Let’s Play Capitalism
Capitalism is a concept that is pretty much common sense to us since time immemorial. It has something to do with using money to exchange goods and services — pretty straight forward, right? Ever wonder why it’s not called Money-ism instead? Aside from the horrible sounding name, capitalism is not all about money.
Capitalism is about the exchange of capital. Money is definitely a capital. But it’s not the only one — skills, time, fame, products, effort, to name a few.
So why would you care for this definition? Well, with the exception of the 5 non-capitalist countries, Capitalism is the game you are in. Unconvinced? Let’s look at the life of a normal office worker. We’ll call him Sam.
Sam is a technical consultant in a huge multi-national conglomerate. He works 9–5 doing a bunch of internal troubleshooting and solving customer issues. He gets paid $50k/year. On his day-to-day, he trades off his capital of skills on customer solutions to gain another capital, money, at the end of the every month.
Before Sam got his job, he was studying IT in a huge university. He’s exchanging his time and effort for a set of skills (and a degree, which is a capital in itself primarily because a market accepts this certification. Other than that, it’s just a piece of paper.) And it is these set of skills that he uses to land a job — essentially, a market where he can transmute his skills into money.
Does Sam’s moves sound familiar? Right, let’s move on.
There are three rules to this game.
The first rule is to acquire capital. Like Sam, whether consciously or unconsciously, you are acquiring capital. Every book you read, every skill you learn, every person whom you talk to, you are acquiring capital. Some capital are pretty straightforward to exchange (i.e. Working at a job to gain money). Others are more difficult (i.e. gaining an audience through writing — hint hint).
That is why you have to learn the second rule: find a market in which you can exchange the capital you have already acquired. In capitalism terms, this exchange is called selling (yes, you sell even if you don’t know it). Going back to our office worker Sam. Say he wants to increase his money capital. There are three ways he can do this. One is to lower expenses (addition by subtraction). Two, increase his skills to gain more money at the same job(I know he’s still at the mercy of the company he’s in, but that’s a separate point we’ll not discuss in this article). Or three, he can find a different company to exchange his skills into. This option — finding a market where your capital is deemed more valuable — will allow him to use the same amount of skills to gain more money. This is the path of least resistance and the option most people turn to in the job market.
Putting Sam in alternate reality, if he continues to work in the same company for 24 months without getting promoted, he is getting the same amount of money capital for a growing set of skills (we hope). There is a widening discrepancy between Sam’s skills and the money he receives. This discrepancy is what leads us to the third rule.
Third rule is to exchange capital. To be winning in the game, you need to gain more capital. You can do so by continuously gaining capital on your own (turtling) or trading capital. Both has its merits but trading capital has a slight bonus. Even if you trade the same capital, for example skill to skill (in the form of teaching), you get a small +fame or +network just by doing the trade.
That said, here’s a pro tip: figure out a way to make every exchange of capital generate a net increase for your side. In Sam’s alternate reality example, his company gains more in the trade in the form of value for money. Nevertheless, Sam still increases his skills while working. But to keep on winning, he needs to find a different market (i.e. company or online) where he can exchange his wider set of skills to gain more capital.
Let’s look at another scenario. Sam, like any of us, gets tired after work and decides to kick back his feet and watch TV. While on a personal level this feels rewarding for Sam, he exchanges a capital he has worked for, time and money, to something that cannot be converted back to capital. Leisure (and convenience by extension) is a boon for this game. In the perspective of the game, the only time Sam should have sold his capital for leisure is when he has capital that has no available market to exchange to. Otherwise, it is lost capital.This means that not all capital are made equal.
Below are the capital resources available to Sam and each player of the game, arranged by weight:
Time > Trust > Power - Fame - Money - Skill - Product - Effort > Leisure
Time is the most valuable capital because you can use it to buy everything else in the set, but nothing in it can buy time.
So is true with trust. Though, you can buy trust, not by another capital, but by a combination of other capital resources. For example, fame-skill-product as with Apple, or power-fame-money-skill-everything else as with Oprah.
The other available capitals (i.e. power or fame) can buy each and every other on the same level plus leisure. You can use money to buy skills, or products to buy fame, you just have to find the right market.
Last in the sequence is leisure. It can buy nothing on the set, but everything on the set can buy it.
The great kicker is, at the start of the game, every player is given the most valuable resource: time.
Okay, so now you know the rules of the game and what chips to play, but how can you and Sam win?
How to Win
The answer is: you can’t. Gaining more capital puts you in a winning position. But Capitalism is not a win/loss game like chess. It’s a high-score game like flappy bird. It’s an infinite game. The goal is to just keep playing and beat that high score.
The game you are playing, whether you like it or not, is capitalism. The rules are simple: acquire capital, find a market for it, then exchange it. Keep playing and the game rewards you with more of the game. Stop playing and… well, you can’t.
This article was inspired by a book called So Good They Can’t Ignore You by Cal Newport and a talk about the infinite game of business by Simon Sinek. Take a look at them if you’d like to know more. Also leave a clap if you enjoy this post!