What capitalism prioritizes, the world does more of. So how can we change capitalism so that it focuses on what humans really want and need? Entrepreneur Andrew Yang has a surprising proposal.
Think of the activities on the list below:
Parenting or caring for loved ones
Teaching or nurturing children
Creating art, music, dance
Working in struggling regions near our hometowns
Preserving the environment
Reading or writing for pleasure or personal growth
Character-building for your kids, your team, yourself
Building community connections
Having a hobby
Becoming involved in local government
Most of us do some or many of these things — and usually, we don’t do them for money. What these activities add up to is what we might call a normal life, a well-rounded life of care and character, rich with community and creativity and balance. When you do these things, you don’t think of yourself as participating in capitalism.
But the fact is, capitalism moves and energizes the modern world. And what capitalism values, our world does more of; what it doesn’t, we do less of. Many of us feel like the activities of a normal life are becoming harder and harder to accomplish. So the question becomes: In a system where capitalism is a prime determinant of value, how can we preserve what we truly value as humans, what matters to us beyond money?
I’m someone who was educated to thrive and dominate in our capitalist system. And my deep conviction now is: it has to change. I’m an Ivy League graduate who followed the 59 percent of my peers into one of the four jobs we all take — lawyer, business consultant, finance, technology — in one of the four US cities we all move to, and in the process abandoning our hometowns and the dreams that first inspired our academic success. I watched the country’s best-educated young people fall into jobs that were designed to harvest and concentrate wealth, working insane hours to pay off insane loans. And my hometown friends who didn’t end up on the Ivy League track are facing a bleaker future, as automation destroys more and more jobs in towns across America, disrupting communities and families. No matter where we stand on the socioeconomic ladder, the future of the “normal life” doesn’t look good.
In the US, and in much of the developed world, our current form of capitalism is failing to produce an increasing standard of living for most of its citizens. It’s time for an upgrade. Adam Smith, the Scottish economist who wrote The Wealth of Nations in 1776, is often regarded as the father of modern capitalism. His ideas — that the “invisible hand” guides the market; that a division of labor exists and should exist; and that self-interest and competition lead to wealth creation — are so deeply internalized that most of us take them for granted.
Today, many people contrast “capitalism” with “socialism,” the social ownership or democratic control of industries. The perception is that capitalism — as embodied by the West and the United States in particular — won the war of ideas by generating immense growth and wealth and elevating the standard of living of billions of people. By contrast, socialism — represented by the Soviet Union, which collapsed in 1991, and China, which moderated its approach in the 1980s — didn’t work in practice and was thoroughly discredited.
This assessment of capitalism triumphing over socialism misses a couple of important points. First, there is no such thing as a pure capitalist system. There have been many different forms of capitalist economies ever since money was invented around 5,000 years ago. The current form of institutional capitalism and corporatism is just the latest of many different versions. Similarly, there are many forms of capitalism in service around the world right now. For example, Singapore is the fourth richest country in the world in terms of per-capita GDP. It’s had an unemployment rate of 2.2 percent or lower since 2009 and is regarded as one of the most free and open, pro-business economies in the world. Yet the government in Singapore routinely shapes investment policy, and government-linked firms dominate telecommunications, finance and media in ways that would be unthinkable in America, Norway, Japan or Canada. Like Singapore, many countries’ form of capitalism is steered not by an unseen hand — but by clear government policy.
Imagine a new type of capitalist economy that’s geared toward maximizing human well-being and fulfillment. These goals and GDP would sometimes go hand-in-hand, but there would be times when they wouldn’t be aligned. For example, an airline removing passengers who’d already boarded a plane in order to maximize its profitability would be good for capital but bad for people. The same goes for a drug company charging extortionate rates for a life-saving drug. Most Americans would agree that the airline should accept the lost revenue and the drug company accept a moderate profit margin. But what if this idea was repeated over and over again throughout the economy? Let’s call it human-centered capitalism — or human capitalism for short.
Human capitalism would have a few core tenets:
1. Humanity is more important than money.
2. The unit of an economy is each person, not each dollar.
3. Markets exist to serve our common goals and values.
In business, there’s a saying that “what gets measured gets managed for,” so we need to start measuring different things. The concepts of GDP and economic progress didn’t exist until the Great Depression. However, when economist Simon Kuznets introduced it to Congress in 1934, he cautioned, “The welfare of a nation can … scarcely be inferred from a measurement of national income as defined above.” It’s almost like he saw income inequality and bad jobs coming.
