The Problem With Capitalism

The Choices We Think We Have

Photo by Daniil Korbut on Unsplash

One of the challenges of being genuinely passionate about enterprise, and about what ventures can achieve around innovation, employment and the remarkable human capacity to create something from nothing, is that the most widely accepted system for delivering all of that remains capitalism. This is not a comfortable tension to sit with, particularly for those of us who spend our working lives encouraging leaders to make bolder and more ethical decisions. The system that enables enterprise is also the one that so frequently undermines the very values we ask those leaders to uphold.

Watching a succession of American companies dispatch thousands of employees with little notice, in the pursuit of technological efficiency, and feeling genuinely grateful for the employment protections that exist in the United Kingdom and across much of Europe, one arrives at an uncomfortable realisation. The system is not malfunctioning. It is performing precisely as designed. The shock felt by workers, communities and commentators is the shock of people who had, perhaps, persuaded themselves that the machine had a conscience.

We are asked to marvel as a small proportion of the world’s population accumulates wealth on a scale that defies comprehension, more commas in a bank balance than could be spent across several lifetimes. The media platforms through which such stories reach us are, with a certain grim irony, frequently owned by the very individuals whose fortunes are being celebrated. Those same platforms will lament public waste and critique the welfare systems and social safety nets upon which the less fortunate depend, systems which exist precisely because the market alone has never proven sufficient to sustain human dignity across a whole society.

We have come to regard education primarily as a means of production. Programmes that encourage wonder, the arts, craftsmanship and philosophy are routinely dismissed as frivolous, their graduates gently mocked, their disciplines defunded, as though the measure of knowledge were its proximity to a revenue stream. There is, however, a contradiction worth acknowledging here. The same system that reduces education to vocational utility has also attracted some of the most remarkable minds of each generation and, through the incentive structures it provides, directed them towards work that has genuinely improved the quality of human life in measurable ways.

Capitalism is structurally incentivised to externalise its costs, offloading them onto environments, communities and future generations rather than absorbing them onto a balance sheet where they might affect shareholder returns. The fossil fuel economy offers perhaps the most vivid illustration of this tendency, with decades of profit extracted by a relatively small number of corporations and individuals, whilst the catastrophic long-term consequences of carbon emissions were quietly transferred to the collective, to be borne by people who had little say in the arrangement and received little of the reward.¹ Critics argue with considerable force that capitalism has also reduced things that carry profound social meaning, healthcare, housing, education and, one might reasonably suggest, democratic participation itself, to market commodities, with measurable consequences for social cohesion and collective trust.² The question of how much is spent on lobbying in the United States alone offers a useful, if dispiriting, illustration of how thoroughly financial power has colonised political life.³

Much of the early wealth upon which modern capitalism was built derived from slavery, colonialism and the systematic extraction of resources from what we now call the Global South, and many argue that those dynamics persist in contemporary supply chains. The historian Eric Williams argued in his landmark 1944 study that profits from the Atlantic slave trade and Caribbean plantation economies directly financed the British Industrial Revolution, flowing into banking, insurance and the textile industries that came to define industrial capitalism.⁴ The historian Edward Baptist has since extended this argument, making the case that American slavery was not a pre-modern or feudal relic sitting awkwardly alongside capitalism, but was itself a sophisticated capitalist enterprise, complete with credit markets, financial instruments and a systematic and brutal approach to productivity optimisation.⁵ The historian Sven Beckert coined the term “war capitalism” to describe this foundational phase, a capitalism built on violence, dispossession and coercion, which then provided the platform upon which the cleaner, more theorised industrial capitalism of the textbooks was subsequently constructed.⁶

There is a temptation to read this history and conclude that capitalism is simply a force for harm, and books of considerable weight and scholarship speak to how the system has not only enforced inequality but provided both the motivation and the mechanism for chattel slavery, shaping colonialism and imperialism across the centuries. One need not look far into any major conflict of the past hundred years to find an underlying logic of extraction and control.

