The dirty secret of capitalism


On a good day, Capitalism can seem pretty impressive. Take, for example, the sheer organisational might of corporations, with their incredible ability to focus the complex efforts of thousands of people on precise goals. Think of the Schweppes beverage brand. It’s a vastly complex manufacturing and licensing enterprise that coordinates the skills of very large numbers of accountants, factory workers, business strategists, lorry drivers, lawyers, HR personnel and logistics experts around the planet so as to ensure that a familiar, reliable bottle of sparkling beverage can be purchased in Riga, Vancouver, Lagos or Montevideo (and thousands of other places). It is all held together by a very simple and powerful concern: the pursuit of profit and the return on investment to the varied shareholders who own different parts of the brand. As a result, the pension funds of public servants in Ankara will ensure that a container ship in the Singapore Straits carefully carries the manganese which will go to make the tops of bottles that will end up being drunk by an IT manager in a cafe in Dublin.

If you could magically go back in time and explain the workings of Schweppes to an acute and wise defender of Capitalism like the 18th-century economist Adam Smith, he’d be hugely impressed and very excited by what we’d achieved. He’d also at once assume that if we can go to such lengths, and be so amazingly well organised just to get bubbly drink made, then we must surely by now have all the other more important matters facing humanity sorted out. He’d assume that we would have been working down a list of priorities, starting with the great challenges, and must therefore be at the mopping up stages, getting the last tiny details (like the evening drink) perfect.

He’d surely be longing to hear about the wondrous efficiency with which we had constructed exquisitely beautiful and affordable cities, got clean water and safe food supplies to everyone on the planet and solved the problems of forming stable contented relationships and raising well-balanced, hard working, happy children. He’d also want to hear all about our perfect education system.


Adam Smith, surprised

Then we’d have to tell him the shameful secret. We started with bottled water. That was what we got right first. We’re also quite good at making phones and cars and toasters… But sadly, we haven’t got round to most of the other things yet. Despite all our resources and collective intelligence, we’re still unable to start corporations that successfully tackle some of the core human needs. The dirty truth about Capitalism is not that it is inefficient, but that its ambitions as yet have been so lowly and so restricted.

When we get furious about bankers’ bonuses, it’s not simply the money that infuriates us. After all we don’t usually get enraged by the fact that J. K. Rowling has made a fortune or that David Beckham is rich. That’s because we know that Rowling and Beckham made their money by pleasing other people. The stories are brilliant, the free kicks were magnificent. What we really hate is the idea of bankers getting paid a lot of money when we can’t see how they have helped other people.

Though we maybe don’t often say it, we actually have a very moral idea about money, we think that profit is great, when it is made by doing things that genuinely benefit other people. So when we get fed up with Capitalism and call for its end, we are imagining that the Beckham-Rowling model is always going to be the exception. But why shouldn’t it be normal? Why shouldn’t we demand that big profits only come from doing big amounts of good in the world?

There are few businesses out there that truly help humanity and make lots of money. We’re still – oddly – at the dawn of working this one out. There should be a lot more such businesses. That’s the challenge facing Capitalism, which is now so widely hated, because it seems to have lost any sense of a necessary connection between profit and the human good. Rather than wanting to wind back big corporations, we should have a different and better ambition: we should want them to learn to make their profits by a strangely odd-sounding but in fact plainly obvious goal: truly helping other people.