Is anger at capitalism about the capital or the ‘ism’?
There is a difference between capital and money, and defining our terms may help us achieve a more human-centered approach to economic activity
Given how enmeshed politics have become with our economic and cultural life, I probably ought not to be surprised that capitalism, or what it has come to represent, is frequently disparaged as the bearer of illness in the body social. I have found myself reminding others when such negativity has been spoken, that we will likely always have some sort of capital regardless of the choice of economic system and how it is governed. And, further, that the issue is perhaps with the “ism” and not the capital. That is to say: the practice now dubbed capitalism represents a manifestation of attitudes toward capital that includes extreme self-interest and rampant materialism. These two factors alone cast a shadow on wealth overaccumulation, and its darker partner, greed. Wealth expressed and practiced as power is a pollutant in the polity.
Accounting for capitalism and its effects on the world is a little like a financial balance sheet that must show that assets and liabilities are equal. This is a requisite equivalency scenario: if one part of the system being accounted for has significant assets, some other part of the system must show equivalent liabilities as balance. Such an accounting shows in numbers what people experience as deep inequity — inequities of wealth and disparities in income. Asset holding is made possible by those who bear the liabilities.
This polarity between the haves and have-nots is more deeply affirmed in our perception the more it is characterized in this way, even as the reality continues to deepen the existing social divide. These conditions are sometimes framed cruelly in economic terms as winners and losers, a competitive framework that belies the economic reality of interdependence and the commonwealth of nature. A foundational counter-imagining of this narrative of polarities would be: sufficiency and circulation are indicators of health, while accumulation and containment are indicators of illness. We would need a new accounting that would offset balance with flow. This imagining actually reflects how the human organism works.
Defining the difference between capital and money
Of course, a wide range of feelings is evoked in considering capital and its uses. What I hear in the criticism of capitalism is that all those feelings are attached to capital itself. But this is also an avoidance of self-reflection and a recognition of deeply ensconced assumptions, policies, and practices about class, race, and gender that inhabit our economic life. The problem is conditioned behavior, not the capital itself. Capitalism in which some feel entitled to generate and use capital in a way that disregards the moral questions — toward what end and at what cost or consequence to others? — is illness producing. And further, one measure of that capital — namely money — is generally thrown in the mix without understanding the distinction between the two and the interconnected functions capital and money play in the economy.
In common parlance, the terms capital and money are often used interchangeably. On one hand, such a confusion is understandable given that current culture has pretty much monetized all economic activity. On the other hand, reestablishing a clear distinction between them and further understanding their particular inherent qualities may support a more human-centered approach to economic activity. The distinction will also support reimagining the economy so that it can divest itself of bad actor capitalism, and instead operate in a way that hews to positive human and organic processes. In short, the genie of money needs to be returned to the bottle marked “efficient accounting system.” Money’s core purpose is to serve as an efficient, portable, and exchangeable measure of value. The genie of capital needs to be returned to its proper domain of connecting spirit and matter, idea and reality.
The flow between capital and money is a bit of an economic mystery, in the deepest sense of that word. The presence and play of spirit, in the forms of ideas, idealism, insight, and intuitions, is an essential and often forgotten aspect of the sublime relationship between the two. Capital arises in the economy when intelligence (spirit) is applied to organizing work or labor in the process of creating value.* For example, one place where capital frequently shows up is around innovation and invention; they both need and draw capital. Invention means in its Latin origin “coming in.” But I do not remember any conversation that addressed the question “coming in from where?” Capital is an emergent phenomenon rather than a thing; it holds within it a kind of reciprocal breathing between the invisible and visible. This is a rather radical way of looking at capital, but it is important to grasp because such a notion helps us to rediscover both a truer version of the role capital plays in economic life and how we can consider our relationship to it. And then, there is the question of money.
One might say that capital is where spirit manifests in the economy. It then continues to produce value in the economy as measured by money. Labor applied to natural resources also creates a value stream that manifests in the production of a commodity, such as the farmer who grows food to take to the market. Money is then a measure of the exchange value of that commodity, but not the measure of the value of the farmer.
