Capitalism as an economic system has led to unparalleled innovation and improvement in the human condition. Many consider it to have “won” the war of ideas against socialism, but that simplistic view ignores that there is no such thing as a pure Capitalist system. And our current version of institutional capitalism and corporatism is a relatively recent development.
Our current emphasis on corporate profits isn’t working for the vast majority of Americans. This will only be made worse by the development of automation technology and AI.
We need to move to a new form of capitalism – Human Capitalism – that’s geared towards maximizing human well-being and fulfillment. The central tenets of Human Capitalism are:
- Humans are more important than money
- The unit of a Human Capitalism economy is each person, not each dollar
- Markets exist to serve our common goals and values
The focus of our economy should be to maximize human welfare. Sometimes this aligns with a purely capitalist approach, where different entities compete for the best ideas. But there are plenty of times when a capitalist system leads to suboptimal outcomes. Think of an airline refusing to honor your ticket because they can get more money from a customer who purchases last-minute, or a pharmaceutical company charging extortionate rates for a life-saving drug because the customers are desperate.
We need to make the markets serve us rather than the other way around. Profit-seeking companies are organized to maximize their bottom line at every turn which will naturally lead to extreme policies and outcomes. We need government leaders who are truly laser-focused on the public interest above all else and will lead companies to act accordingly.
Problems to be Solved
- At present, the Market systematically tends to undervalue many things, activities, and people, many of which are core to the human experience.
- Make the economy work for Americans, not the other way around
- Direct capital to investments to improve human welfare, not to enrich the wealthiest Americans
- Create measurements around people, not dollars
As President, I will…
- Change the way we measure the economy, from GDP and the stock market to a more inclusive set of measurements that ensures humans are thriving, not barely making it by. New measurements like Median Income and Standard of Living, Health-adjusted Life Expectancy, Mental Health, Childhood Success Rates, Social and Economic Mobility, Absence of Substance Abuse, and other measurements will give us a much clearer and more powerful sense of how we are doing both individually and as a society.
- Rein in corporate excesses by appointing regulators who are paid a lot of money – competitive with senior jobs in the private sector – but then will be prohibited from going to private industry afterward. Regulators need to be focused on making the right decisions and policies for the public with zero concern for their next position.
- The government’s goal should be to drive individuals and organizations to find new ways to improve the standards of living of individuals and families on these dimensions. In order to spur development, the government should issue a new currency – the Digital Social Credit – which can be converted into dollars and used to reward people and organizations who drive significant social value. This new currency would allow people to measure the amount of good that they have done through various programs and actions.
An Excerpt from The War on Normal People
Imagine an AI life coach with the voice of Oprah or Tom Hanks trying to help parents stay together or raise kids. Or a new Legion of Builders and Demolishers that install millions of solar panels across the country, upgrade our infrastructure and remove derelict buildings while also employing tens of thousands of workers. Or a digital personalized education subscription that is constantly giving you new material and grouping you with a few other people who are studying the same thing. Or a wearable device that monitors your vital signs and sends data to your doctor while recommending occasional behavior changes. Or voting securely in your local elections via your smartphone without any worry of fraud.
Each of these scenarios is possible right now with current technology. But the resources and market incentives for them do not exist. There is limited or no market reward at present for keeping families together or upgrading infrastructure or lifelong education or preventative care or improving democracy. While our smartphones get smarter each season propelled by tens of billions of dollars, our voting machines, bridges, and schools languish in the 1960s.
This is what we must change.
At present, the Market systematically tends to undervalue many things, activities, and people, many of which are core to the human experience. Consider:
- Parenting or caring for loved ones
- Teaching or nurturing children
- Arts and creativity
- Serving the poor
- Working in struggling regions or environments
- The Environment
- Preventative care
- Infrastructure and Public transportation
- People of color / underrepresented minorities
And now, increasingly,
- Unskilled Labor and Normal People
- Meaningful Community Connections
- Small Independent Businesses
- Effective Government
There were periods when the Market supported some of these things more than it does today. Today, it needs to be steered to do so. The U.S. has reached a point where its current form of capitalism is faltering in producing an increasing standard of living for the majority of its citizens. It’s time for an upgrade.
