Socialism has been all the rage these days. I scrupulously avoid political conversation on CEO Exclusive, for obvious reasons. But, I think it’s helpful for business leaders to examine capitalism versus socialism and why socialism is coming back into the public discourse in such a prominent way over the past few months.
According to Wikipedia, “socialism is a range of economic and social systems, characterized by social ownership, of the means of production, and workers’ self-management. As well as the political theories and movements associated with them. Social ownership can be public, or collective, or ownership, or citizens’ ownership of equity.” And there are many varieties of socialism, and there’s no single definition encapsulating all of them. Fundamentally, socialism is about workers’ rights and does involve redistribution of resources.
Taking from the rich and giving to the less rich. Robin Hood. Why is this coming up now? What problem is socialism trying to fix? Keep reading this week’s CEO Exclusive article to find out.
Need for Fairness is Innate
Human beings have an innate need for fairness. There’s this sense of something being deeply wrong with the fact that if one person is born in one zip code, versus another person being born in another zip code, this completely changes the trajectory of their life. Somewhere deep inside of us, human beings feel like this is just fundamentally wrong.
In a new book called Mama’s Last Hug: Animal Emotions and What They Tell Us about Ourselves, Professor Frans de Waal from Emory, describes how monkeys behave when they receive unequal treatment when given the same task. The monkey that feels shortchanged goes through all manners of temper tantrums–rattles its cage, throws back the food the reward, makes a lot of noise. What Professor de Waal has inferred from this experiment is that primates recognize when one individual is being treated different from another, arbitrarily. And, they don’t like it. As I observed in last week’s article, human beings are primates.
The perception of unfairness evokes a deep-seated frustration In the context of human affairs and the U.S. economy, wealth inequality in the U.S. is at levels not seen since the Great Depression. .1% of the U.S. population (not 1%, this is .1%) controls 25% of the wealth; it’s very disproportionate. With people’s innate need for fairness, you can see why that would kind of raise some issues. People are rattling their cages, and stomping their feet, and doing things just like the monkeys in Dr. De Waal’s experiment. They’re looking over at other people and saying to themselves, “I’m working hard; I’m working 40 hours a week; I have a job, and I’m going to work every day. Why, just because I was born into a different set of life circumstances, is my life so different than the .1%?”
Taking From the Rich and Giving to the Poor
I believe the reason that socialism is coming into prominence is because some people see it as a correction, to level the playing field. Socialism is a reaction to the perception that the cards are being stacked in some primate’s favor, and against other primates, and that’s unfair.
The notion of providing a basic economic standard for everyone who works an honest 40 hours is seen as one key idea. The notion that every worker has rights to the economic surplus generated by the businesses which work—because that surplus comes directly from their labor—is another key concept. In the end, enacting policies to achieve these results will involve taking money from business owners and giving to workers. Redistribution. Robin Hood.
While many people love the Robin Hood story and see tremendous justification for his actions, Robin Hood is a legend and a fictionalized character. Forced redistribution of wealth is problematic, to say the least. Fundamentally, our economy, for better or for worse, is built on the notion that people have rights to assets, and they have rights to ownership. Americans like their money and their stuff. Policies that start to take from the rich and give to the poor may undermine the fundamental system on which our entire economy is built.
Capitalism can be Corrected
Can capitalism be fixed? It has to be. Wealth inequality at its current levels in the US is unsustainable. But, forcing people to give up their profits is not going to work either. Just like people need fairness, they also need the exercise of free will. Americans just don’t like having outside entities impose their will on individuals. Land of the free, home of the brave.
Enter conscious capitalism, which is beginning to address the same issues as socialism, without force, duress, shame, or obligation. The tenets of conscious capitalism, if faithfully applied, will lead to the redistribution of resources. Once leaders get past the “warm and fuzzy” and actually commit to conscious capitalism, they’re going to start spending time, resources, and money on improving the lives of their employees–voluntarily. They’ll do it in ways that are organic, create connection, and are much more natural for their businesses
“Give me a break. No one is going to do this willingly, Soyini.” I have spoken with people with doubts around whether or not anyone will voluntarily give up wealth. Two very important ideas are the response.
• Companies that espouse these principles perform better financially. More money for everyone.
• Just like people have an innate need for fairness and freedom: people also have an innate need for contribution, connection, and harmony—even business leaders.
We all want to be in systems, organizations and environments, where there is a cohesion, and, for lack of a better word, love. We talked about love and humanity in business in February. People want to be in caring, supportive environments. There’s hope. One can appeal to those other needs to drive this voluntary redistribution of wealth.
We don’t have to employ the Robin Hood approach to fix the inequality issue. The U.S. culture and economy has transformed capitalism many, many times over the past 300 years, and I have a lot of faith that this time will be no different.