9.11. What Capitalism Can and Can’t Do

For all its virtues, there are many things capitalism can’t do—or won’t do, unless it’s forced to do it.

Let’s talk about capitalism.

Capitalism’s innovation, flexibility, and adaptation can’t be beat.

Capitalism forces people to work hard, by tying their livelihood to their ability to work.

And it’s pretty clear that the worldwide adoption of capitalism, overall, has increased the standard of living of billions of people.

But capitalism isn’t magic.

Business interests sometimes try to make you think it is—that if we just leave it alone, “the market” will magically take care of everything itself.

But that’s simply not the case.

The truth is: there are many problems with free market capitalism.

It creates enormous inequalities, as the haves use their advantages to gain even more money, while the have-nots struggle just to survive.

It creates an incentive to focus on short-term profits, rather than long-term benefits to society.

It creates an incentive to pay people as little as possible for their work, and trick consumers into handing over as much money as possible.

It creates an incentive to lie, cheat, or withhold important information, as long as you can get away with it.

It fails to punish businesses that create negative byproducts, like pollution.

It overvalues the work of some—like CEOs and professional athletes—and undervalues the work of others, especially work that’s hard to quantify and put a price on, like education, child care, and art.

It creates an enormous amount of anxiety, illness, and misery, as even good workers are stressed to their breaking point, and others have to worry affording basic necessities.

And it tears at the fabric of society, as we learn from an early age that we’re all competing with each other, and that their loss is often our gain.

None of this means that we should totally do away with capitalism.

Winston Churchill famously quipped that democracy is the worst form of government, except all the others that have been tried. And you could say the same of capitalism as an economic system.

It’s better than anything else that’s been tried. But it’s ridiculous to put it up on a pedestal.

There are plenty of interventions necessary to keep it from causing damage to our society.

And yes, some of these interventions can be superfluous or inefficient—and we don’t want that to happen either.

But if an intervention isn’t doing its job, we should try something else—not conclude that everything will magically work itself out, if we leave capitalism to its own devices.

Because for all its virtues, there are many things capitalism can’t do—or won’t do, unless it’s forced to do it.

 

This is the 151st in a series of over 150 videos about how to create real, lasting social change. Click here for a list of all titles, videos, and transcripts.

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