Am I a capitalist?

Andrew Hill’s Financial Times Business blog last week asked some social entrepreneurs running benefit corporations – a reasonably new social enterprise-style corporate structure in the US – whether or not they regarded themselves as capitalists. The question prompted an interesting range of responses.

Four out of five respondents quoted seemed to see their socially enterprising activity as at least a version of capitalism, the closest to a ‘no’ came from the appropriately named Sean Marx of Give Something Back Office Supplies who answer was: “I studied economics. I’m not a capitalist in a free-market way.

At Social Enterprise Exchange in March, there was an intriguing discussion on this question during a plenary on ‘Good Business and how to do it’. This discussion saw Chris Dabbs of Unlimited Potential express the view that “I didn’t come into social enterprise to be a capitalist” and that he supported a different economic system based on social benefit. In response, Paul Monaghan of The Co-Operative Group complained that capitalism had come to mean “the people putting up the capital get all the surplus.

The obvious, technical answer to question of whether social entrepreneurs are capitalists is ‘yes’. If you run an organisation that generates income and spends it within a market system then you’re participating in capitalism.  People running charities sustained entirely by donations within market economies are capitalists. Activists selling  the Socialist Worker are capitalists.

More broadly, though, I’d argue that anyone who accepts accepts wages or benefit payments from a capitalist government is a capitalist of some sort.

One of the most striking things about the ‘anti-capitalist’ and ‘anti-globalisation’ movements that emerged in the late-1990s was the fact that the majority of their supporters weren’t opposed to capitalism at all. The most popular book to emerge from the movement, Naomi Klein’s No Logo, far from being an attack on the existence of market-based economic systems, was primarily a rejection of what the author perceived as growing dominance of a small number of large number of multi-national corporations over the global economy. The negative consequences of this dominance included unfair exploitation of workers, corporate encroachment on public space but also a reduction in genuine consumer choice.

Klein’s website describes No Logo as ‘a cultural manifesto for the critics of unfettered capitalism worldwide’ that ‘tells a story of rebellion and self-determination in the face of our new branded world.’ The implication of this is not that capitalism needed to be abolished but that, while some form of capitalism was seemingly the only viable political system on offer, the dominant political approaches – enforced through the political and military might of the USA – were supporting a form of capitalism based on the wrong priorities.

There’s been some pretty significant changes to the global economic situation since No Logo was published in 1999. Whether or not the USA was ever really the all powerful geo-political force that most anti-capitalists then believed it to be, it certainly doesn’t hold that position now – and since 2008, the ‘unfettered’ capitalism championed by corporate and political leaders, has been questioned even by many of its previous supporters.

I am a capitalist in the sense that I believe that democratic capitalist systems – where people get to vote their leaders in and out, and to choose whether or not to start their own businesses or work for other people – provide the best basis for creating societies where everyone has the best possible opportunity to live the life they want to live.

In the democratic world, we’re in the midst of ongoing debate about what kind of capitalism we want – combined with a debate about what kind of capitalism will work. As social entrepreneurs, most of us will not be in a position to make a significant direct impact on the the policies and practices of national and international politics leaders, and the multi-national corporations that interact with them. But what we can do is attempt to make our social enterprises examples of an approach to capitalism that has different priorities to those of most political and business leaders over the past thirty years – and that hopefully also works.



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15 responses to “Am I a capitalist?

  1. jeffmowatt

    Well David, as one of those responders, I know it was something our founder was emphatic about, “I am a capitalist” he told me.
    There’s an earlier response from me which was removed, it points to where he began with a critique of fractional reserve banking – money imagined into existence as debt.
    It’s not welcome in a lot of places where there’s now something of a frenzy of opinion on the subject. That’s a key point, so much of the advocacy for reforming capitalism is hypothetical.
    I got in touch with one of the B-Corps founder around 2007, suggesting that we might collaborate – that wasn’t feasible, I was told.
    In the Sustainable Business hub of the Guardian, questioning Mark Kramer on .Creating Shared Value’ was enough to get my comment removed and for me to acquired moderated status.
    There was something even more recently that eclipsed all in silo behaviour Harvard’s Long Term Capitalism awards. A man in Kenya trying to feed those orphaned and starving would make me even more angry about not being allowed a voice. . .

