered - there is so very little "rehabilitation" and so much corruption of the soul, that its no wonder the return rates to life prior to prison are so high - and that some of these folks prefer the structure of prison life to the uncertainty of civilian life. Seems to me, there should be something that is a hybrid between a military life and a corporate life for those that either fall through the cracks or are straddling them.

c.???Like all good system thinkers and modelers, I would have preferred to see great minds like Adam Smith be as honest about the strengths and weaknesses of their system and make it clear to future generations that if Capitalism has an inherent flaw, it must be recognized and fixed and not to be blindly followed as a failsafe system. This point may be a harsh criticism, but nonetheless, capitalism and capitalists in particular have a responsibility to societies that embrace its framework. The Naturalist Charles Darwin did just that, he openly conceded that if there was one aspect of his theory that could be proven false, then the entire theory is of no use. While it may be a stretch to compare Capitalism to Darwinism, its not lost on me how Darwinism impacted capitalism with its survival of the fittest mentality permeating the investor and corporate landscape.

We should recognize that times change, people change, circumstances change, things we didn’t know then, we now know have impact; while there is a strong and legitimate case to be made for holding on to a system that has proven its merit, we should not be afraid to face the prospects that we have reached the systems furthest point of positive utility and to renovate it when it is in need of repairing. Renovation of a tried-and-true system, is far better than replacing the old with the new and unproven or the unproven system wrapped in a new shiny verbiage few understand.

It's time we take capitalism to the next level by incorporating more prosperity thinking into the model and a whole lot less focus on profit over people.

P-Corp anyone?