Two Capitalism hacks to help you sleep better

Social Capitalism

marrying money is a full time job (image: harpers bazaar)

What gets you out of bed in the morning? For me, it's Capitalism. And lately, it's been keeping me up at night, too.

There's much to like about Capitalism. For one thing it's exciting, because it's gamified. Like all great games, the challenges increase progressively as participants' skills increase, along with the rewards.

Newbies can get started with Capitalism quickly, with little investment. Capitalism is well-documented with lots of free advice available in print and online. Citizens can participate as individuals or as part of a team. And the pursuit of Capitalism has pulled a large part of the world's population out of desperation and servitude.

But Capitalism is losing its mojo. Like dead-eyed real estate scions at a Reno roulette table after 3am, we're not feeling the fun anymore. We're burning out from high-pressure jobs, America is in a funk, and billionaires are feeling sorry for themselves. Something's wrong with Capitalism, but I believe we can fix it.

"Advocates of capitalism are very apt to appeal to the sacred principles of liberty, which are embodied in one maxim: The fortunate must not be restrained in the exercise of tyranny over the unfortunate." ~ Bertrand Russell

Core to Capitalism's success has been its scoring system. Standings are tallied in money, letting us know in real time whether we are winning or losing. In Capitalism, money is the point, and that's the problem.

Shouldn't the point of a social-economic system be (something like) happiness¹, which money, we know, does not buy?

The focus on money is a critical design flaw, creating perverse incentives that have led to levels of inequality now threatening to undermine the entire system. The edifice is starting to creak.

“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.” ~ John Maynard Keynes

Happiness, not money, should be the measure of success. What brings happiness? Human relationships². Whereas an emphasis on money is ultimately destructive of the social-economic system, an emphasis on human relationships would be self-reinforcing, because what is a social-economic system but a network of human relationships?

I don't want to throw Capitalism out, just make a few tweaks. A couple of modest adjustments to the scoring system can shift the emphasis from money to human relationships, keeping all the freedom and frisson we love about Capitalism, but adding sustainability and happiness. I'd like to call the modified system Social Capitalism.

Capitalism does not permit an even flow of economic resources. With this system, a small privileged few are rich beyond conscience, and almost all others are doomed to be poor at some level. That's the way the system works. And since we know that the system will not change the rules, we are going to have to change the system. ~Martin Luther King, Jr.

Here are the tweaks:

1. abolish inheritance.
2. make charity non tax-deductible.

When the Flames face off mid-season against the Oilers, the starting score is 0-0. In hockey, as in most sports, points are not transferred between games. When the Flames beat the Oilers 9-1, the Flames do not carry the 8 point surplus into the next game. This system maintains a level playing field (in the sense of fairness, not flatness) in order to preserve competition and reward excellence. To allow teams to carry points across games would rig the game in favour of the incumbents, leading to greater and greater inequality, until the league broke.

We should abolish inheritence on grounds of fairness and equality, because letting families accumulate wealth across generations is like letting sports teams accumulate points across games.
In Social Capitalism, when a citizen dies, all wealth reverts to the state. For the reasons just discussed, most Capitalist societies already impose heavy taxes on inheritances and other gifts of wealth. Abolishing inheritance is an extension of these policies.

Without the option of passing wealth across generations, citizens seeking a happier future for their children would do better to invest in, rather than insulate their children from, society. Legacies would take the form of publicly recognized contributions to society, not contributions to private bank accounts.

The second tweak is to make charity donations non-tax-deductible, because the welfare of needy citizens is as much Government's concern as that of any specific charity, and Government is typically better organized, informed, and open to scrutiny. Government should be the best run charity, and everyone's concern and obligation.

It's illuminating to think of Government as a charitable organisation with mandate to care for its citizens. In this light, tax-deductions for private charities are shown to be, in effect, opt-outs from government. So when Lord Beezlebotham makes a tax-deductible donation to a private charity, the deduction redirects a portion of money from the government to the private charity, say the WindyFlanks Retirement Home for Hunting Dogs.

Compared to private charities, Government has advantages in scale and scope that let it provide services with greater effectiveness and efficiency. Governments are also typically better run and more accountable. Citizens should be allowed to donate their money to any cause they feel is deserving, but there should be no opt-out from obligations to Government, society's collective charity.

Without the option of diverting money from government toward private causes via charitable tax deductions, citizens looking to make positive change would be more likely to engage in Government, and to engage with societal needs beyond their personal interests. Citizens would still be free to fund Arts Centers, Hospitals, etc, and name them after themselves, but their first obligation would be to Government, the collective charity that provided the conditions for their own success.

"Capitalism fails to realize that life is social. Communism fails to realize that life is personal. The good and just society is … a socially conscious democracy which reconciles the truths of individualism and collectivism." ~ Martin Luther King

The ideal of Social Capitalism is a society where excellence is rewarded, competition is fair, and an individual's standing is tallied in terms of contribution to society, not financial assets. These tweaks are meant to encourage people to measure their lives in terms of Social, rather than Financial capital.

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1. Happiness as an end-goal has its own problems, but it works as shorthand for profound satisfaction and peace of mind. ↩
   
2. see, for example: here, and here and here. ↩
   

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If you prefer less introspective fare, my other blog is for the more practical and professionally-minded reader

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