In my last article I pressed on the idea that while we rely on capitalism to value things, there are a lot of things it’s not good at valuing. I want to explore that a little more.
The oft repeated line is that capitalism is a crappy system, but it’s the best one we’ve got. Generally what’s pointed to to support that idea is that it’s an efficient system for determining the ‘true’ value of things. To be sure, the laws of supply and demand are seductively sensible. People do seem to respond to abundance and scarcity according to that model, so it’s a little difficult to imagine how things could be any different.
But again, as I argued in my last article, when all you have is a hammer everything looks like a nail. The thing that capitalism is good at valuing is widgets, but it’s not the right tool for assessing squishy yet arguably more important things like mental/emotional health, feelings, or community to name a few. It’s a tool like any other, only we’ve put so much faith in its ability to efficiently determine the value of anything that we’ve allowed it to reach into areas in which it has no business going. We’ve let it, for example, decide for us that a lawyer has more value than a janitor. Lawyers are paid more than janitors, so it must be true. Right?
But hold on. Why are lawyers paid more? As a child born into the system we all inhabit, here are a couple of reasons that spring to mind:
- They pay a lot of money and spend a lot of time to be educated in law, so their efforts need to be rewarded. Otherwise who would bother going to the trouble?
- There are fewer potential lawyers than there are potential janitors, ergo supply and demand makes it so that lawyers command more money.
That makes sense, right? It does to me, but looking at the problem in only this way is a trap. That’s the lens through which the system looks at things, and the way we’ve been trained to look at things by virtue of being born into it. But is there another perspective? If we try to shed some of that brainwashing and look with fresh eyes, maybe we can see something else.
When we pay one person more than another does that really mean one has more value than another in objective terms? Look at it this way: If all people making less than $50,000 per year suddenly went on strike, would the wealthy be able to continue functioning? No, they wouldn’t. After the black plague swept through Europe wiping out millions of the servant class, the aristocracy was left helpless. As a result, remaining workers were able to demand higher salaries, ushering in the rise of the middle class. In New York City 1968, sanitation workers went on strike and brought the city to its knees within days. My point is that everyone has value. You don’t want to collect garbage for a living? That’s fine, so train for something else you want to do, but don’t delude yourself into thinking that that makes you better than other people, or should give you rights and privileges over them. Every person plays a role in keeping our society running — most of them in ways that aren’t properly recognized. Salary does not indicate a person’s value yet we routinely and insistently draw this equivalency at all levels of society.
So, again, why are lawyers paid more than janitors? It’s not because they’re more valuable people. Let me present a different perspective. Capitalism is a system and, like any system, its primary goal is to perpetuate itself. Lawyers make more money than janitors for the simple reason that the system rewards people commensurate with their ability (read power) to perpetuate it. That’s it.
Why is this perspective important? For me, looking at the economic puzzle in this way puts a significantly different spin on the whole thing. I am not a fan of capitalism. More accurately, I’m not a fan of the way we’re making use of the tool we call capitalism — a tool we could choose to use differently or not at all, in favour of a different one. When we have real cases where a CEO has determined whether to issue a vehicle safety recall or simply do nothing and handle the lawsuits based on which approach is the most cost effective (hint: it wasn’t the recall), something has gone seriously awry. It’s tempting to point a finger at the people who make those decisions and paint them as monsters, but if you were to talk to many of them you’d find they were perfectly ordinary, nice, well-meaning people with families for whom they care deeply. No, to do that is to merely point out a symptom of a sick system. To do that distracts from the real problem, which has everything to do with incentives.
Incentives matter
People make most decisions based on their wants, evaluated through filters of perceived risk and reward. There are some areas in which people will use a strict ethical or moral compass, risks and rewards be damned, but in the vast majority of matters the risk/reward equation is what’s in play. Before pointing the finger at the CEO who decided not to issue a vehicle recall, think about this: We say we want people to act ethically and morally, but in reality we all support and participate in a system that places very little value on those things. In fact, corporations’ sole incentive is profit generation for its shareholders. What should we expect to get from a system like that? Certainly not decisions that are good for society as a whole. Ethics and morality take a back seat when money is in play, because the system prioritizes profit over all other things, heedless of any objective measure of help or harm to society.
