Capitalism as an economic system has brought a myriad of gifts and comforts to the modern world (greater comfort, longer, healthier lives, a wealth of technological innovation, etc., much greater accessibility to many products, etc.) – but it is also destroying the planet, screwing over many people in the working class in affluent countries, not to mention exploiting many people in poorer countries and helping to further consolidate power and stratify the global economy. There is a strong case to be made that these effects are likely outcomes of the system as it exists, rather than “bugs” in it.
As it exists, the capitalist system we have incentivizes firms in both the manufacturing and service industries to reduce labor and production costs relative to competitors and to try to gain monopoly control over industries, so they can more freely exploit the consumer base. Executive compensation is often tied strongly to stock price performance and many companies consider their fiduciary responsibilities to their shareholders to be their top priority. Consequently, systematic unfairness in labor practices and environmental destruction are fairly predictable results. While capitalism has brought about improvements to the lives of many in our society, there are many pernicious downsides. The system can certainly be improved if governments are appropriately proactive in setting and enforcing environmental and labor regulations, investors stop incentivizing destructive behaviors, executives start valuing ESG priorities more highly, workers are empowered to exercise their rights more and consumers make conscious decisions on the basis of sustainability and fairness as well as price.
The dysfunctional communism of the former Soviet states or of more recent Latin American dictatorships is not the only alternative to the system we have now. Differences in pay may be a partial incentive for differences in work ethic and innovation, but the pay differences we have in our society are far greater than those described by the differences across people’s actual work ethic, contribution to society or fair minded notion of “deservedness”. This reality is not only unkind, unfair and a toxic byproduct of capitalism, colonialism, slavery and monopoly, but it also prevents societies from realizing their full potential. There are rational economic arguments to be made that too much inequality is bad for collective economic growth. Transforming our current economy into something more fair, sustainable, just (and more genuinely beneficial to all) will take a lot of work, change and intention. But it’s really necessary for the sake of long-term sustainability and the next generation.
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