Few sins throughout history have made men smaller than greed. Ridiculed and demonized, the need to consume without satisfaction has been used to great effect to paint characters through history as comical, criminal or cruel. From Molière’s misers to Dickensian portraits of factory bosses, greed’s association with malice and ignorance have painted it amongst the most capital of sins throughout the centuries. So, naturally, a system relying upon this same form of consumption and encouraging this vice in order to fuel growth must be similarly viewed and actively avoided by most, correct?
Here stands the hypocrisy of modern capitalism, accompanied by the seemingly unbeatable counter-argument: What alternative actually works better? Capitalism, for it’s failings, has raised living standards across the globe, furthered life expectancy and been the fundamental anchor in designing a global system that has prevented outright global warfare since the mid-1940’s. But applying that inter-connectedness on a micro-scale has been shown to be problematic, as seen when dealing with interwoven banks as opposed to interconnected economies. Capitalism is now associated directly with globalization and banking, two systems growing less popular by the day in the western world.
Given that capitalism has lost it’s sheen of entrepreneurialism and innovation in recent years, notable since the 2008 Financial Crisis, what is to be done? Churchill’s views on democracy likely extended into the capitalist economy as well; that it was by far the worst system, save for all the others. But it’s flaws have become indefensible. So how might they be fixed?
A new solution would need to be two things: decentralized and equitable. Any economic system is required to be capable of both producing and distributing the goods and services desired by consumers. Capitalist economies currently accomplishe this task using markets, allowing individual firms to take charge in order to best price a good or service provided. However, the system bottlenecks when examining the financial and banking component, a vulnerability that has repeatedly lead to collapse. A centralized system also increases vulnerability to cyber terrorism – a growing worry in the financial world. A revised system must remove that vulnerability. Economic democracy, an anarchic notion built upon the idea of worker’s cooperatives, publicly-owned banks and participatory budgeting, show promise but fails to address the inherent bureaucracy needed to maintain such a system, or the speed with which such decisions would be made; both would have an enormous drain of financial and human capital.
An equitable system would need to circumvent issues of exploitation and greed that allow for the isolationist accumulation of wealth. A potential model to follow might be that of Islamic financial systems: The Quran strictly prevents the accumulation of interest, altering the structure and role of the banking system in the Arab world. Many incorporate Musharaka, a profit and loss system where the borrower and lender form a joint partnership in a venture. By formalizing a partnership and tying the two parties closer together, it furthers the relationships and lessens the likelihood of abuse from lenders.
An equitable system might also formally divide markets for necessities and remaining goods. This division would remove vulnerabilities from the system and ensure the inelasticity of food and housing did not price necessities out of vulnerable population’s consumption patterns in times of scarcity.
More radical views might ask if the value of a global system outweighs the risks associated. Others may ask if a truly decentralized economy might abandon the notion of currency all together. Both notions are unrealistic – currency serves as the base for common valuation, a necessity when trading beyond borders. And local providers can simply not deliver the same goods, services or distribution capacity offered in a global system. An alternative to capitalism should continue to offer it’s notable benefits (growth, efficiency and economic freedom) while patching the evident holes in the system. To answer Churchill, the failing of other systems does not reduce the likelihood that an improved solution would succeed. At that notion, the Prime Minister would have been pleased.