A lot of people who have opinions about the ethical value of capital and capitalism actually have no experiential basis for their opinion. I believe that capital is ethically neutral. What do I mean by this?
Is a hammer good or bad? Well, if you are using it to build a house it is good. If you are using it to bash someone's head in, well, not so much. Capitalism is a hammer. It can be used to build communities or it can be used to tear them down.
At the Capital Corner we are proponents of what we call "conscious capitalism." We see capital as a tool of empowerment that can provide the building blocks of a healthy community.
Let's look at the African American community. Blacks represent roughly 12% of the nation's population and yet they control less than 1% of the nation's wealth. It seems that Black folks have an historically dysfunctional relationship with capital. Understanding the cause of this is an interesting topic but understanding the cause is not essential to improving the situation. What is essential is that knowledge of how capital works is communicated effectively to this community.
At The Capital Corner we work with minority owned business and small business to provide not just knowledge but investment, support, and planning necessary for these businesses to thrive. There are no global solutions to poverty or to economic disenfranchisement. There are no instant solutions. However, a bean bag is not filled by one giant bean. A bean bag is carefully filled bean by bean. Our goal is to build the capital base of economically challenged communities one partnership at a time.
Together, let's figure out how capital can be deployed as an effective tool of economic empowerment. Let's figure out how to move communities from cultures of dependency to cultures of independence and agency. In other words let's learn how to use capital as a hammer to build the community.
The author, Philip Stephano, is owner of PrimalTweet a social media marketing company in Bucks County, PA. He is passionate about helping local and regional business around the country to use social media as an effective tool to find local prospects and customers. To learn more about Stephano go to http://about.me/philipstephano
The author, Philip Stephano, is owner of PrimalTweet a social media marketing company in Bucks County, PA. He is passionate about helping local and regional business around the country to use social media as an effective tool to find local prospects and customers. To learn more about Stephano go to http://about.me/philipstephano 
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ReplyDeleteCapital as economic empowerment is inevitably, and reciprocally, capital as dispossession.
ReplyDeleteCapital accumulation and capital deployment are mutually exclusive through time ('through time', is the key here to respond to the 'what about loans? counter-argument'; loans and investments are and always will be pro-creditor, not pro-debtor; and of course! because otherwise there would be no 'capital-minded' incentive to issue them).
Blacks in the US are relatively disadvantaged on the socio-economic scale because they have always been at the butt-end of capitalist (whether private or public) endeavor-- let's not even mention the geographic, political and economic history of slavery ('say what?' or 'did I do that?' are appropriate puns here, and I'll let the reader choose).
Does it make sense for one to try to control the system by which one has been victimized, and thus enact the same depredation to other individuals.
let's cut off the 'invisible hand' (which cannot be stained by the virtues of indelible ink)and use our real ones.
hammer/capital analogy: meet your neighbor and lend her your actual hammer, (not the money--with interest-- to buy her own. after all you're not using it now... in fact, chances are you've got more hammers than hands (more money than you really need)
man to man; not man to money to man.
we don't need money; we need compassion and altruism.
say 'yes!'
love you, uncle.
Apparently the lesson of "two kinds of money" is lost on you. You continue to insist that capital and capitalism are zero sum games- that in order to become wealthy someone else must lose. I can prove that that is not the case. In fact I can prove that one person's success and wealth can benefit an entire community. But I'm going to allow you to figure out an example since you have been following my blogs for a while
ReplyDeleteThis blog is called "conscious capital". It is premised on the idea that capital is a tool and needs to be applied thoughtfully. Giving examples of how it has been used unconsciously and then condemning the tool on that basis is not the whole story. Fire, for instance, is a powerful tool. It has been used to burn down villages by unconscious and evil people. Do we conclude that fire is evil and should be avoided. No, we don't ascribe moral value to that tool. We try to find ways to use it to promote culture- warmth, food, making things.
I love charity. However,it should be personal and voluntary. Marxism and other forms of collectivism kill not only kill the generative powers of capitalism but require submission of the individual to the state or central planners. That system is a zero sum game.