Sure, we ‘value’ human life when it happens to align with what is economically advantageous. We ‘value’ the rainforest when letting it stand happens to align with objectives that reap greater profits than could be realized by cutting it down. But don’t for a moment think that that forest would remain standing when there’s a dollar to be made. When we let dollar differentials be the final arbiter of our decisions we are truly adrift. For one thing, as pointed out above and elsewhere dollar valuations of most things that are truly important for us as human beings are impossible to make in any meaningful way. Yet we still insist on doing it so that we can compare apples to apples. But what we’re often really comparing are apples and smoke. The current incarnation of capitalism requires that we twist and cajole and warp the concepts we want to compare and stuff them into a standardized ‘dollar value’ box so we can set them on a scale and make a decision based on which one is heavier. The CEO looks at the vehicle recall problem and asks themself from which of these paths can we squeeze the most profit, or at least lose the least money? The path that lets people die, but saves us from having to do a vehicle recall? Well, then that’s the most sensible decision. If they don’t choose that path, then they’ll be swiftly punished by the people who are concerned solely with the bottom line — the investors. How? First by being fired. A blacklisting and rapid fall through the societal strata comes next; bankruptcy and family collapse follows. Fear is a very powerful motivator.
I don’t think the incentives require any more explanation than that but, to be clear, capitalism incorporates mechanisms that reward accumulation and punish loss. Profit or die. This endless exercise is, of course, enabled by a way of looking at the world that allows us to take almost any concept — abstract or concrete, inane or horrific — and reduce it to a simple and conscience-free dollar figure: a kilo of shark meat, an acre of rainforest, a litre of drinkable water, a life, a war.
Who does capitalism serve then? Don’t believe for a moment the lie that it serves everyone. Simply put, it serves those with the sway and power to keep it going.
So, what does a person’s salary tell us if it doesn’t give us a sense of their comparative value with other people? What is it measuring, exactly? It’s measuring their effectiveness at perpetuating a system that I think most of us can see is failing the vast majority of people. Due to the “profit über alles” incentives built into the system we end up with things like giant corporations taking huge tax cuts and bailouts from the government and then turning around an laying off staff anyway, even though the benefits they accrued amount to about a million dollars per employee laid off. Screw employees. Screw taxpayers. The math tells them there are ways to extract more profit, and so they do it.
We have a sick system. The majority of the 99% know it, and the ones that don’t are looking to the wealthy as the wise sages who will extricate us from this mess. But really, the wealthy and the powerful don’t want to do that at all, and instead feed us with platitudes and distractions while continuously working to tilt the field in their favour. The 99% form the foundation of society. If we were to all choose to move in the same direction at the same time, the 1% would come toppling down. But the wealthy have the ways and means of working to ensure that doesn’t happen, not the least of which is by using media to sow confusion, division, and conflict among the plebs in order to keep them from effectively organizing.
The way to make real change is to stop valuing things in the way the system wants us to, and start valuing things on a moral and ethical basis. We need to rework the system to get the incentives right. “Profit über alles” has got to go. Some profit is probably fine, but not profit at the expense of everything else. The higher priority than that — the higher VALUE than that — has be what’s good for society as a whole. When we make economic decisions we need to stop falling into the profit über alles trap. We need to instead put clean water, clean air, and healthy people, animals, and environment at the top of the list when evaluating what to do. If governments and corporations aren’t doing that, then the best way to force the issue is to hit them where it hurts — their wallets. Use the system as it presently exists to tell the powerful what you really want. When you buy a share in a company or when you buy a product from them, ask yourself what you’re saying by doing that. Have you looked at what that company is doing to the environment? Have you considered what they’re contributing or doing to society at large? Or are you just trying to maximize your bank account? Reward companies that are serving the greater good. Punish those that aren’t. If you’re not doing that — if you’re not thinking about your role in perpetuating this broken and failing system we have, if you’re not trying to make more considered decisions — then you’re enabling the very things that you say you don’t want. Stop thinking you’re just one person and that your choices have no impact. Start working to align your wallet with your values. Your choices matter, because if you won’t change your habits, why should anyone else? We build the systems we pay for.