The relationship between capitalism and these historical atrocities is, however, considerably more complicated than a straightforward causal account would suggest. Slavery predates capitalism by several millennia, with ancient Rome, the Islamic world and pre-colonial African kingdoms all practising it in various forms. Adam Smith himself argued in The Wealth of Nations that free labour was more productive than enslaved labour, and many of those who drove the abolitionist movement were drawn from the emerging merchant and industrial classes, people with a material as well as a moral interest in seeing slavery dismantled.⁷ Racism, nationalism and state power did not emerge from capitalism as simple by-products; they evolved alongside it, each shaping and being shaped by the others in ways that resist any single explanatory framework. The legacies of that entanglement remain active nonetheless, visible in the structural wealth gaps between former colonial powers and colonised nations, and in global supply chains that many economists argue replicate historic dependency relationships in contemporary form.⁸

The case for capitalism cannot in honesty, be dismissed without confronting its genuine achievements. Over the past two centuries, the proportion of the world’s population living in extreme poverty has fallen from roughly ninety per cent to under ten per cent, a transformation that coincided, however imperfectly and unevenly, with the global spread of market economies.⁹ The profit motive, for all its distortions, has driven investment in technologies, medicines and efficiencies that have materially improved human life. The pharmaceutical industry remains a deeply contested example, capturing enormous returns on medicines developed in part through public research funding, and demonstrating a structural indifference to diseases that predominantly affect the poor, whilst also producing treatments that have saved millions of lives. Friedrich Hayek’s observation that markets aggregate the dispersed knowledge and preferences of millions of individuals in ways no central planner could hope to replicate remains, whatever one thinks of his broader politics, a serious intellectual point worth engaging with rather than dismissing.¹⁰ The argument that market economies tend to support individual liberty and act as a counterweight to state power is contested, but it is not without foundation.

Why Does This Matter?

The work I do with executives in small and medium-sized enterprises around the world, and occasionally with larger organisations, centres on decision intelligence and quality. Working alongside remarkable leaders, many of whom could be more remarkable still were they not constrained by a fear of making the wrong decision, or by the weight of operating within systems that demand compliance above judgment, one sees the consequences of these structural pressures in very human terms.

A mentor of my wife’s observed, more than twenty years ago, that many companies carried considerably more staff than they required, and that a correction was coming, whether through technology, efficiency drives or some combination of the two. The observation proved prescient, and its implications are still unfolding. My own conviction, developed through years of working with businesses of all sizes, is that the engine of our economies would run more cleanly and more equitably if it were powered more substantially by small and medium-sized enterprises, supported by regulatory frameworks that do not entrench the anti-competitive and monopolistic behaviours of larger incumbent players.

There are aspects of sovereign citizenship as a doctrine that are difficult to endorse in full, but there is a legitimate concern beneath some of its impulses, namely that capitalism by design progressively narrows the capacity of ordinary citizens to exercise meaningful choice over how they live, work, eat, access utilities and pursue what might broadly be called a good life. The capacity of single nations, whether the United States, China, Russia, Israel, Iran or other significant economic powers, to wage physical or psychological warfare on other nations without meaningful recourse, in competition over oil, water and energy, is symptomatic of a system in which the logic of accumulation consistently overrides the logic of human welfare.

This is, for better or worse, the system we have. Short of a revolution for which there is no visible appetite in the Western world, and given that the most prominent organised opposition to capitalism outside the West has taken the form of state communism, with its own extensively documented failures, what matters more than the project of overthrowing an entrenched system may be the quieter and more demanding work of asking why we do what we do, and cultivating a genuine sense of agency over the things within our power to influence.

One modest example from my own practice. I have never employed an unpaid intern, and I regard the widespread practice of doing so as both ethically indefensible and socially regressive, conferring advantage on those already advantaged enough to work without pay, which is worth distinguishing clearly from work experience, which serves a different and more legitimate purpose. In a similar spirit, there is something genuinely important in recovering a degree of basic self-sufficiency, the capacity to grow food whether one has a garden or a balcony, drawing on techniques that communities from indigenous Australians to the Amish have practised and maintained across generations. These are not merely romantic gestures; they represent a practical form of resistance to total dependency on systems whose priorities are not aligned with our own.

These things matter because the human cost of the decisions people feel compelled to make within these structures is visible at every level, from senior leaders too frightened to shift a model that privileges shareholders over staff and customers, to individuals who remain silent in the face of practices they find troubling. After all, dissent can mean the difference between a mortgage being paid and healthcare being covered.

The rapid emergence of artificial intelligence serves as a fresh reminder that capitalism concentrates power in the hands of the few with each successive wave of innovation. OpenAI and Anthropic are, in important respects, contemporary iterations of the East India Company and the United Fruit Company, possessed of considerably better public relations and a more sophisticated vocabulary of social purpose.¹¹ Both began with a stated commitment to the common good and have found themselves navigating the familiar tension between mission and capital in ways that should surprise no one with any knowledge of how such tensions have historically resolved. The pattern is not new. Capitalism has always been adept at absorbing the language of transformation whilst preserving the underlying architecture of accumulation.

