Why we are "reformed" capitalists?
For hundreds of thousands of years, human evolved slowly. Then through innovation that started with the agricultural revolution, scaled through the industrial revolution, refined and improved through the scientific revolution and accelerated through the technology revolution, human existence changed. Consistent innovations, now at parabolic rates, have expanded our numbers and influence on the world. Viewed as a whole, it has also dramatically improved quality of human life.
The fundamental driving force of this innovation is “growth”. At first, growth in food supplies drove population growth. Later, with the invention of money, we started to increase trade. Invention of the printing press drove growth in knowledge and information sharing. Today, the combination these factors, resources utilization, knowledge sharing and capital formation drives innovation. But while all three are factors, the one metric that drives innovation and performance is growth in capital through increased profits. (Please see our post #1 Driver of all Human Activity is Profit Growth.)
For a long time, growth was great. The pursuit of more drove us to new heights. But growth is not a linear solution, it is inherently parabolic. $100 grows 10%, and it increases $10. But when $110 grows 10%, it increases $11. Then do that 1,000 times.
Growth in today’s society is compound interest problem, and we have hit the point where the side effects of growth — particularly population and related human waste — cannot be sustained.
While many people are calling for governments and/or innovative businesses to step in to solve the problem, this will not work. Businesses AND governments are driven by revenue/profit growth. As we will demonstrate, short and medium term interests dictate that our leaders prioritize investment in areas that drive more profits — whether or not they make sense for society in the long-term.
This was true in the past, but the net positive was greater than the net negative. But that is changing, and it is has become clear that unfettered capitalism can not control growth.
It may seem radical at first that growth is the root driver of what society values, but an brief examination of our culture highlights what we care about.
The business leaders we celebrate are not the large ones — they are the ones growing the fastest. Their business are rewarded with incredible valuations. Money losing tech unicorns are valued for their growth. And while that value does not require profits today, they must eventually convert their success into huge profits. Athletes and entertainers are rewarded for record breaking performance. Governments and politicians are not different. All promises from politicians cost money and to deliver, they must grow the tax revenue. While they can manipulate tax rates in the short-term, those we celebrate are the ones that can drive a larger pie. Try to find a trans-formative hero that did not take us to the next level and expand the human experience.
Unfortunately, many of the changes that will be required for a healthy and sustainable planet cannot be delivered through the pursuit of growth — and the related profits. To facilitate those changes, we must find new ways to reward innovations and innovators with other measures besides profit.
This site will explore this challenge. We will help illuminate why an orthodox dedication capitalism will not solve the problems. Neither will other -isms (e.g., socialism, communism), because they lack the incentive structure to reward performance. We can all say we want something better and more equitable, but only capitalism has the
We intend to define a new approach that evolves the concept that profits are the reward for innovation, and to properly incentive those who create the most most value to society when all factors are considered.
We do not claim to have all of the answers but the following principles will guide our thinking:
There is no going back. We cannot and should not stop the pursuit of progress and innovation.
Pursuit of profits will not stop the fundamental forces that are driving the kinds of growth that is overwhelming the planet.
A new paradigm is needed to inventivize and reward people and solutions that will create a better and sustainable existence.
Not only is this concept possible, it is the only solution that balances addresses the urgent needs of society while retaining the core attributes that drive action.
Please join us on this journey.