    Thankfully U-DO gave me opportunity to publish what you’ll never hear fo in the Guardian

    I think we can demonstrate impact on international leaders, though most would die before admitting it. . In the above example, creating impact on childcare policy, which becomes a turning point.


  2. jeffmowatt

    In February 2008, there wasn’t a lot being said about capitalism when we made direct contact with the US Senate Committee on Foreign Relations. The fax ended with these paragraphs:

    “There is increasing congruence and synchronicity in play now, to the point of attunement. What Ms. Fore is describing has been central to P-CED’s main message, advocacy and activity for a decade. That, and helping establish an alternative form of capitalism, where profits and/or aid money are put to use in investment vehicles with the singular purpose of helping the world’s poorest and most vulnerable people. The paper on which that is based is in Clinton’s library, dated September 16, 1996, author yours’ truly. That is reflected in P-CED’s home page and history section. In fact, you might notice a number of ideas and writings there that have now made their way into the mainstream of economics and aid thinking, how to make business and aid work smarter and more effectively in relieving poverty and the misery and risks that result. Bill Gates – as hard-edged a capitalist as has ever existed – reiterated the same things in Wall Street Journal a couple of weeks ago (ref below.) It sounds as though Ms. Fore’s remarks very much reflect this sort of thinking. Now it’s time to move forward and get it done.

    Thank you for your time and attention to this. I and others will look forward to hearing from you. I hope we continue to realize ever more fully that outside the box and inside the box have only a box in the way. We outside the box know quite a bit of what’s going on, many times in exquisite detail, perhaps in ways that those inside the box can’t quite as easily access if at all. We are grossly underfunded in favor of missiles, bombs, and ordnance, which is about 100% backwards. Now, with even the US Pentagon stating that they’ve learned their lesson in Iraq and realize (so says top US general in Iraq ten days or so ago) that winning hearts and minds is the best option, I and others shall continue to think positive and look for aid budgets and funding spigots to be opened much more for people and NGOs in silos, foxholes and trenches, insisting on better than ordnance, and who understand things and how to fix them. We can do that. We can even do it cost-effectively and with far better efficiency than the ordnance route. Welcome to our brave new world. Except it’s not so new: learn to love and respect each other first, especially the weakest, most defenseless, most voiceless among us, then figure out the rest. There aren’t other more important things to do first. This message has been around for at least two thousand years. How difficult is it for us to understand?”

    We could be pretty sure of being on radar. An international production agreement involving nuclear materials isn’t something that goes unnoticed. I was told that entry point into political channels had been the man who is now US President.


  3. Problem with that definition of capitalism and capitalist is this – the worker who sells their labour-power to generate income is under this definition a capitalist. I’m sorry, but people who set up social enterprises aren’t capitalists – will they sell the business completely out to the needs of investor-owners? Probably not. Do they structure their businesses so that any the surplus generated is devoted to the needs of capital-owners? No more than is necessary – and that’s what distinguishes social enterprise from capitalist enterprise. If you do business as a capitalist, you want the highest financial return possible. Far from being all about markets, capitalism is, as Braudel said “the zone of the anti-market” – states grant firms limited liability, successful firms get bigger and develop systems of internal production and exchange which are not open markets.


    • jeffmowatt

      James, This may ba a matter of different perspectives. By and large, social enterprise came to be considered an arm of nonprofit foundations, like Ashoka who would pay their fellows a stipend to apply business solutions to social problems. This was how the UK adopted it with the support of public funding.
      Another arm of social enterprise which some call for-profit, set out to create self-sustaining business which instead of distributing profit to shareholder, invested it to create social impact.
      Part of the argument for doing this was the limitation placed on nonprofits in the US which are described as Program Related Investments, which typically saw only 5% of foundations funds going to social causes, with the remainder invested in financial return, into capitalism where money is invented out of thin air.
      The case for social capitalism was argued as a replacement of charity.


  4. Very good post as always. Highly provocative and interesting. However, I think the definition of capitalism is too broad to be analytically useful.

    For me, capitalism is a term with a history and you have to incorporate that history into any definition.

    Buying and selling goods is much older than the term capitalism. You could buy or sell goods in ancient Rome but it was not a capitalist society.

    For me, the distinguishing feature of capitalism is that people who own and control capital are the ones with most power. This is not always the case in all societies. There have been times and places when ownership of land or slaves was more important or when your position within a bureaucracy or a party or a religion were more important.

