Clinton Pavlovic

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Destroy neoliberalism


Here is an article by Nick Hanauer, published at Evonomics, arguing that capitalism itself is not an evil, and remains the most effective system to solve the world's problems.

He argues that capitalism has been corrupted by the neoliberal view that the goal of the corporation must be to maximize shareholder value, humanity be damned, a goal that totally discards mankind's pro-social nature and the desire to cooperate.

Despite stating that it is mankind's humanity, not the absence of it, that is the source of our prosperity, he goes on to suggest that it is not the capitalist system that needs to change, only that way that people act under the system. To rescue capitalism from neoliberal thinking Nick Hanauer offers four heuristics.

Irrespective of your views on capitalism, Nick Hanauer's heuristics does a good job in pointing out some of the biggest flaws in the system.

Nick Hanauer - How to Destroy Neoliberalism: Kill 'Homo Economicus':

Heuristic number one: Capitalism is self-organizing, but not self-regulating.

The notion of market capitalism as a Pareto-optimal closed, equilibrium system is—to use the technical term—bullshit. Throughout the world, the most broadly prosperous capitalist economies are also the most highly regulated and highly taxed. To be clear: Government investment and intervention is not a necessary evil. It is just plain necessary.

Which leads us to heuristic number two: True capitalism is not shareholder capitalism.

The neoliberal claim that the sole purpose of the corporation is to enrich shareholders is the most egregious grift in contemporary life. Corporations are granted limited liability in exchange for improving the common good. Thus, the true purpose of the corporation is to build great products for customers, provide good jobs for employees, provide a fair return to shareholders and to make their communities stronger—in coequal measure.

Heuristic Three: Capitalism is effective, but not efficient.

Schumpeter's perennial gale of creative destruction has proven extraordinarily effective at raising our aggregate standard of living, but it can also be extraordinarily wasteful, cruel, and unequal—unequal to the point that it threatens to destroy capitalism itself. If our economy and our democracy are to survive the ever-quickening pace of technological change, we must use every tool available to close the innovation gap between our economic institutions and our civic institutions.

And finally, heuristic number four: True capitalists are moral capitalists.

Being rapacious doesn't make you a capitalist. It makes you an asshole and a sociopath. In an economy dependent on complex trust networks to facilitate the cooperative tasks from which prosperity emerges, and when prosperity itself is understood—not as money but as solutions to human problems—true capitalists understand that every economic act is an explicitly moral choice—and they act accordingly.

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