Capitalism Didn't Fail Us, Greed Did

Capitalism gets blamed for a lot of shit it didn’t actually do.

Every time a company lays off thousands of workers after reporting record profits, people blame capitalism. When some giant corporation buys out its competition, raises prices, and makes its product worse, capitalism gets dragged into it again. The same thing happens when executives give themselves massive bonuses while telling employees that there’s no room in the budget for raises.

I understand where the anger comes from. Watching executives make millions while ordinary workers struggle to pay their bills is infuriating, especially when those same executives start lecturing everyone about sacrifice and fiscal responsibility. But capitalism didn’t walk into the boardroom and decide to fuck those workers over. The people running the company made that decision because they wanted more money.

Screwing over consumers and employees isn’t a tenet of capitalism. It’s greed.

There’s absolutely nothing wrong with a free market. When it’s working properly, businesses have to compete for customers by offering better products, lower prices, or improved service. That competition encourages innovation, advancement, and growth because a company that sits on its ass for too long risks losing customers to someone willing to do a better job.

Consumers benefit from having choices, while businesses are rewarded for finding better ways to meet their needs. A company should have to earn your money rather than assume it’s entitled to it. If another business can offer you something better, you’re free to take your money elsewhere. That’s how a healthy market is supposed to work.

Of course, a lot of large companies don’t want to compete. Competition is hard, and there’s always a chance that someone else might beat you. It’s much easier to buy out competitors, lobby the government for special treatment, or trap customers in an ecosystem where leaving is difficult and expensive.

People tend to view monopolies as the natural final stage of capitalism, but monopolies go against the entire concept of a free market. You can’t have meaningful competition when one company controls the industry, dictates prices, and makes it nearly impossible for anyone else to enter the market. At that point, the consumer is no longer choosing the best option. They’re taking the only option available.

Even Adam Smith, the man commonly referred to as the father of capitalism, was adamantly (see what I did there?) opposed to monopolies.

Smith believed that competition helped keep merchants and manufacturers in check, and he repeatedly warned that business owners would conspire against the public when given the opportunity. His support for free markets didn’t mean that he wanted the government to disappear and let businesses run wild. Smith believed the government had legitimate responsibilities, including national defense, the administration of justice, public infrastructure, and certain forms of education. He also accepted that government action could be necessary when private interests threatened competition or caused harm to the public. The important distinction was that regulation should protect the market rather than allowing politicians and favored businesses to manipulate it for their own benefit.

That sounds like a relatively sensible position to me. Let the businesses compete, but don’t blindly trust them to behave when dishonesty or exploitation becomes more profitable.

Unfortunately, somewhere along the way the business world stopped treating profit as the reward for running a successful company and started treating it as the company’s only reason to exist. Consumers became sources of revenue, employees became expenses, and every decision had to be justified by how much money it could produce for the people holding shares.

The 1919 case Dodge v. Ford Motor Co. played a major role in establishing that mentality.

At the time, Ford Motor Company had accumulated an enormous financial surplus. Henry Ford wanted to stop paying special dividends and reinvest more of that money into expanding production, employing more workers, and continuing to reduce the price of Ford vehicles. John and Horace Dodge, who were minority shareholders in Ford as well as future competitors, sued because they wanted their share of the money.

The Michigan Supreme Court ordered Ford to issue a special dividend and stated that a business corporation was primarily operated for the benefit of its shareholders. The ruling didn’t literally require every company to squeeze every possible dollar out of employees and consumers, and the court still gave Ford considerable freedom to expand the company under the business judgment rule. However, the case helped cement the idea that shareholders were supposed to come before everyone else.

That shareholder-first philosophy has become gospel in corporate America. If a decision makes the quarterly numbers look better, executives will often pursue it even when it harms the company over the long term. They’ll reduce staffing until the remaining employees can barely function, outsource customer service to the lowest bidder, and lower the quality of their products while charging more for them (i.e. shrinkflation).

Then, a few years later, some highly paid consultant gets brought in to determine why customers hate the company and employee morale is in the toilet.

