Fixing Capitalism will not fix America

24 June 2022

Rebalancing society and the globe

Methinks that capitalism doth propose too much: Progressive Capitalism, Breakthrough Capitalism, Caring Capitalism, Conscious Capitalism, Creative Capitalism, Customer Capitalism, Stakeholder Capitalism, Pluralistic Capitalism, Inclusive Capitalism, Regenerative Capitalism, Sustainable Capitalism, Humanistic Capitalism, and the most telling of all, Democratic Capitalism (capitalism being the noun, democracy the adjective). Why not just call the whole bunch of them adjectival capitalism and be done with it?

How did a word about the funding of private enterprises become the be all and end all of human existence? (Ask an economist.) Capitalism certainly needs fixing, not least in the short-term dysfunctions of its stock markets—day trading, quarterly reporting, executive bonuses that favor quick wins. But fixing capitalism will no more fix America than would fixing communism have fixed the broken regimes of Eastern Europe. It is society that needs fixing, by rooting capitalism in its place, namely the marketplace, and out of the public place.

The fall of the Berlin Wall in 1989 did not signal the triumph of capitalism over communism. It signaled the triumph of balance over imbalance. The communist regimes of Eastern Europe were severely out of balance on the side of their public sector governments, and so collapsed under its own dead weight. In contrast, at that time, the successful democracies of the West maintained a relative balance across their three sectors—public, private, and plural. In recent years, however, the United States, with many other countries following suit, has been racing out of balance on the side of private sector interests, thanks to this misunderstanding about the fall of the Berlin Wall. Capitalism has been triumphing since 1989, and the world is  now in deep trouble. How ironic that the very force that brought down communism in Eastern Europe—imbalance—is now dismantling democracy in America.

A healthy society balances the collective power of governments in the public sector with the commercial interests of businesses in the private sector and the communal concerns of associations in the plural sector—so labelled (instead of “civil society”) to take its place alongside the sectors called public and private. A society, like a stool, cannot be balanced on one leg, whether public communism, private capitalism, or plural populism. And trying to do so on two legs encourages the pendulum politics we see in the swings between left and right, government controls and market forces. Three sectors can hold each other in check while cooperating for balanced development. Especially important in this regard, as Alexis de Tocqueville implied two centuries ago in Democracy in America, is the plural sector: “democratically constituted” countries need “associations… to prevent the despotism of ...arbitrary power…” Plural sector associations open the pathways that allow public and private organizations to take our societies forward.

There is a rising tide all right, as economists have claimed for some time, but not as they believe. Rather than raising all boats, it raises the free-floating yachts while swamping the anchored dinghies. Private forces, global and local, have been coopting the power of many governments while squeezing so many workers. As a consequence, income disparities have been increasing while social mobility has been decreasing. Should it come as a surprise, therefore, that so many marginalized people, confused about where to turn, have been electing demagogues, or voting for the likes of Brexit?

How to exit this mess? As noted, we need to rebalance our societies, not just fix capitalism. Many people normally look to government, the ultimate authority in democratic society, to do such fixing. But these are not normal times: too many governments have been coopted by the very forces that they need to confront.

We are all in it together

This leaves but one sector to begin redressing the balance, the plural. But what, exactly, is this? In two words, large, and obscure, in two more words, you, and I. The plural sector comprises all kinds of associations, many of them community-based, that are owned neither by private investors nor by public governments. Those called cooperatives are owned by their members (the United States has more cooperative memberships than people), while a great many others are owned by no-one, including NGOs, foundations, religious orders, clubs, and “private” universities, as well as organizations in the social economy. Yet as a sector, the plural one is obscure, lost in the pendulum politics of left versus right, public versus private, communism versus capitalism.

This will have to change if we are to secure the future of our planet and our progeny. We will make no headway on climate change, or income disparities, or the demise of democracy, until we rebalance our societies and the globe. Private forces that benefit from this are simply too powerful. The good news is that perhaps never before have so many people, especially young people, been prepared to vote with their feet—and that means acting beyond marching. With an understanding of what has been going on, the problem of imbalance can be addressed directly. Concerted, constructive, consolidated action has to be brought to bear on the imbalance, by community forces that push governments and businesses to act.

And this comes down to us: we are the plural sector, you and I. Many of us work in the private sector and most of us vote in the public sector but all of us live in the plural sector, whether volunteering with a charity, shopping in a co-op, convalescing in a not-for-profit hospital, or protesting the legal corruption of a cherished institution.

With the threats of warming, weapons, and the lopsided distribution of wealth, we require reformation, from the ground up. In his pamphlet Common Sense, Thomas Paine wrote to his American compatriots that “We have it in our power to begin the world over again.” Paine was right in 1776. Can we be right again now? Can we afford not to be?

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© Henry Mintzberg 2022. No rights reserved: This has a Creative Commons Attribution-NonCommercial 4.0 International License.