Our economic system must shift to focus on bettering the lot of the average person. Instead of having our humanity subverted to serve the marketplace, capitalism has to be made to serve human ends and goals.
In addition to GDP and job statistics, the government could adopt measurements like:
Average physical fitness and mental health
Quality of infrastructure
Proportion of the elderly in quality care
Marriage rates and success
Deaths of despair; substance abuse
Global temperature variance and sea levels
Re-acclimation of incarcerated individuals and rates of criminality
Artistic and cultural vibrancy
Dynamism and mobility
Social and economic equity
Responsiveness and evolution of government
It would be straightforward to establish measurements for each of these and update them periodically. It would be similar to what Steve Ballmer (TEDxPennsylvaniaAvenue talk: Our nation in numbers) set up at USAFacts.org. Everyone could see how we’re doing and be galvanized around improvement.
This could be tied into a Digital Social Credit (DSC) system, in which people who help move society in a particular direction might be rewarded. For example, a journalist who uncovered a source of waste or an artist who beautified a city or a hacker who strengthened our power grid could be rewarded with social credits. So could someone who helped another person recover from addiction, or helped acclimate an ex-convict into the workforce. Even someone who maintained a high level of physical fitness and helped others do so could be rewarded and recognized.
Maybe you smile in disbelief at the concept of “social credits,” but it’s based on a system currently in use in about 200 communities around the United States: Time Banking. In Time Banking, people trade time and build credits within their communities by performing various helpful tasks — transporting an item, walking a dog, cleaning up a yard, cooking a meal, providing a ride to the doctor, etc. The idea was championed in the US by Edgar Cahn, a law professor and anti-poverty activist in the mid-1990s as a way to strengthen communities.
Despite the success of Time Banks in some communities, they haven’t caught hold that widely in the US in part because they require a certain level of administration and resources to operate. But imagine a supercharged version of Time Banking backed by the federal government where in addition to providing social value, there’s real monetary value underlying it.
The government could put up significant amounts of DSCs as prizes and incentives for major initiatives. For example, they could allocate 100 million DSCs to reduce obesity levels in Mississippi or 1 billion DSCs to improve high school graduation rates in Illinois, and then let people take various actions to collect it. Companies could help meet goals and create and sponsor campaigns around various causes. Nonprofits and NGOs would generate DSCs based on how much good they do and then distribute it back to volunteers and employees. New organizations and initiatives could be crowdfunded by DSCs instead of money, as people ‘vote’ by sending points in.
We could create an entirely new parallel economy around social good.
The most socially detached would likely ignore all of this, of course. But many people love rewards and feeling valued. I get obsessed with completing the 10-punch card for a free sandwich at my deli. We could spur unprecedented levels of social activity without spending that much. DSCs could become cooler than dollars, because you could advertise how much you have and it would be socially acceptable.
The power of this new marketplace and currency can’t be overstated. Most of the entrepreneurs, technologists and young people I know are champing at the bit to work on our problems. We can harness the country’s ingenuity and energy to improve millions of lives if we could just create a way to monetize and measure these goals.
I’m no fan of big government. The larger an organization is, the more cumbersome and ridiculous it often gets. I’ve also spent time with people at the highest levels of government, and it’s striking how stuck most of them feel. One Congressperson said to me, “I’m just trying to get one big thing done here so I can go home.” He’d been in Congress for 7 years at that point. Another joked that being in DC was like being in Rome, with the marble there to remind you that nothing will change.
But I’ve concluded there’s no other way to make these changes than to have the federal government reorganize the economy. Even the richest and most ambitious philanthropists and companies either operate at the wrong scale or have multiple stakeholders that make big, long-term commitments difficult to sustain. We’re staring at trillion-dollar problems, and we need commensurate solutions. We’re in a slow-moving crisis that is about to speed up.
Andrew Yang is the founder of Venture for America, a major nonprofit that places top college graduates in start-ups for two years in emerging US cities to generate job growth and train the next generation of entrepreneurs. He has been the CEO, co-founder or executive at a number of technology and education companies. A documentary called “Generation Startup” that features Yang and Venture for America was released in 2016 and is available on Netflix and other streaming platforms.