    Perhaps it is also worth distinguishing between being in a capitalist society and being a member of the Bourgeoisie i.e. people who own and control the means of production. It is probably more relevant and interesting to ask social entrepreneurs if they see themselves in this way…


    • jeffmowatt

      You may see some of that history in the material we put together for the Economics for Ecology conferences soon after the crisis of 2008.
      The PBS material on Commanding Heights explores the major competing ideologies of the past 90 years.
      A key point is in the development of the fractional reserve banking system and eventual abandonment of any anchor in tangible wealth allowing that money is imagined into existence by unscrupulous human beings.
      PBS Frontline ‘The Warning’ shows the ‘Svengali’ influence of Ayn Rand over Alan Greenspan and how Brooksley Born tried to challenge Greenspan Summers and Rubin over the issue of OTC derivatives. They told her she would ruin the economy by trying to control this market.
      In the 2010 paper, the treatise which was the core argument from the paper delivered to Clinton in 1996.


  5. Beanbags admin

    Hi Tom,

    Lots of good points. I think it’s definitely worth asking social entrepreneurs whether they think it matters who controls the means of production.

    And you’re right on the definition point. My broad-brushing wasn’t intended to extend quite as far as ‘all countries where people buy and sell stuff are capitalist’ but I was, for the sake of argument, saying ‘the economies of Western democracies are capitalist so if you participate in those economies you’re a capitalist too’.

    I think the question of where power lies – and where it should lie – in national economies and the global economy is one that social entrepreneurs need to consider.


    • But you said that Klein, for example, isn’t anti-capitalist. She is – she believes in a market economy in which workers control the means of production through co-operative enterprises (for example, the film made with her husband, The Take, about the reclaimed factory movement in Argentina after the economic collapse 10 years ago).

      You also mentioned “democratic capitalism” and gave the example of political democracy and the “choice” of working for others or for yourself. But this isn’t a reality of life – most workers cannot choose to become owners of the enterprise in which they work. And the ability to make this choice a real one would involve a greater degree of economic dislocation than say, making incorporation – a privilege granted by the state – conditional upon democratic structures and a limit on the return to capital invested.

      An integral part of capitalism is continued accumulation – hence derivatives, the “shadow banking system”, and the drive to commodify just about everything. Social entrepreneurs – by defining the goals of economic activity through conscious association – are clearly not motivated by meeting this systemic requirement.

      Wittgenstein came to the conclusion towards the end of his life that philosophical problems are not about describing the world, but disentangling different language games people play in describing it. I tend to use capitalism to mean a system of class rule by capital-owners, but that’s just me. Most other people seem to use it to describe market economies. So it goes.


  6. Beanbags admin

    Given that Naomi Klein is probably unlikely to drop by and outline her position on this, it’s probably unwise for me to attempt to argue about what she thinks about economic systems in a general sense. My point above was that the message of her first book, No Logo, was not ‘we have to abolish capitalism’.

    I support greater opportunities for workers to run the enterprises they work for. I think that’s something that government should actively support and I don’t see that support as being inconsistent with support for a socially responsible form of capitalism.

    A system where the government banned all company structures apart from worker co-operatives would be something different and I wouldn’t support it.

    In terms of people having choice about who they work for, I think everyone in the UK has some degree of choice but clearly the extent of people’s choices varies enormously. For me, ensuring that life choices are more evenly distributed is one of the points of social enterprise.


    • jeffmowatt

      I guess a lot of people won’t know that John Spedan Lewis spoke of a perversion of the proper working of capitalism.

      We’ve got politicians on all sides talking kinder, more responsible capitalism, but you can bet that none can articulate it.

      Kiein’s Shock Doctrine would reveal how the “Chicago School” ideology was imprinted on Russia. P-CED was there in 1999 sourcing a rather different approach.

      Actually doing something would be novel


    • “A system where the government banned all company structures apart from worker co-operatives would be something different and I wouldn’t support it.”

      But it isn’t a case of banning a anything – limited liability is a privilege granted by the state. My point is, why should the state in a democratic society grant this privilege to structures which are undemocratic? All this requires is a reform of corporate governance, changes to company law to incorporate co-operative principles.

      Anything other than the democratisation of the corporate form is unlikely to deliver a socially responsible economic system – because capital will flow to structures which are undemocratic and can thus provide greater returns to investors rather than other stakeholders.


