C-46. Where capitalism succeeds – and doesn’t

Capitalism works, to the extent it does, because of the fundamental behavioral force (C-41), because it responds to the behavioral problem (I: Pbeh) better than its institutional competitors in at least some matters of the economy and polity (XI).

Capitalism works, for example, because it encourages innovation, creativity and invention, the needed constructive response to the Pbeh force, bringing about compositional change rather than depending on circumstantial changes (II).

Capitalism works because it focuses on the operating system before the control system – for a while anyway — as an initiative gets started, but “scaling up” will pose control system problems (C-36) and “standard operating procedures” will be attractive for solutions that have to be repeated (O: Sp).

Capitalism works because functional capability to meet needs leads to structural innovations in body and step (C-37). Only later does control system structure dictate functioning – as for company workers as role players (VI).

Capitalism works because outcomes speak knowledgeably (IX), at least until valuation procedures take precedence over evaluation procedures (C-31), as may be expected to happen, for example, if marketing is valued over research and development – i.e., the “bottom line” mentality.

Capitalism works in so far as it does because it liberates the individual, as entrepreneur and/or investor, from any suffocating control system.

Capitalism works because it has avoided at least some of the distortion in dynamic balance (XI) brought about by over-zealous emphasis on one or another behavioral consideration (e.g., decision making over problem solving – ergo stultifying management over inspiring leadership).


Where doesn’t capitalism work?

Capitalism has attained its successes from behavioral aspects of the Nature of Things — not from an understanding of the Nature of Things and what else it can tell us about behavior, especially about collective behavior. The mechanisms of capitalism (e.g., the markets, money) as developments could be improved by attention to the fact of development, to the need for it, to the process of development and to the behavioral principles which can guide that development.

Consider what is represented in and by the “law of supply and demand.” As principles go, this is an actuarial principle. It generalizes after the fact (“empirically”} from the particulars of transactions between sellers and buyers. However, it’s just an actuarial principle. It has little to offer development efforts. What is to be seen in supply and demand as phenomena are two functional indicators (C-37), the relationship between them only one of many functional interdependencies relevant to economic development (XI). Their variance and covariance have more to do with informed decision making than informed problem solving.

Consider our reliance on the market’s “invisible hand,” the expectation that supply and demand can provide, via price levels, a reliable operating system for the economy qua control system. An actuarial principle, it is an assessment of what, in practice, tends to happen; it’s about valuation in, not evaluation of, economic policy (C-31).

How effectively principled is capitalism? Normative principles (e.g., “conscience”) and legal statutes (e.g., regulations) may ameliorate the consequences of the manipulative hands influencing supply and/or demand, but such principles are still generated after the fact, addressing matters as they have been and not as they might and/or should be, addressing behaviors rather than behavior per se … and thereby foregoing principles that could be helpful in designing a better economy. How can one not anticipate regulatory rules and sanctions to be needed with such a weakly principled operation? Consider the sorry record of systemic dysfunction evident via the most primitive of functional indicators (e.g., panics, recessions)!

What of other potential guiding principles, such as the behavioral requisites and imperatives following from the Nature of Things? They apply to behavioral entities generally. They “scale up” readily through partners to collectivities. (The singularity requisite [VIII], for example, asks of partnerships and communities that they “become and act as one [C-23],” to assure that exercised equity extends far enough to maintain the integrity of the relationship – disqualifying advancements of selfish advantage, promoting initiatives that may increase the equity in the relationships. Fairness, justice, cooperation, humanity, compassion … these are just some of the concepts that need to be indexed to “as one.”)

Importantly too, any brand of economy must find a dynamic partnership (XI) with other institutional (e.g., societal) developments –such as polity, education, transport, communication and health. What for instance of democratic capitalism? Of democratic and capitalistic health care? Of capitalistic education – with its under-emphasis of compositional capability (C-47)?

In system terms (C-36), communities may be viewed primarily as control systems, understandably given the typical fortuity of their genesis (e.g., as places on the rivers, roads and railroads), and consequent need for political organization. But they need to be seen behaviorally as principled operating systems, comprising and therefore needing to nest, to integrate, other operating systems, of which the economy is but one. Composing communities is a challenge (C-10). Composing communities as effective operating systems is the crux of that challenge.

Pragmatically, capitalism is a system more nominal than functional. (But then so are the others named just above.) More seen than possessed. (See C-51: Decline and fall.) In functional terms the line of ascent is no better understood than the line of descent – however obvious some states of decline (e.g., widespread pollution, erosion, decay and other [O:Ps] conditions).

The big problems threatening our quality of life (O: Ps, P), such as population growth (e.g., partisan procreation), resource depletion (e.g., carbon-based fuels) and the environment (e.g., global warming), require collective problem solving capability. Which is to say: community development (App. II; C-10). As we could see in the Behavioral Manifold (V), there are many different behavioral capabilities required to meet a community’s functional needs. These may be seen by some to come and go as evolutionary history, but we need all of them to grow and continue to grow in developmental strength. And we need to be able to measure their growth if we are to be able to helpfully gauge their dynamic aspects (XI, App. IX. App. X). So we need to see ahead better too (O: S-P).

Community capability is the ultimate test of behavioral understanding and strength. Capitalism has had little to contribute here. It all too readily lends itself to innovations of capacity and efficiency rather than of capability and effectiveness (XI). Further, perhaps dangerously, the marketplace’s advertising tactics may encourage an emphasis on decision making, relative to problem solving, together with an increasing emphasis of want over need by both seller and buyer. Together with loose credit all this may be producing a very dysfunctional result (XI: “consumer clog”). Consider too that an over-emphasis on decision making as a behavioral strategy can be contagious — as it has become for the polity’s election proceedings, to be seen in the seriously debilitating practice of overemphasizing issues relative to problems in policy consideration.

(c) 2012 R. F. Carter