The Wonderful Flaw in Capitalism

So sleep hasn’t come easily to me since I was young, but perhaps it’s both a blessing and a curse.  As I lay awake at night wishing I could fall asleep, my mind continues to problem solve.  A few months ago, I was doing my best to understand the difference between the idea of democracy, and the application of it in American politics – and effectively understand where things went sideways when 20% of the American public was able to elect someone which most of the world despised.  More recently, I’ve been focused on capitalism and more importantly, how it’s led to an unsustainable concentration of wealth.  At about 2am a couple nights ago, I woke up Siri to take a note.  That note reads:

“The fly in capitalism is the assumption that resources are scarce” 

I had said flaw, but close enough, Siri.  What I first tried to do was understand what capitalism is at its core.  My best definition was the exchange of resources for the creation of value.  Whether you’re producing a good, a service, or something in between, capitalism was there to reward you with resources to help you sustain yourself and with the goal of motivating you to create more value in the future.  Theoretically, in capitalism, those who create the most value should be rewarded with the most resources.  I don’t think that’s the case today.

As  the application of capitalism evolved, it became a heavily complex system and as with all systems, they can be taken advantage of.  For example, some businesses specifically target customers who don’t fully understand the transaction and end up paying for services they don’t need or products they can’t use – selling ice to an Eskimo.  While some examples are blatant, I suspect most are shades of grey.  Those shades of grey allow those with a greater understanding of the system to manipulate that transaction of value for resources – ultimately leaving them paying less or receiving more.  In this environment, the most significant factor in deciding who receives the most resources isn’t the ability to create value, but rather the ability to understand and play the game.

When I look across the board of the wealthiest people in the world, I don’t see a direct correlation between the wealth they’ve accumulated and the value they’ve created.  There are some, like Bill Gates, Jeff Bezos, or Larry Paige who I think should be among the wealthiest individuals in the world, but for each of them, there are dozens of wealthy individuals who have made their fortunes by extracting resources rather than creating value – casino’s come to mind.

So when I understood that, I thought that we just needed to find a way to get back to the fundamentals of capitalism.  We just needed to find a better way to ensure that there was a fair and equitable approach to the exchange of value for resources.  But wait… if resources weren’t scarce, would capitalism still motivate us to create value?

I know this is all super high level so let’s make this more tangible.  The sun currently projects more energy onto our planet than we’re capable of using – and we’re getting increasingly better at harnessing it.  99.9% of the resources ever used on this planet are still on this planet because as it turns out, matter can’t be destroyed.  That means that resources aren’t scarce, we’re just temporarily inefficient at turning used resources into usable resources.  That’s a technological issue that we’re getting increasingly better at solving – one which I expect to be largely solved within our lifetime.

So let’s be optimistic and think 100 years out.  There are solar panels everywhere.  Roads, roofs, cars, skyscrapers, and huge chunks of desserts are covered in enough solar panels to passive provide our planet with sufficient energy to both sustain and grow.  Waste conversion technologies have advanced to the point where a landfill can be broken down into synthesized raw materials.  Additive manufacturing is able to take synthesized raw materials and efficiently build just about anything that our minds can imagine.  If that ecosystem sounds familiar, it’s because that’s pretty much how our planet worked before humans came along and started trying to reinvent the wheel.  Mind you the earth did it at a much slower pace, but the fundamentals are the same.

Waste is a concept only known to humans.  In every other aspect of the known universe, it’s simply another state in which energy or matter can exist.  Once we can wrap our heads around that, it’s easier to understand that there is no scarcity in resources, simply an temporary inefficiency in turning used resources into usable resources.  That is something that I’m confident technology can solve, and it has me looking rather optimistically towards the future.

In a future where resources aren’t scarce, what would motivate someone to create value for others?  This is where the crusty capitalists might say that people are inherently lazy and it’s only through the motivation of scarcity that they’re willing to provide any level of value to others.  It’s too easy to find counter-examples for that to be entirely true, but I don’t deny that the fear of not being able to sustain yourself can motivate people to do all kinds of things.  What I also think though, is that love is a far more powerful motivator.  In this case, it would be love for what one does.  More often than not, the best computer programmers, the best musicians, the best entrepreneurs, and the best parents are those who absolutely love what they do.  Between their hardware, firmware and software, they’re totally in line with their life’s work.  They’re in their element.  They love what they do, and as a result, their drive, passion, and work ethic to create value for others far surpasses what they might have done out of fear.

That is the future I see and the future that I’m confident we’re headed towards.  We’re a few years out, and there will be plenty of stumbling blocks between now and then, but this is a logical eventuality which is simultaneously an enlightened perspective on how technology drives progress, and how progress drives ideology.  The future is bright and oh so cool.