What remains, then, is the question of navigation. Whether one is running a small business, leading a not-for-profit, or ascending a corporate structure whose upper floors are shaped by incentives one did not design and may not endorse, the question of when and how to make decisions that are bold, resilient, agile, visionary and ethical does not resolve itself automatically. The framework I return to, in my work and in my own practice, is captured in the word BRAVE. Could we look those we care about in the eye and say, with genuine honesty, that we made the best decision available to us, for ourselves and for our communities? Are we making truly good decisions, or are we making the best of constrained options because the alternatives feel too costly, too uncertain, or simply too difficult to imagine?

These feel like the right questions to be sitting with on a Sunday afternoon.

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Notes

¹ The structural tendency of market economies to externalise environmental costs is examined in detail by Naomi Klein in This Changes Everything: Capitalism vs the Climate (Allen Lane, 2014). The broader concept of externalised social costs has its roots in Karl Polanyi’s The Great Transformation (Farrar and Rinehart, 1944), which argued that the self-regulating market necessarily commodifies land, labour and money in ways that generate systemic social harm.

² Karl Polanyi, The Great Transformation (1944). The commodification of healthcare, housing and democratic participation as a feature rather than a bug of market logic is developed further by Mariana Mazzucato in The Value of Everything: Making and Taking in the Global Economy (Allen Lane, 2018).

³ According to OpenSecrets, total lobbying expenditure in the United States exceeded four billion dollars annually in recent years, a figure that encompasses only disclosed federal lobbying and substantially understates the broader influence industry. See opensecrets.org for current data.

⁴ Eric Williams, Capitalism and Slavery (University of North Carolina Press, 1944). Williams’ thesis, though contested in some of its specifics by subsequent economic historians, has been broadly rehabilitated and extended by more recent scholarship.

⁵ Edward Baptist, The Half Has Never Been Told: Slavery and the Making of American Capitalism (Basic Books, 2014). Baptist demonstrates how American cotton plantations functioned as highly capitalised, financially sophisticated enterprises rather than atavistic holdovers from a pre-modern order.

⁶ Sven Beckert, Empire of Cotton: A New History of Global Capitalism (Alfred A. Knopf, 2014). Beckert traces the global commodity chains of the cotton industry to show how coerced labour and colonial violence were integral to, rather than incidental to, the formation of industrial capitalism.

⁷ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Book III, Chapter 2. Smith’s argument that slave labour was ultimately less economically efficient than free labour was grounded in the observation that the enslaved had no incentive beyond avoiding punishment, whereas free workers could be motivated by self-interest and ambition.

⁸ Thomas Piketty, Capital in the Twenty-First Century (Harvard University Press, 2013), provides an extensive empirical account of how capital accumulation drives structural inequality across generations. For the dependency framework in global trade, see Walter Rodney, How Europe Underdeveloped Africa (Bogle-L’Ouverture Publications, 1972), and more recently Ha-Joon Chang, 23 Things They Don’t Tell You About Capitalism (Allen Lane, 2010).

⁹ Max Roser and Esteban Ortiz-Ospina, “Global Extreme Poverty,” Our World in Data (2017, updated continuously), ourworldindata.org. The figures are drawn from World Bank data and remain the subject of methodological debate, particularly regarding the adequacy of the poverty threshold used and the distribution of gains across regions.

¹⁰ Friedrich Hayek, “The Use of Knowledge in Society,” American Economic Review, vol. 35, no. 4 (September 1945), pp. 519–530. This essay remains one of the most cited arguments for the epistemic advantages of price signals over central planning, though Hayek’s broader political conclusions have been contested by economists across the spectrum.

¹¹ The East India Company, chartered in 1600, began as a trading venture and ended as the effective government of the Indian subcontinent, with its own army and the power to wage war. The United Fruit Company, operating across Central America in the early twentieth century, became the archetype of corporate capture of state power, with the term “banana republic” coined to describe the governments it effectively controlled. For a contemporary parallel in the technology sector, see Shoshana Zuboff, The Age of Surveillance Capitalism (PublicAffairs, 2019).

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All essays are written by me and I use Ai for grammar check and references