As someone who does management consulting for a living, I’ve had the opportunity to see how companies operate from the inside. Many of them aren’t inherently evil, despite what the internet might have you believe. They’ll cut corners where they can, and some operate with minimal concern for how their decisions affect employees, but their actions usually aren’t motivated by spite.

I think that a lot of it comes down to ignorance.

Many CEOs and executives are completely out of touch with their rank-and-file workers. They spend their days talking to other executives (many of which are professional ass-kissers), looking at reports, and making decisions based on numbers presented in spreadsheets. Payroll becomes an expense that needs to be reduced, but they don’t see the employee doing the work of three people because two positions were eliminated. Customer service becomes another cost to trim without anyone considering what happens when customers can no longer get help.

The people running the company might genuinely have no idea what daily life is like for the average employee. That doesn’t excuse bad decisions, but it explains why executives can make choices that seem needlessly cruel without viewing themselves as cruel people. When leadership is too far removed from the bottom of the company, employees become numbers instead of human beings.

I can also say from experience that there are plenty of executives and business owners who make a genuine effort to understand what’s happening beneath them. They talk to employees, listen to their concerns, and consider how proposed changes will affect the people expected to carry them out. Within reason, they’ll do what they can to improve working conditions and take care of the people who keep the company running.

At the end of the day though, those companies still need to make money. They still have budgets, financial obligations, and shareholders to consider. Taking care of employees doesn’t mean paying everyone six figures or approving every request that lands on management’s desk. It means recognizing that the workforce is part of the company’s success rather than an obstacle standing between executives and a larger bonus.

Capitalism isn’t perfect, but no economic system is. Every system is vulnerable to exploitation because every system is operated by people, and people can be greedy, corrupt, selfish assholes.

Take communism for example.

Communism sounds great on paper. The people own the means of production, everyone works toward the common good, and the wealth is shared instead of being hoarded by a small ruling class. In practice, communist governments have repeatedly ended with ordinary people getting fucked while members of the ruling party enjoy wealth, power, and privileges unavailable to everyone else. The wealthy business owner is replaced by a government official with even more authority and fewer ways for the public to hold him accountable.

Changing the economic system doesn’t remove greed. It changes the methods greedy people use to enrich themselves.

We already know that the people running large corporations can’t always be trusted to consider what’s best for society. Some oversight is clearly necessary to protect employees, consumers, and genuine market competition. Antitrust enforcement, labor protections, safety standards, and laws against fraud exist because trusting every company to police itself would be fucking stupid.

At the same time, regulation can become overbearing. Excessive rules create unnecessary costs, discourage new businesses, and bury companies beneath mountains of paperwork that accomplish very little. Ironically, large corporations are usually better equipped to absorb those costs than smaller competitors, meaning poorly designed regulations can strengthen the same companies they were supposed to restrain.

The answer is somewhere between allowing corporations to do whatever they want and having the government oversee every business decision. Laws can establish boundaries and punish the worst behavior, but they can’t force executives to develop common sense or basic human decency. You can regulate how a company operates, but you can’t regulate someone into giving a shit.

The business world needs a change in mindset. Making money and treating people fairly aren’t mutually exclusive goals, and a company shouldn’t have to choose between remaining profitable and acting responsibly. Employees who feel respected tend to work harder, customers who trust a company tend to return, and businesses that think beyond the next quarterly report have a better chance of surviving over the long term.

We don’t need to tear down the entire economic system because some overpaid executives make selfish decisions. We need stronger competition, sensible oversight, and leaders who understand that running a company involves more than extracting as much money as possible before moving on to the next one.

The system has flaws, but the people abusing those flaws are still making a choice. Until the business world stops rewarding greed, it won’t matter how many laws we pass or how many economic theories we argue about.

The people running the system are the ones who need to change.

Angry_Jerk

Adam “The Angry Jerk” Baker is the CEO of The AJnet Organization and Editor-in-Chief of AJnet Magazine. A grizzled internet veteran of over 20 years, he writes about politics, culture, and whatever else manages to annoy him that day.

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