As far as the "invisible hand" versus the real hand, they are not mutually exclusive. Build a business, hire people, pay taxes, be a pillar of your community, give to empower the best in us. It's all about empowerment if you're bringing consciousness to the table.
Thanks for the response and keep 'em coming. There are many people who have been indoctrinated against capitalism and I look forward to answering your questions.
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ReplyDeleteI appreciate your openness to the debate. Ongoing dialogue is necessary to work out the kicks in our understandings, and it often reveals to us basic, unquestioned assumptions on which we base our beliefs.
ReplyDeleteYour point is well taken; there are more or less conscientious ways to utilize capital. I totally agree.
However, I would still ask you to provide an historical case study of capitalist human interaction, which has resulted in an truly positive-sum outcome.
It seems to me that any system that is fundamentally dependent on strict and exclusive notions of property is on the broadest net scale zero-sum, though within the scale of immediate transaction may be perceived as beneficial by both parties. This is partially explained by Stiglitz's (himself, a liberal economist) theory of asymmetrical information between the parties involved.
I highly recommend Marxist geographer David Harvey's book 'The Limits to Capital', as an explanation of the dynamic of capital flows, littered with case studies demonstrating how under-regulated capitalism throughout history has led to severe uneven geographic development and the dispossession through commodification and accumulation.
I'm going to resist political debate here and stick to economics. The market demands that people find greater efficiencies in order to provide goods and services at lower and lower costs.
ReplyDeleteA computer that I paid $1000 for in 1988 is 1/50th as powerful as a a computer that I pay the same price for today. My father paid $800 to have a cell phone. It was the size of a small brief case and the phone was connected to the case by a cord. A phone with 100 times that capacity costs about 1/4 of what he paid.
The only reason why commodity prices for things like oil and food have not exploded is because the private sector has discovered more efficient ways for these goods to be delivered to market.
I could go on and on but the point has been made. Markets, private property, the motivation that individuals have to excel continues and will continue to outperform ANY centrally planned economy. Even the communist Chinese, Cuba, and the former Soviet Union realize this now.
All the global and political issues are of theoretical interest. At the Capital Corner, however, we are interested in making real change for real people in neighborhoods with real needs. It's all about empowering communities, by empowering leaders. Stay tuned to see change you can believe in.
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ReplyDeleteColin, from your first post: "Capital accumulation and capital deployment are mutually exclusive through time ('through time', is the key here to respond to the 'what about loans? counter-argument'; loans and investments are and always will be pro-creditor, not pro-debtor; and of course! because otherwise there would be no 'capital-minded' incentive to issue them)."
ReplyDeleteThis statement could not be further from the truth. Here's an example. If you had $50k you could buy a nice row home in Philadelphia with no debt. According to your logic this would be a smart investment. No one is going to benefit by collecting interest and you will benefit from appreciation.
That same $50K, however, can be used to buy 5 row houses on the same block through the concept of LEVERAGE. On each house you would put $10k as a down payment and use lender's money to finance the rest. If we assume that appreciation of the real estate assets is, say 10% over three years you will have made $5k in your scenario and $25K through leverage.
The other advantage to borrowers is inflation. If you assume 3% inflation per year over that same 3 year period you will be paying the bank back with "deflated" dollars. If you were to pay the bank off after the three years you would be reaping about a 10% discount on the payoff figure due to inflation alone- forget about any principal reduction from amortization.
All in all it is by far better to acquire an asset through debt than it is to pay cash for it.
That begs the point that you have missed. There are two types of debt. One is good and productive as in the example above. The other kind of debt, borrowing to make up for cash flow shortage or to pay bills is negative debt and will put people farther behind. In short, always borrow to buy an asset and never borrow to pay budget shortfalls.
With this distinction in mind you can see how I am opposed to govt. borrowing to meet budget shortfalls. At the end of the day they keep putting the tax payer further in the hole.
Keep the questions and comments coming. Cheers, P