As a child in South Africa, I would accompany my father to his bowling games, where I entertained myself with a portable transistor radio. These radios were new to South Africa. I managed to get my hands on one because a family friend had imported the first shipment.
At one such game, another bowler asked me where he could buy a radio like that. Our family friend said I could sell the radio for him and be paid a commission. As a six-year-old, I had no idea what it meant to be paid a commission, but I connected the buyer to the seller and received that commission.
Suddenly, I was a ‘capitalist’.
With this one transaction, I earned my first paycheck - and I was absolutely thrilled. That moment set me on a life-long entrepreneurial journey that has led, as it has for countless others, to a life greater than I could have imagined.
I tell this story because nowadays, the world increasingly seems to face an awful decision – between anti-trade, closed-market nationalism or anti-prosperity, government-directed socialism. Having been born to a family that fled the horrors of Nazism only to witness the horrors of Apartheid, I have direct experience of two of the worst social and economic systems ever inflicted upon civilisation. I am here to testify that capitalism, for all its shortcomings, remains by far the best and most ethical system yet devised for promoting a kinder, fairer and better society for all.
First, let’s acknowledge the shortcomings of capitalism, because we must.
Capitalism is unmatched at creating wealth, but it struggles to distribute that wealth equitably. That’s not so much a failure of the system as of the people running the system, where political favours can be bought and sold. When public policy is for sale, political extremism and social unrest won’t be far behind. (As an aside, the most notorious communist and socialist systems have featured extraordinary income inequality, so this condition is hardly unique to capitalism.)
We know that capitalism is only as good as capitalists. The good news is that we have proof that doing business ethically benefits both capitalists and society. In the past four decades, it has become abundantly clear that those companies which subscribe to the notion of enlightened self-interest, marrying purpose with a long-term commitment to stakeholder engagement, are more successful financially and more beneficial to society.
We should heed the advice of a famous capitalist - Henry Paulson, formerly the CEO of Goldman Sachs and the US Secretary of the Treasury. “I've never been anti-regulation,” Paulson once said. “I've always believed that raw, unregulated capitalism doesn't work.”
We absolutely need strong, smart, effective regulation to protect society from the excesses of the capitalist system, because they do exist.
Perhaps a sports analogy can help us think through this issue - and as the Women’s World Cup is underway this month, let's use football (or soccer, to readers from the US). Soccer is a highly regulated sport, as the best ones are, because its participants strive to achieve fairness. Each team has the same number of players, each field is of the same dimensions, and each game is played under the same laws. But the skill of the players (think economic participants) varies, the quality of the fields (think markets) can be uneven, and the inconsistency of the officiating (think regulation) can be maddening.
For all that, would anyone get rid of soccer (smartly regulated capitalism)? Would the beautiful game be nearly as compelling if the talent was evenly distributed by force (communism), or if every field was unfairly constructed in favor of the home team (nationalism)? Of course not.
Capitalism uniquely recognizes that individual talent varies, and it encourages the blossoming of that talent, which is why we are enthralled by the majesty of the best players. But democratic capitalism, which embraces the benefits of regulation, makes sure that each team has a fair shot in the game and that talent can seek its proper level undeterred. No one should encourage or celebrate a game in which highly skilled professional players run up a huge score against those with less training and talent. That’s just wrong.
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What is growing around the world, understandably, is a sense that the game simply isn’t fair anymore. It seems like one side with 14 players, all with the best equipment and training, is competing against a side of eight with little access to advancement.
This year marks my 30th as a CEO, which means I have witnessed a lot of change in economic fortunes and social progress. Here’s what those experiences have taught me: Humans are flawed, which means all social systems are necessarily flawed. But democratic capitalism remains the best system yet devised to unleash human ingenuity and ensure spiritual, social, and material progress. We are better off reforming capitalism to become more ethical rather than abandoning the system altogether.
Capitalism, in short, has done more than any other system to reduce poverty, promote individual freedom, encourage creativity, reduce international tension and provide opportunities to people from all backgrounds. Let’s agree to keep playing on this field.