"The financial crisis is not the crisis of capitalism. It is the crisis of a system that has distanced itself from the most fundamental values of capitalism, which betrayed the spirit of capitalism."
-- Nicolas Sarkozy
During the current crisis, I've more than once heard someone remarking that financial-firm CEOs who take huge bonuses during the good years and then run away when their black-swan bets blow up, are only exercising the usual capitalist values of "grab all the money you can get".
I think that a fair amount of the enmity in the world, to say nothing of confusion on the Internet, stems from people refusing to contemplate the real values of the opposition as the opposition sees it. This is something I've remarked upon before, with respect to "the terrorists hate our freedom" or "the suicide hijackers were cowards" (statements that are sheerly silly).
Real value systems - as opposed to pretend demoniacal value systems - are phrased to generate warm fuzzies in their users, not to be easily mocked. They will sound noble at least to the people who believe them.
Whether anyone actually lives up to that value system, or should, and whether the results are what they are claimed to be; if there are hidden gotchas in the warm fuzzy parts - sure, you can have that debate. But first you should be clear about how your opposition sees itself - a view which has not been carefully optimized to make your side feel good about its opposition. Otherwise you're not engaging the real issues.
So here are the traditional values of capitalism as seen by those who regard it as noble - the sort of Way spoken of by Paul Graham, or P. T. Barnum (who did not say "There's a sucker born every minute"), or Warren Buffett:
- Make things that people want, or do things that people want done, in exchange for money or other valuta. This is a great and noble and worthwhile endeavor, and anyone who looks down on it reveals their own shallowness.
- Your competitors are your loyal opposition. Usher them toward oblivion by offering a better product at a lower price, then dance on their graves (or buy them out, if they're worthy). An act of violence, like punching them in the nose, is as absolutely forbidden as it would be to a scientist - violence is reserved for the thuggish lower classes, like politicians.
- Plan for the long term, in your own life and in your company. Short-term thinkers lose money; long-term thinkers get to pick up the remains for a song.
- Acquire a deserved reputation for honesty and reliability - with your customers, your suppliers, your subordinates, your supervisors, and the general community. Read the contract before you sign it, then do what you said you would. Play by the rules, and play to win.
- Spend less than you earn. Keep a cushion for rainy days. Fear debt.
- Pay your shareholders a good dividend - that's why they originally gave you their money to invest, to make more money.
- Don't fiddle the numbers. The numbers are very important, so fiddling with them is very bad.
- Promote based on merit. Being nice to your nephew-in-law will make less money.
- Give someone a second chance, but not a third chance.
- Science and technology are responsible for there being something to trade other than stone knives and fruit. Adopt innovations to increase productivity. Respect expertise and use it to make money.
- Vigorous work is praiseworthy but should be accompanied by equally vigorous results.
- No one has a right to their job. Not the janitor, not the CEO, no one. It would be like a rationalist having a right to their own opinion. At some point you've got to fire the saddle-makers and close down the industry. If you want to reward loyalty, give them money.
- No company has a right to its continued existence. Change happens.
- Investing is risky. If you don't like it, don't invest. Diversification is one thing, but stay far away from get-rich-quick schemes that offer easy rewards with no risk or hard thinking. Trying to vote yourself rich falls in this category.
- A high standard of living is the just reward of hard work and intelligence. If other people or other places have lower standards of living, then the problem is the lower standard, not the higher one. Raise others up, don't lower yourself. A high standard of living is a good thing, not a bad one - a universal moral generalization that includes you in particular. If you've earned your wealth honestly, enjoy it without regrets.
- In all ways, at all times, and with every deed, make the pie larger rather than smaller.
- The phrase "making money" is a triumph in itself over previous worldviews that saw wealth as something to steal.
- Create value so that you can capture it, but don't feel obligated to capture all the value you create. If you capture all your value, your transactions benefit only yourself, and others have no motive to participate. If you have negotiating leverage, use it to drive a good bargain for yourself, but not a hateful one - someday you'll be on the other side of the table. Still, the invisible hand does require that price be sensitive to supply and demand.
- Everyone in a company should be pulling together to create value and getting a decent share of the value they create. The concept of 'class war' is a lie sold by politicians who think in terms of a fixed pie. Any person of wealth who actually, seriously tries to exploit those less fortunate is a bully and a heretic; but offering someone a job is not exploiting them. (Though bribing politicians to pass laws that transfer wealth, definitely could qualify as exploitation.)
- In countries that are lawful and just, it is the privilege and responsibility of a citizen to pay their low taxes. That said, a good billionaire wouldn't ask to pay a lower tax rate than his secretary.
- People safeguard, nourish, and improve that which they know will not be taken from them. Tax a little if you must, but at some point you must let people own what they buy.
- The fundamental morality of capitalism lies in the voluntary nature of its trades, consented to by all parties, and therefore providing a gain to all.
- In countries that are lawful and just, the government is the referee, not a player. If the referee runs onto the field and kicks the football, things start to get scary.
- Unearned gains destroy people, nations, and teenagers. If you want to help, go into the dark places of the world and open stores that offer lower prices; or offer employment to people who wouldn't have gotten a chance otherwise; or invest capital in worthy recipients who others shun. Plow your gains back into the operation, if you like; but if you don't make at least a little money in the process, how can you be sure that you're creating value?
- Wise philanthropy is a privilege and responsibility of achieved wealth.
- Making money is a virtuous endeavor, despite all the lies that have been told about it, and should properly be found in the company of other virtues. Those who set out to make money should not think of themselves as fallen, but should rather conduct themselves with honor, pride, and self-respect, as part of the grand pageantry of human civilization rising up from the dirt, and continuing forward into the future.
There was, once upon a time, an editorial in the Wall Street Journal calling Ford a "traitor to his class" because he offered more than the prevailing wages of the time. Coal miners trying to form a union, once upon a time, were fired upon by rifles. But I also think that Graham or Barnum or Buffett would regard those folk as the inheritors of mere kings.
"No true Scotsman" fallacy? Maybe, but let's at least be clear what the Scots say about it.
For myself, I would have to say that I'm an apostate from this moral synthesis - I grew up in this city and remember it fondly, but I no longer live there. I regard finance as more of a useful tool than an ultimate end of intelligence - I'm not sure it's the maximum possible fun we could all be having under optimal conditions. I'm more sympathetic than this to people who lose their jobs, because I know that retraining, or changing careers, isn't always easy and fun. I don't think the universe is set up to reward hard work; and I think that it is entirely possible for money to corrupt a person.
But I also admire any virtue clearly stated and synthesized into a moral system. We need more of those. Anyone who thinks that capitalism is just about grabbing the banana, is underestimating the number of decent and intelligent people who have put serious thought into the subject.
Those of other Ways may not agree with all these statements - but if you aspire to sanity in debate, you should at least be able to read them without your brain shutting down.
PS: Julian Morrison adds: Trade can act as a connective between people with diverging values.