A Better Capitalism for a True Democracy
For “The People” to rule, we need better rules of social resource management.
Capitalism is often defined as “An economic system where the means of production are privately owned and operated for profit.”
With this as your definition, I can understand why many people would be opposed to “Capitalism”.
“Who are these private persons who ‘own’ the means of production?”
“What are these ‘profits’ which they are accumulating?”
Without clarity on these questions, you can end up with a system where “The People” are essentially being sold into slavery to hidden, cowardly, priviledged, overlords that rule from the shadows.
Indeed, this is exactly what many people claim. I have not yet reached that point of pessimism. I still believe public institions operate in pursuit of our shared interests, but poor design makes them less effective than they should be.
In my post on equity, I tried to describe the core principles of equity, and how these provide more insight than its usual definition. Equity is defined as “Assets minus Liabilities”, but it’s a really about a tool for people to come together, work on shared objectives, and share the rewards. To this end, equity must demonstrate two key principles: flexibility and fairness. Flexibity allows these social entities to adapt, survive, and continue their purpose, even in the face of setbacks and unforseen circumstances. This is what happens when a share price drops in value or a currency inflates. Fairness ensures that everyone succeeds or fails together, that even when there are ups and downs, we are in it together.
Before that post, I described some of these same principles in the context of fiat money, using a Pizza analogy. Equity claims grant you a slice of a pizza, but we don’t always know how big that pizza will be. We try to divide that pizza fairly, according to our accounting values, no matter how big or small it turns out.
Today I wish to highlight the key principles of effective capitalism, and explain how we need to use these principles if we want a true democracy.
For me, the goal of capitalism is “Empowering the expression of social values by promoting the common success of diverse virtual entities as independent resource managers instituted to promote these values.”
1. This isn’t just private, personal, ownership. It creates a diverse political ecosystem of independent virtual entities, who each express a particular set of social values as programs.
2. These entities don’t merely organize arbitrary choices through voting and representation, they create social processes for effective resource management: organizing access, authority, ownership, and choice, by applying effective accounting design.
3. It’s not just about production. Production is only one aspect of resource management.
4. It’s not just about profits. Profits are merely one way to express social values, and distribute resource rewards, in a political context.
In our current system, the people choose but they do not rule. What is the difference? Power. Influence. And Design.