However, we do need to be thinking about alternative systems. Capitalism is working too well for a very few at the top, not so well for the rest of the world, and increasingly threatening our planet and future.
Taking a closer look at a hybrid of capitalism and socialism as an example, at the time of this writing, this form of government appears to be working well in countries like Germany and the Scandinavian subregion of Northern Europe that includes Denmark, Sweden, and Norway. In addition to being economically strong and stable, these countries rank very high on the World Happiness Index, an annual publication of the United Nations Sustainable Development Solutions Network. The index is a ranking of national happiness based on the respondents' ratings of their own lives, which correlates with various other life factors, many not related to consumption, such as having someone to count on, having a sense of freedom to make key life decisions, generosity, trust, and purpose (World Happiness Report, March 2020).
However, in the United States, when politicians like Vermont Senator Bernie Sanders propose the distribution of wealth equally among the people, free provision of government social services like schools, healthcare to its citizens, and public ownership of most land, they are quickly demonized as socialists by a subset of the country's population. This subset has been taught that the capitalist ethos of competition and acquisitiveness is simply “human nature,” and is the best and only way to govern. They do not seem to realize that capitalism is a socially constructed way of life that has been deliberately and systematically fostered by centuries of the market economy.
ADVANTAGES OF CAPITALISM
Capitalism has some merits, which is why it has survived and thrived in the majority of the world economies. The following sections touch on a few advantages of this economic system.
Economic Freedom Helps Political Freedom
When governments own the means of production and set prices, this invariably leads to a powerful state and creates a large bureaucracy, which may extend into other areas of life.
Efficiency
Firms in a capitalist-based society face incentives to be efficient and produce goods that are in demand. These incentives create pressures to cut costs and avoid waste.
Innovation
Capitalism has a dynamic where entrepreneurs and firms are seeking to create and develop profitable new products that may be popular with consumers. This can lead to product development and more choice of goods.
Economic Growth
With firms and individuals facing incentives to be innovative and work hard, this creates a climate of innovation and economic expansion. The dynamic helps to increase real GDP and can lead to improved living standards. This increased wealth enables a higher standard of living; in theory, everyone can benefit from this increased wealth, and there is a “trickle-down effect” from rich to poor.
THE UNINTENDED OR WILLFULLY IGNORED NEGATIVE CONSEQUENCES OF CAPITALISM IN THE TECHNOLOGY SECTOR
“Capitalism is the astounding belief that the wickedest of men will do the most wickedest of things for the greatest good of everyone.”
—John Maynard Keynes
There are many UCOTs related to capitalism. This section focuses on the ones with the biggest influence.
Monopoly Power
Private ownership of capital has enabled large technology firms to gain monopoly power in product and labor markets. Companies with monopoly powers—like Amazon, Apple, Google, and Facebook—have exploited their position to charge higher prices, pay lower wages to workers, avoid paying their fair share in taxes, and gain unilateral control of who they do or do not want on their platforms.
One of most recent examples is Amazon, one of the most valuable companies in the world, fighting tooth and nail to prevent its workers from forming a union. It's a battle for higher wages and improved working conditions. The company has steadfastly said its “workers don't need any union” (Greene, 2021).
In a capitalist society like the United States, there is great inequality between the owners of capital and those who work for their firms. In the current pandemic of COVID-19, for example, folks who are doing all the heavy lifting (the essential workers) under the harshest conditions are often getting paid minimum wage. Research at the Brookings Institution, a nonprofit public policy organization based in Washington, DC, titled a report “The COVID-19 Hazard Continues, But the Hazard Pay Does Not: Why America's Essential Workers Need a Raise” (Brookings Institution, 2021). As Robert Reich, a UC Berkeley professor and former Secretary of Labor pointed out, “Jeff Bezos' [the founder of Amazon] net worth in 2009 was $6,800,000,000 and $200,000,000,000 in 2020; meanwhile the Federal minimum wage in 2009 was $7.25 and is still $7.25” (Reich, 2020).
The following quote appeared in an NPR article, “There Is Rich and Then There Is Bezos Rich” (Zarroli, 2020):
“You probably think 2020 has turned out to be a pretty lousy year, what with the coronavirus pandemic, a global recession and unceasing partisan warfare in Washington.
Then again, you're not Jeff Bezos or Elon Musk.
Thanks to soaring stock prices at Tesla, the company Musk founded, the quirky South African-born entrepreneur has seen his personal wealth soar to unimaginable heights of $147 billion [less than a month later this number was $188 billion making him the richest person in the world].
In fact, Musk is one of only five centibillionaires in the world, or someone with a personal fortune exceeding $100 billion, according to the Bloomberg Billionaires Index.”
This is not sustainable. If we have learned anything from nature and the laws of physics, nothing grows forever. Whatever goes up will peak, and then it has to come down! The bottom line is that there are a limited number of resources on this planet. How we share and distribute these resources to all living things is a matter of importance that affects our future, and should affect our conscience. Unbridled capitalism is not sustainable, nor is it humane.
Negative Externalities
Technology companies that greatly benefit from the free market have ignored the negative effects of their creations. They mostly care about maximizing profit for their shareholders and choose to ignore negative externalities, such as the horrifying inequalities and pollution from production that harm living standards and living things.
Sadly, that same free-market economy continuously underprovides goods with positive externalities, such as health, public transport, and education. These goods are mostly deemed the work of philanthropy or government. This has led to an inefficient allocation of resources. Even ardent supporters of capitalism admit that government provision of certain public goods and public services is essential to maximizing the potential of a capitalist society.
Inherited Wealth and Wealth Inequality
Capitalism is based on the legal right to private property and the ability to pass on wealth to future generations. Capitalists argue that a capitalist society is fair because you gain the rewards of your