      • jeffmowatt

        This much was reasoned in the P-CED white paper. That given the “responsibility” of business to return investment to shareholders, it would require only said shareholders to agree that the entire purpose of that business was social, such that profit was either invested in the community or retained for growth for this social form to be legitimate.
        By this means it could co-exist with traditional business and no step on any toes, while at the same time invest in stimulating a given local economy by creating seed capital for startups of the same form. .
        Limited liability protected the interests of these shareholders but until about 10 years ago, was never available to partnerships. It took the collapse of Barings Bank due to vicarious liability, for a new vehicle to be conceived, the UK LLP. to protect the interests of merchant banks and prevent money going offshore,
        Chris Cook a former City of London Regulator says, that if the road to hell is paved with good intentions, perhaps the converse is also true. This LLP could provide the vehicle for a 21st Century Form of cooperative where assets and sweat equity can be rewarded by nths shares of productive output.
        Something I found interesting about the CIC model which was allegedly invented by lawyers Bates, Wells and Braithwaite was that it took them another 6 years to conceive what they described as ‘revolving funding’ as had been proposed 15 years earlier.
        In 2004, we found a newly created and entirely suitable vehicle for the P-CED model, a coop form known as a Community Benefit Society or Bencom Since 2004, I’ve been trying to encourage the coop movement to erm, cooperate, in this alternative to traditional capitalism.
        Recently, they found someone called Noreena Hertz who seems to have come to similar conclusions.


  7. Beanbags admin

    Well, there’s clearly different perspective on what a socially responsible economic system might mean. I don’t think removing limited liability from all but co-ops would create a very dynamic economy.

    I also don’t accept that humanity has been badly served in a general sense by the practice of people investing money in the hope of generating signficant returns.

    There’s defiitely some situations where we need to find the right balance between rewarding financial risk and promoting social responsibility. There’s other situations where investors significant returns can help to deliver positive social change in the process.

    That said, while I don’t support restricting limited liability to co-ops, I think there’s a good case for CIC report-style social reporting to be required from all limited companies as part of their annual accounts process – even if companies chose to say nothing about their social impact, people would be able to note that.


    • I didn’t say removing or restricting liability. What I proposed is akin to constitutional reform – not to make existing firms bona fide co-ops, but to shift the balance of power, from a plutocratic set up to a democratic one. The interesting thing about it is that if there was democratic control of firms then investors would be in a much stronger position to, for example, reject the remuneration packages proposed by boards at AGMs. Currently these votes are non-binding.

      The idea that liability is limited for investors but there’s no limit to their potential returns has the microeconomic impact of encouraging people to prioritise investor interests when they conflict with behaving in a socially enterprising way. I heard a talk from an enlightened executive on what you call social enterprise as a verb – he mentioned in passing that what he called the “investor community” didn’t get what he was trying to do. Little wonder, as the potential returns were not only long term but potentially intangible. It wasn’t that the proposals necessarily harmed shareholder value, it’s just that being socially enterprising appeared to be a distraction from what was held to be the function of the enterprise.


      • jeffmowatt

        As you can James, that much has already been reasoned
        and put into practice through microeconomic development work in Russia. It was a fast in 2003 for the US to ratify the International Covenant on Economic Social and Cultural Rights which gave rise to this statement in our business plan:

        “The fundamental policy guide for P-CED is the International Bill of Human Rights. IBHR is comprised of Universal Declaration of Human Rights; International Covenant of Civil and Politial Rights, and International Covenant of Economic, Social and Cultural Rights. P-CED’s main focus falls within sphere the economic, social and cultural rights, ICESCR”

        Aligned with the formal model of a Bemcom, which some within the co-op movement describe as “a cooperative for the greater good” you have the democratic model you aspire to, allowing this social form argued for all those years ago, i.e..

        “If a corporation wants to donate to its local community, it can do so, be it one percent, five percent, fifty or even seventy percent. There is no one to protest or dictate otherwise, except a board of directors and stockholders. This is not a small consideration, since most boards and stockholders would object. But, if an a priori arrangement has been made with said stockholders and directors such that this direction of profits is entirely the point, then no objection can emerge. Indeed, the corporate charter can require that these monies be directed into community development funds, such as a permanent, irrevocable trust fund. The trust fund, in turn, would be under the oversight of a board of directors made up of corporate employees and community leaders.”


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