How Did We Break Capitalism
Adam Smith’s vision puts people first.
Milton Friedman, in the 1990s, defended the logic of putting the shareholder’s desires ahead of the customer or the employee.
We argue that Friedman’s economic writings assume an economy in which businesses operate under limited liability protection, which allows corporations to privatize their gains while externalizing their losses. By accepting limited liability, Friedman must also view business as embedded in social interdependency, which serves as the logical and moral foundation for corporate social responsibility (CSR).- Ignacio Ferrero, W. Michael Hoffman, Robert E. McNulty in onlinelibrary.wiley.com
This was the first step to the loss of morality in the financial system. We now see where it all went for; having Jeff Bezos buying a multi-billion-dollar yacht and so many other extravaganzas.
Lack of morality can destroy an entire country or economy, but something scarier can also happen- the rise of radical leaders such as Adolf Hitler, Mussolini, or Stalin: those who promised to moralize the political system with moralized politics, remember?
There’s nothing wrong with capitalism, except that we’ve broken it.
Capitalism is Adam Smith’s vision where he puts people first.
No society can surely be flourishing and happy, of which the far more significant part of the members are poor and miserable.- Adam Smith
But what happened to capitalism? What did we do wrong? How did we manage to get to this point?
People don’t buy what you do; they buy why you do it.
We have been playing with the wrong rules for a long time.
Not like a game rule, but economic rules. According to James P. Carse, we have finite and infinite games when playing games and when we’re at our jobs.
There are finite games and infinite games.
A finite game is defined with a certain number of players, fixed rules, and a finite goal, like soccer. There are referees to control the rules, and in a defined time frame, whoever gets more points wins the game. There’s a beginning, a middle, and an end.
And then, there’s the infinite game. An infinite game is defined as known and unknown players; new players can join at any time, the game has changeable rules, and the goal is to perpetuate the game- to stay in the game as long as possible.
Marriage is an infinite game; you can’t say you have won a marriage. You wouldn’t know who won global politics or won in a business.
Yet, if you watch some leaders talking about success, they say things like be the number one, be the best, or beat their competition.
Based on what?
There are no metrics on winning a marriage or a business. If you try to win marriage, you’d no longer be married. If you’d try to win a business, you wouldn’t know when it ends, so it would be at least awkward.
In other words, people are playing the infinite game with a finite mindset. And if you’re playing the same game with the wrong rules, something happens- the decline of trust, the decline of cooperation, and the decline of innovation.
Simon Sinek, author of the book Start With Why: How Great Leaders Inspire Everyone To Take Action, spoke at an educational summit at Microsoft and at Apple.
At the Microsoft summit, most executives spend most of their time talking about how to beat Apple.
At the Apple summit, a hundred percent of their executives spend all their time talking about how they could help teachers teach and how to get help students to learn.
One was obsessed with where they were going, the other was obsessed with beating their competition.
Why the tokenization of the entire economy?
Today, the Basel Committee on Banking Supervision issued a public consultation on preliminary proposals for the prudential treatment of banks’ crypto-asset exposures. While banks’ exposures to crypto-assets are currently limited, the continued growth and innovation in crypto-assets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment.- bis.org
It all began in 2009 when Satoshi Nakamoto wrote a 9-page white paper where he mentioned:
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.- Satoshi Nakamoto in bitcoin.org.
The behavioral incentive to disrupt the monetary system was so powerful that developers and coders wanted it to happen, so they followed Nakamoto’s first block of the Bitcoin symbolically named Gemini, into thousands of other blocks in a totally decentralized monetary system that will, I hope, be part of the global financial system.
Why did the Bitcoin Network survive all the attempts to its destruction?
The creators started building the system with an infinite mindset, meaning developers and coders knew already what was wrong with the current monetary system and began to build a completely disruptive new system, under the premise of not making the same mistakes governments and central banks did in the past.
Trustworthy protocols have to be validated in a peer-to-peer relationship for transactions to occur.
Developers and coders didn’t want to beat the current financial system; they built another one, completely different from the existing one. In an infinite game, you don’t want to beat the competition; you want to solve problems and move one to the next challenge.
The Bitcoin Network and the blockchain were built to solve problems, not to beat the competition. And because of that, governments realized that it can’t be destroyed, like Microsoft thought could happen against Apple.
How did we break capitalism?
After the 2008 Great Recession, millions of citizens all over the world watched the shameless episode of the banking collapse and the recognition of the existence of a banking elite that not only got away with the greedy engineering created but also returned to the party with the approval of governments and central banks.
It didn’t happen, though.
The almost romantic story of Satoshi Nakamoto that no one knows who he, she, they are is at least flagship. Even more so when the 9-page white paper was created precisely in 2008, after the last financial crisis. And the creation of the Bitcoin Network was neither more nor less to destroy the rotten system that broke out in the great recession.
If the governments at that time had dared to take appropriate action, the financial system would have been highly moralized, and perhaps the Bitcoin Network would not have been born, or at least it would have been created under a different premise.
It’s going to be a modern socialism kind of political arrangement.
On the other side, a totally decentralized monetary system is arising, built under the premises of individual freedom. At some point, I believe central bankers will try to manipulate the decentralized system, not willing to lose control of the money supply they so carefully manage.
Millennials have the power to start the shift, moralizing communities or tokens and building bridges between blockchains and the post-industrial revolution era.
A new industry will arise with the environment behavioral philosophy under their vision and motto. Climate change, renewable energy, decentralized finance, tokenization of the global economy will be premisses for millennials to guarantee a moralized and healthier ecosystem for future generations.
Final Thoughts
Let me be frank with you- I don’t like what central banks have been doing for the last decades.
They constantly benefit the few over the majority. The gap between the rich and the poor is at levels that deter any ordinary citizen from fighting for a supposedly just and equitable democracy.
On the other hand, governments could try to find better solutions to the inequality problem, decentralizing the financial system. I understand that a currency is a geopolitical weapon that saves us from conflicts and wars, but it’s also a tool to enrich the few to the detriment of the majority.
Something in between would be the best solution, and I believe it’s possible to achieve it. Unfortunately, there will be conflicts between the decentralized Bitcoin Network and the blockchain ecosystem, and the post-industrial revolution economic system.
In this challenging transition, many will fall; others will rise to build the future with climate change, inequality, and abundance as priorities.
Pure infinite gamification of our mindsets.
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.
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