Rand, 1967’s as quoted in Locke p.19 defines capitalism as” a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” This definition was written in 1967 though not at the start of Capitalism. Is it not interesting that capitalism may have been so named by people looking at western economics from Eastern Europe? They wrote everything that they disliked about the West and its economic form while campaigning for socialist and communist market based economies. Could it be that these critics helped shape what capitalism is today? .
Do we really have to turn our backs to the future and try to correct the wrongs of the past? Are China and Russia justified for dealing with rogue governments while adopting a policy of non interference in internal matters of other countries or are our criticisms of them necessary to shape them towards capitalist nations that we are today? Why then are there more billionaires in Russia and China than there are in the rest of Europe combined? Are we at risk of turning back to the past because as it seems these two nations seem to be going up whilst the western world with the exception of Germany seem to be going the other way. Should we therefore adopt a back to front (Raggy Dolls) approach, in trying to shape the future of long term capitalism while keeping a chameleon eye on its past. Maybe simply we just have to learn from these two countries Russia and China and move with the times
The solution lies in regulation or laws and their respect, because they keep us from getting at each other’s throats. There is a saying in Africa that goes’ Bad people do bad things by taking advantage of the good people’s respect of the law.’ The earth should endeavor to have one set of laws for everyone in every country. Globalization should aim at removing borders that evil man take advantage of. Human kind has come such a long way from the tower of Babel and such a long time from the formation of the United Nations that by now we should have had some kind of unified law, at least in business. We should all be speaking with or in one language of business. Failure to adopt to such a unitary law will mean that even the gains made by these two countries China and Russia and possibly other BRIC nations will be shot lived. They soon will be wallowing in poverty and dire straits like in the hovels of Timbuktu. Failure to adopt a unified code means at any one time some countries will be very wealthy and the others very poor, unfortunately because of scarcity of resources there is always this trade off. True globalization and cultural unification can only be a pantomime. The West may have to discard all the gains made which have made this world a safer place to live in as each and every man fights for himself and may God help mankind. The world would kiss goodbye the times of peace and love, as it descends into anarchy and chaos. It would see decay in morality and ethics of unprecedented proportions, as it descends into the dark ages, darker than the so called Dark Africa. To coin one politician (Evil man have a field day because good man do nothing) Business as we know it today should not be allowed to decay into opportunistic debauchery. We should therefore be able to trust our friends in that we are pursuing the same goal and engender for the same outcomes.
Capitalism has made tremendous strides towards good practices in business and safe environments for businesses. Since the early days where business was an opportunity of any kind even when it may have been for the good of the few at the expense of many, to the tremendous strides that have been made to try and rectify this situation. Today one of the countries considered as the bastion of capitalism is one of the most heavily regulated in terms of business practices.
One of the main benefits that this regulation has brought about is corporate social responsibility which means a company or organization should be doing good in the community that it does business. Companies have been made to pursue the triple bottom line.
Some of the benefits have been derived in the form of regulations towards fair practices in business or the so called Fair Trading Acts which ensure good business practices between B2B’s and B2C’s. We can also include the benefits brought about by fair competition regulations such as preventions of monopolies and Consumer Guarantees Acts, The Copyright Act, The Commerce Commission as an organization and many other regulatory bodies.
In line with financial accounting and disclosures, there are regulations like Sarbanes Oxley, The financial Reporting Acts, The Financial Reporting Framework and IFRS.
In a nutshell all these regulations help shape what Capitalism is today. Without these laws that govern the conduct of business in most countries on this earth there would have been chaos. We should therefore acknowledge the strides made this far by capitalism and hope that we can only go further rather than backwards. What we have gained in business thus far is a semblance of order brought about by regulation or law.
There is no purpose of reinventing the wheel, but we can only investigate the mistakes that we may have made along the way. That is when we go to basics and try to redefine capitalism and what it is. Use of such definitions as given by Rand in 1967, can help us start the investigation by looking at the meaning of social system, recognition of individual rights, property rights and the goodness of private ownership. We therefore need to learn from the past by keeping an eye on it all the way to the Promised Land. Should our friends falter China and Russia for example, then we need to remind them of our own sins.
Is capitalism for the past still the capitalism of the future or where the old capitalists missing something in their conduct of business? This brings me to the point of opportunism where there is need for the change of attitude in business dealings. To me opportunism means taking advantage of every opportunity that came your way at whatever cost. Williamson, E.O. (2006), said “Opportunism is the frailty of motive, in every contract there requires a degree of circumspection and distrust.” Capitalism should be geared for the disclosure of almost all information in every contract. Outdating such rules as ‘let the buyer beware’ and encouraging disclosure of all vital information in contracts should be pursued.
The future of capitalism should also be based on trust. Giambetta (1988), cited in Williamson 2006, p.217 says that “trust is the belief of probability that someone we trust will perform an action that is beneficial or at least not detrimental to us when we engage in some form of co-operation with them.” To prevent the rich and mighty from taking advantage of the weak and poor there should be some adherence to common rules just because it is not easy to trust each other.
1. There will be better co-operation as a result of having the same regulations for business
2. It will be easier to keep track of unethical practices
3. It will uplift the well being of marginalised communities
4. It would be a step in the right direction for transparency and responsibility or sustainibility reporting.
5. It would also be a step in eliminating unfair competition
In conclusion I believe the answer is political and regulatory. It also lies in morality and trust. We may look in all other places but until we change the human being to being good as a human being then we may as well be wasting time like, setting a mouse trap to catch an elephant. I guess the answer lies in ourselves then but we just happen to be looking elsewhere. If we cannot be born good, let therefore regulation make us good.