capitalism has a double bottom line

Capitalism is not new, contrary to progressive liberal claims. It's as old as human beings themselves. In the very nature of each person from the beginning of time until the end is the compulsion to trade. Fair exchange is endemic in human nature. Yet, capitalism is under assault as it is viewed as greed run amuck. This is a very limited and misguided view of capitalism. A little understanding wouldn't hurt anyone.

Who are the players in capitalism? First, there are the capitalists. Many think these are the ones who run off with all the money leaving everyone lacking. Nooooo, the capitalists are the ones with capital, willing to risk it for some return. Capitalists have a "double bottom line," representing their wish to gain a return on their investment of time and money both financially and ecologically. A ecological return is the benefit or value the capitalist brings to others.



Others impacted by the capitalists can be one of two kind. First, there are the ones outside of the organization established by the capitalist that form what is called "the market." These people benefit from the capitalist because they receive in some form of exchange the products and services that make their life more favorable. The degree the capitalist maintains engaged customers and consumers is the degree that the capitalist is winning in their ecology.

Another group of others outside the capitalist's organization are those who benefit from any residual effects of the capitalist's impacts. Air and water quality, roads, schools, commerce from support systems, etc. that exist in part because the capitalist is creating economic, social and environmental factors resulting from their presence in the community.

Inside the organizations of capitalists are managers and workers. These are called agents of the capitalists. When the production and distribution of goods require more human resources than just the capitalists themselves, an organization is formed and agents have to be employed by the capitalists. In a similar way to the ecology, capitalists must maintain a favorable position with agents or they will leave and not be engaged in the capitalists' activities. The trick for capitalists with regards to agents is that there are normally conflicting objectives and needs. If the capitalists fail to satisfy agents needs, the capitalists no longer retains agents and the capitalist cannot meet its double bottom line. If the agents desire more from the capitalist than the capitalist wants or can provide agents, then the capitalists dismisses the agents.

Now, this is how capitalism works. Often businesses are seen only for their greedy financial interests, but economics involves much more. It involves equilibrium among all constituents, both inside and outside the organization of the capitalist. Any successful capitalist understands that over time, they must win on the Double Bottom Line.   

Under normal conditions, the capitalists seek equilibrium with internal and external constituents, called stakeholders. The capitalists can then claim all residual financial benefits for themselves to offset the risks of providing capital. This is the normal risk/reward force that drives capitalism.

In unusual times, such as the current social tragedy of the coronavirus, capitalism embraces unusual norms. Here the capitalists forego some or all of their desired financial reward to support abnormal needs of stakeholders. This is what is happening NOW. Capitalists are finding ways they can use their residual claims from normal times to invest in the lives of stakeholders who have less options and opportunity to navigate the crises. This adjustment may include how agents who have benefited greatly by the capitalists' successes may now forego or share benefits with the agents who have benefited less.

Capitalism embraces all of this. It is the beauty and lure of capitalism for everyone. Greed finds itself into every system in which humans operate. Capitalists and stakeholders can be greedy. Greed is not peculiar to capitalism. Fair exchange both inside and outside the organizations is what makes capitalism work. Fair exchange is the engine of capitalism, the purest form of justice. There is a DOUBLE BOTTOM LINE. It is, or at least should be, the full horizon of the capitalist's vision.

Just some thoughts worth pondering in times of social distancing when capitalism is under assault but is the answer ....