The Next Stage of Capitalism
Adam Smith, the Scottish Economist who wrote The Wealth of Nations in 1776, is often regarded as the father of modern Capitalism. His ideas of the Invisible Hand that guides the market, division of labor, and that self-interest and competition lead to wealth creation have been so deeply internalized that today we take most of them for granted. Our general thinking today is to contrast ‘Capitalism’ with ‘Socialism,’ which arose in the 1800s and advocated social ownership or democratic control of industries. Karl Marx published Das Kapital in 1867 and argued that capitalism contained internal tensions that would oppress the working class who would eventually rise up and take control. Our perception is that Capitalism – embodied by the West and the United States – won the war of ideas by generating immense growth and wealth and elevating the standard of living of billions of people. Socialism – represented by the Soviet Union which collapsed in 1991 and China which moderated its approach in the 1980s – didn’t work in practice and was thoroughly discredited.
This simplistic assessment misses a couple important points. First, there is no such thing as a pure Capitalist system. There have been many different forms of Western capitalist economies going back centuries ever since money was invented around seven thousand years ago. The market feudalism of the Middle Ages evolved into the expansionist Mercantilism of European trading companies, which evolved into the Industrial Capitalism of 20th century America, and into the Welfare Capitalism of the 1960s when the U.S. and many other advanced countries established safety net programs like Social Security and Medicaid. Our current form of institutional capitalism and corporatism is just the latest of many different versions.
Similarly, there are many forms of capitalism in service around the world right now. Singapore is the 4th richest country in the world in terms of per capita GDP. It has had an unemployment rate of 2.2% or lower since 2009 and is regarded as one of the most free and open, pro-business economies in the world. Yet the government in Singapore regularly shapes investment policy and government-linked firms dominate telecommunications, finance, and media in ways that would be unthinkable in the U.S. Singapore’s system of capitalism is very different than Norway’s and Japan’s and Canada’s and ours. Many countries’ form of capitalism is steered not by an unseen hand, but by clear government policy.
Now imagine a new type of capitalist economy that is geared toward maximizing human well-being and fulfillment. These goals and GDP would sometimes go hand-in-hand. But there would be times when they wouldn’t be aligned. For example, an airline removing passengers who had already boarded a plane to maximize its profitability would be good for capital but bad for people. So would a drug company charging extortionate rates for a life-saving drug. Most Americans would agree that the airline should simply accept the lost revenue and the drug company should accept a moderate profit margin. What if this idea was repeated over and over again throughout the economy?
Call it Human-centered Capitalism, or Human Capitalism for short.
Human Capitalism has a few core tenets:
- Humanity is More Important Than Money
- The Unit of an Economy is each Person, not each Dollar
- Markets Exist to Serve Our Common Goals and Values
There’s a saying in business that “what gets measured gets managed for.” We need to start measuring different things.
The concept of GDP and economic progress didn’t even exist until the Great Depression. It was invented so that the government could figure out how bad the economy was getting and how to make it better. Economist Simon Kuznets, upon introducing GDP to Congress in 1934 remarked that “Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.” It’s almost like he saw income inequality and bad jobs coming.
Our economic system must shift to focus on bettering the lot of the average person. Capitalism has to be made to serve human ends and goals, rather than have our humanity subverted to serve the Marketplace. We shape the system. We own it, not the other way around.
In addition to GDP and job statistics, the government should adopt measurements like:
- Median Income and Standard of Living
- Levels of engagement with Work and Labor Participation Rate
- Health-adjusted life expectancy
- Childhood Success Rates
- Infant mortality
- Surveys of National Well-being
- Average Physical Fitness and Mental Health
- Quality of Infrastructure
- Proportion of Elderly in Quality Care
- Human Capital Development and Access to Education
- Marriage Rates and Success
- Deaths of Despair / Despair Index / Substance Abuse
- National Optimism / Mindset of Abundance
- Community Integrity and Social Capital
- Environmental Quality
- Global Temperature Variance and Sea Levels
- Re-acclimation of Incarcerated Individuals and Rates of Criminality
- Artistic and Cultural Vibrancy
- Design and Aesthetics
- Information Integrity / Journalism
- Dynamism and Mobility
- Social and Economic Equity
- Public Safety
- Civic Engagement
- Economic Competitiveness and Growth
- Responsiveness and Evolution of Government
- Efficient Use of Resources
It would be straightforward to establish measurements for each of these and have them updated periodically, similar to what Steve Ballmer set up at USAFacts.org. Everyone could then see how we’re doing and be galvanized around improvement.
Human Capitalism will reshape the way that we measure value and progress, and help us redefine why we do what we do. It’s time to build an economy that makes people’s lives better. The market must serve us, not the other way around.