The Axiom Of Realistic Expectations
Individuals Demonstrate Valid Behavior
By Having Realistic Expectations
For Themselves, Their Lives, And Others

I was talking to a friend about capitalism the other day, and her opinion is one that more and more Americans share: The only thing capitalism does well is produce greed, selfishness, materialism, and ultimately violence. It puts the good of one over the good of many, destroys cultures and the environment, and is incarnated by the likes of Bernie Madoff and Kenneth Lay.

I wrung my hands under the table as I tried to keep my head from exploding.

I wanted to remind her of all of the violence inflicted by communism: the estimated 73 million (and counting) killed in the People's Republic of China, the 59 million taken by the Soviet Union ("Communist Body Count"). I wanted to tell her that resources (water, food, land, gas, health care) are limited, and if you divide them by "need," someone (i.e. a government official or committee) who doesn't know you or your situation will be in charge of determining what you "need." I wanted to impress upon her the value of incentive. I wanted to make her understand that free markets are essential to producing free people.

However, I also wanted her to enjoy her evening, so I kept my mouth shut. But for those of you out there who are interested in debating this topic, here are some of my thoughts on capitalism:

First off, it is incorrect to hold up criminals, such as Bernie Madoff and Kenneth Lay, as examples of capitalism gone awry. Greed is a part of human nature, and thus there will always be a few bad apples who manipulate others (or the system) in order to take what does not belong to them. In America, we have laws prohibiting and punishing this type of behavior because it is not in keeping with our values or our underlying economic system. These criminals are not capitalists, and severely regulating or completely abolishing the private sector will not stop them because bad people always find a means to their ends and whether you live in a capitalist, socialist, or communist society, there have been/are/will be corrupt government officials. The trick is never to give governing bodies too much power so that when corruption occurs, the majority of power still remains in the hands of the people.

Capitalism is not about stealing, swindling, or screwing the little guy. On the contrary, capitalism is about the creation and exchange of value: It is about the individual improving his or her own situation by producing something of worth that improves the lives of others. True capitalism increases the good of the whole by creating incentive for the individual to increase his or her own good. Notice the keyword "incentive." Without incentive, specifically the incentive of physical and intellectual property rights, people are less willing to work. Capitalism is not about selfishness; it is about inspiring creativity, production, and innovation.

Unfortunately, when capitalist countries such as ours become extremely wealthy, there is the tendency to forget about creating value and focus only on consumption. Consumerism leads to materialism, fiscal irresponsibility, and in my opinion, a sense of entitlement. If we do not refocus ourselves, take responsibility for our financial well-being, and instill a work ethic in our children, our economy and our country will not be as strong as it could be.

Another problem that can occur in capitalist systems is businesses valuing short-term gains (this quarter's profits) over long-term benefits (employee retention, sustainability). This makes absolutely no sense because if you mistreat your employees or completely destroy your surrounding environment, you decrease the likelihood of your business's long-term success. The founders of FLOW, John Mackey, CEO of Whole Foods Market, and Michael Strong, perfectly capture these ideas in their "multiple stakeholder relationship (MSR) business model," the "organizational foundation" of the economic ideal they call "Conscious Capitalism." ("C3: Catalyzing Conscious Capitalism")

Sir Winston Churchill claimed, "It has been said that democracy is the worst form of government except all the others that have been tried." (Another of my Churchill favorites: "The best argument against democracy is a five minute conversation with the average voter.") Personally, I believe that capitalism is the worst form of economic system except all the others that have been tried. Yes, it has its flaws (it involves people), but it produces more good and freedom than anything else, both past and present.

Ellie Sherise
Co-Creator of Magna Sententia
Co-Author of Magna Sententia: The Logical Cure for Our Society