What is Capitalism?

There has been a lot of talk about the capitalistic system these days so I wanted to do a deeper dive into the topic.

Here’s the simple definition of capitalism: it is an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state, i.e. government.

Spoiler alert: We don’t live a purely capitalistic society. We live in a mixed economy that slides on capitalism to socialism scale.

High-level thoughts

• Capitalism is not a form of governance (i.e. it is not democracy). It is actually more akin to a religion. It is a moral belief more than a system.
• Capitalism is a fascinating system that breaks when too much is privately owned by too little of society. The current wealth gap right is… not good.
• Capitalism is supposed to let the “free market” work out problems, but the laws right give too much favor the biggest and most well capitalized private entities.
• Lots of progress have been brought about because of capitalism, but it’s growth has been severely stunted by discrimination. You can’t steal from whole classes of people for centuries and then call it fair system.
• When done well, capitalism is not a zero-sum game. New value can always be created.
• If we want our system to improve, we will have to prioritize entrepreneurship moving forward. It should be much easier for people to start and form businesses with as little friction as possible.
• Private ownership should be redistributed at a certain level (i.e. Standard Oil).
• Capitalism only works with strong contractual and IP laws.
• Capitalism works much better with more transparency. Everyone should be pushing to make being a public entity more attractive because it allows more participation from the common person.

Here’s the source material that I’ve read so far related to my exploration:

• An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith
• Conscious Capitalism by John Mackey and Raj Sisodia
• King of Capital by Steve Schwarzman
• The Communist Manifesto by Karl Marx and Friedrich Engels
• American Kingpin by Nick Bolton
• Doughnut Economics by Kate Raworth
• Factfulness by Hans Rosling
• Smaller Faster Lighter Denser Cheaper by Robert Bryce
• Titan: The Life of John D. Rockefeller, Sr. by Ron Chernow
• Think and Grow Rich by Napolean Hill
• The Snowball by Warren Buffett
• Poor Charlie’s Almanack by Peter D. Kaufman
• Abundance: The Future Is Better Than You Think by Steven Kotler

Source material on my reading list:

• New Power by Jeremy Heimans and Henry Timms
• Capital in the 21st Century by Thomas Piketty
• High Output Management by Andrew Grove
• Capitalism and Freedom by Milton Friedman
• The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes by Zachary D. Carter
• Arguing with Zombies by Paul Krugman

Some tips if you want to get through all of this material:

• Read 3-4 book summaries/author interviews or watch 3-4 summary videos/author interviews on the material. They usually get you 95% of the way there in terms of understanding in a fraction of the time it would take to read the entire book.
• Find someone to talk about these ideas. It’s a big, complex topic that’s worth diving into more.
• Always make note of the time period when the source material was created. Thinking has evolved a lot since the system of capitalism was first invented. Some of the founding principles need to be revisited though.