Capitalism and human progress

By Felipe Leonard, CEO and president of S.I.N. Implant System

The controversy of the moment may be the purchase (or not) of Twitter by Elon Musk, but in January of 2019 it was another billionaire, Bill Gates, who was the topic of thousands of posts on the platform. The reason? A tweet about the “improved quality of life over the last two centuries.” In the Our World In Data infographic that illustrated the post, there was some impressive data: in 1820, according to the numbers, more than 89% of the world's population lived in extreme poverty. That is, on less than USD 1.90 a day. By 2015, the number had dropped to less than 10%.

It didn't take long before the post spurred a polarized and heated debate. On one side, there were people who associated this advance with the rise and strengthening of Capitalism, as well as globalization itself. This is because both can foster (and it has been happening for decades) a reasonable degree of global peace and greater commercial integration between nations - and this justifies this group's concern over the recent escalation of tensions between the East, in particular Russia and potentially China, and the West. On the other side, especially among anti-capitalist and anti-global groups, there were questions about the vulnerability of the parameters used, including the baseline for the classification of poverty adopted by the World Bank at the time (now USD 2.15 per day).

These are antagonistic perspectives on a challenging triad, composed of the current economic model, economic integration and its social impacts. And there are important points to consider. However, there are also well-known biases. One of them is the automatic polarization that demonizes a process and romanticizes its opposite – as if complex issues could be reduced in such a simplistic way. Another is the frantic “shouting” in “social arenas,” especially in the online environment, which fuels clashes and squashes debate, which is quite necessary. In this way, events are no longer analyzed with objectivity and the scientific method: which ideas, after all, have worked in practice? And which have not? What is the correlation between the position of nations in the ranking of “economic freedom” and the prosperity, general well-being and social peace of their populations? Which countries have applied anti-capitalism and anti-free market agendas? And, furthermore, what were the results for the progress and prosperity of the majorities and the strengthening of human and individual rights and civil liberties in those Nations?

With the loss of the guidelines that support knowledge, an alleged villainy of the players that make up the market is presented, at the same time that a deeper analysis of how businesses can bring prosperity to communities, combat inequalities and help build a progressive global economy is ignored. In this sense, it is worth remembering American President Ronald Reagan's maxim: “I believe that the best social program is a job.”

?Going beyond the superficial

A lot of research reinforces this dual and contradictory thinking. For example, two years ago, in the 20th edition of the Edelman Trust Barometer, 56% of respondents claimed that Capitalism does more harm than good in the world, making it clear that they expect some sort of adjustments. However, eliminating, canceling or requesting the replacement of the system was not considered by most of the 34,000 participants, residing in 28 countries, who took part in the study.

In another study by the same institution published in March of this year, 61% of respondents said they trust companies more than their own governments. In second place, non-governmental organizations appeared, with a high degree of trust, for 59% of respondents.

This seems confusing and contradictory. However, there is an important picture being painted here, and at the exact moment when a post-pandemic trauma recovery is gaining momentum. Between the lines, we see that the economic model based on an autonomous, competitive and self-regulated free market is accepted as the right one to reduce poverty, although there is a “politically correct” tendency to criticize it. I ask you: what other system has worked to create prosperity for the majority without curtailing basic individual rights?

On the other hand, we cannot ignore that there are rough edges to be smoothed and that Capitalism should increasingly develop a social orientation to promote greater equity, as well as the sustainable use of resources and nature. This, of course, without losing its best qualities (building wealth and winning the battle against poverty). This is not just a wish, but also a necessity, in terms of our sustainable coexistence with the planet.

A 2021 survey by Toluna revealed that two out of three global consumers are concerned about the social, ethical and environmental impacts of their choices; and that 59% of them take into account the commitment of brands and companies to these issues when they make a purchase.????

We need to make a difference and improve on the idea of profit as the ultimate goal by effectively complementing it with the sense of seeking the common good in the relations between companies, society and the environment, and from the perspective of a globally integrated economy. This is something that has become even clearer, between mistakes and successes, in the negotiations for Covid-19 vaccines; and in the unfolding of the conflict between Russia and Ukraine, including trade rearrangements to try to contain price escalations and shortages of some products and raw material.

Are we ready to embrace integrative movements as a daily goal, far beyond critical moments?

Perspectives

The United Nations (UN) has already highlighted, via a statement by Secretary-General António Guterres, that trade is essential for international relations and that multilateralism is the answer to both diplomatic impasses and technological challenges, climate change and security. A critical look at Capitalism, its history, practices and even the possibility of deconstructing its concepts is a key issue today.

This proposal is even defended by Nick Hanauer in a powerful presentation at TEDSummit 2019. A businessman who defines himself as an “unrepentant but critical capitalist,” he argues that the precepts of Economic Theory need to be reviewed from the perspective of different disciplines, including Psychology and Anthropology. Something that reflects the dynamic and evolutionary character of Market Capitalism itself. “Prosperity comes in a cycle between innovation and growing consumer demand. Innovation is the process by which we solve human problems, and consumer demand is the mechanism by which the market selects useful innovations. As we solve these problems, we become more prosperous,” he said. Poverty in Africa has not changed dramatically since 1960, despite the region receiving more than USD 1 trillion in donations and social aid. It is evident that, in line with Hanauer's assertion, the lack of policies, legislation and a system that guarantees economic freedom in these regions - which includes justice, equality under the law, respect for private property and combating corruption - seems to be the cause of the region's stagnation.

On the one hand, Homo Economicus - a figure that, in the process of generating wealth for himself, inevitably ends up generating wealth for society - according to the classic capitalist process described by Adam Smith, is proving to be insufficient to overcome the challenges of the global and planetary agenda in the 21st century. He is merely rational, selfish and focused on results with maximum benefits. We cannot, and should not, eliminate the Homo Economicus inside us, which would be a step backward for mankind, but he needs to evolve and embrace other variables on his journey, with “sustainability” among the most urgent.

On the other hand, attempts to impose totalitarian governments are advancing in various latitudes and in the minds of politicians around the world. While “Market Dictatorships” – such as China and Russia – may have achieved good results in improving prosperity and fighting poverty in recent decades, in the long run they also imply serious risks and setbacks for freedom and human dignity, both within their borders and globally. And that would end up having a negative impact on peace, happiness and the very process of building prosperity (first signs of this can even be seen in Russian economy after invading Ukraine, and in China after Covid-zero policies, wich implied in a serious stepback in the individual rights that had been conquered in that country during the last decades of gradual opening to Capitalism).

After all, what can we contribute in the midst of these clashes, debates and trends? First of all, let us begin, within and outside corporations, to evolve into Homo Dialogicus, as well as Homo Sustentabilis and Homo Fraternus. Only then we will move forward with willingness, intelligent dialogues, accurate information and calibrated objectives.