Industry and manufacture present a more complicated and nuanced picture. The worker on an assembly line is part of an operational design for labor that seeks efficiency of production (the division of labor). The tradeoff for that profitable efficiency is a dehumanizing effect that ultimately reduces the labor to a commodity, in that each divided function is easily replaced and priced according to the time spent. Efficiency produces capital, but the money attaches to the commodities, in this case including the labor. For example, a company may own a physical manufacturing plant, the means of production. The plant is considered a form of capital because of what it makes possible around production. The capital looks like money in the cost of production including the “cost” of buying the labor and materials.
Herein lies one of the natural flaws of capitalism — the notion of compensation or pay. In this production mindset, labor itself is currently treated and paid for as a commodity. However, the “cost of labor” would look very different if the manufacturer were purchasing the product of the labor from each employee and, through shared governance, distributing more equitably the co-created value in the form of capital. Organizing labor is not the equivalent of commoditizing it.
Bringing intention to the table
In the nonprofit charitable world, the distinction between capital and money is even more evident. When an organization such as a school needs a new building, it often launches a capital campaign. One could look at it in a materialistic way by saying money is gathered in order to build. It might look that way to the school — but at its peril, even though the accounting looks like money in and money out. But we see it is not so simple as that if we take the time to slow down the whole sequence of transactions.
What drives a capital campaign is a community-wide shared vision that is then brought into physical reality through a social process of gifting. Intention matters immeasurably. The conversion of gift capital and its potential into money happens when the organization begins to spend money on building. Even though the money will be expended at completion of the project, the physical result is returned to the realm of capital as an asset that continues to support the originating vision into the future. There is a beautiful reciprocity between the capital and the money as well as an awareness of both the spiritual and material needs to remain co-present in the social sphere.
The same principle applies when one takes the initiative to invest, though the ends of the investment process return the money and increase to the ownership of the investor. An investor provides capital to the entrepreneur. This capital represents a degree of confidence or faith in the entrepreneur and the enterprise. The investment usually has a monetary value, and that monetary value becomes realized when the enterprise makes a capital call in order to put cash into the business operations. The relationship between the investor and entrepreneur carries in it the same parallel dimensions between spirit and matter as in the charitable sector, even though the intentions and expectations are more financially self-interested in the former than would be the case in the latter.
Leading with the heart
In Western culture, capital has a long association with hierarchical forms. Capitals have always been at the top of columns and centers of political power. The root word capitalis means “of the head.” So, it is no surprise that economic capital has a long connection to wealth and the power of the state. This has become conditioned and received wisdom, such as it is. It is an unfortunate association because it has also been assumed that the head is the leader, organizationally and within the individual. Fortunately, in recent years, we have gained extraordinary, even revolutionary, insights into human physiology that upend assumptions about how we discern experience, know for ourselves, even lead ourselves. We certainly still need to keep level heads, but the notion that we sense and know something first through our hearts, which is then conveyed to the brain for processing by the vagus nerve, is a clue about how to reframe how we think about capital.
What if we understood capital as a heart function, as a mediator and manager of what comes to us from the world and what we are able to absorb and reflect back to the world in economic terms? Capital could then be considered in the framework of a reciprocal process of breathing between the world of spirit, intelligence, intention and the world of matter, which is the realm of economics. Operating in a kind of vertical axis, this capital function is complemented by the more horizontally oriented and circulatory carrier of value — namely money. They need each other; one makes the other visible, and together they make visible the human spirit in service to meeting material needs.
Capitalism in its current form seems disconnected from the heart and how it serves. What is needed instead is a rediscovered system that can support continual renewal while cultivating a moral perspective that can actually transform our inner relationship to economic life and make real again the already existing but overshadowed reality of our interdependence through compassion. Stepping toward an economy in which individual economic initiative is recognized and honored, and in which production, distribution, and consumption are actually held as a responsibility of the commonwealth for the commonwealth, would begin to awaken the vertical and horizontal impulses — the flow of capital and money.
To start, maybe we can live by the medical profession’s ancient Hippocratic oath: “I will use treatment to help the sick according to my ability and judgment, but never with a view to injury and wrong-doing” — to people or the earth. The heart has tremendous healing and regenerative capacities for the whole of the system if it were but freed to do so. Imagine what capital liberated in this way could do. And I would place money on it.
* In his 1922 lectures on economics, published as Rethinking Economics, Rudolf Steiner gives a carefully constructed argument for this view of value development based upon careful observation of economic processes. See particularly Lecture 4, “Labor and Value.”