The “ism” of capitalism is to make money out of money. The capitalism dogma is to invest, produce, sell, make a profit, and maximize it. By investing in and selling products, the owners of the business will enjoy the financial rewards and provide the products that people need. This is the core philosophy of the 18th-century philosopher, Adam Smith known as the father of the modern economics.
Over the last 200 years, there has been a divergence between capitalism as envisioned by Adam Smith and today’s capitalism. Economists, investors, academics, and businessmen have tried to come up with explanations to capitalism versus other ideologies like communism. Most hold the optimistic view that capitalism encourages the free enterprise which boosts the economic productivity. The other social systems like communism failed to do that as they are hugely centralized and involuntary.
Free enterprise and capitalism are used together to express the view that the capitalist goods are produced and sold to the buyers at given prices and purchased voluntary by the people. The supply and demand regulate the market and determine the economic value. This became the cornerstone of the debate that favors capitalism over other ideologies. Making money out of money and maximizing profits irrespective of the quality of the products and the working conditions for people have characterized the capitalists’ narrative. Capitalism intuitively implies capital, its preservation, and maximization. It refers to wealth creation and accumulation.
Capitalism has failed to make the distinction between the good and the bad. Is it the amount of value created by companies or the amount of money generated by them? This is the critical difference.
Capitalism can hardly be measured and understood regarding creating value but can be quickly judged by looking at the monetary values or the profit indices.
Capitalism is recognized as the accumulation of money. The more, the better. There must be a measure or a metrics that determine the main concept of capitalism. What makes good capitalism?
The most sought-after reformation for capitalism right now is how policymakers manage it as a regulated market system that incentives businesses to contribute to the real needs of people. Who are the entrepreneurs that their ideas turn their businesses into value centers and profits centers? Who strives to solve a problem in a business model and who profits from creating a problem through the company? Bill Gates made billions through Microsoft, but he created value through many products that solved problems for businesses all over the world. McDonald’s food chains which are burdening most countries populations with a list of problems, the least of which is fatness and diabetes, especially for children.
This is the distinction that should be acknowledged and observed. Who are the good and the bad capitalists? The purpose and the impact of the business is the answer to this question. Capitalism can be greatly understood and applied correctly if viewed from this angle.
Great companies are problem-solving companies that challenge the status quo and make money out of doing that. The larger the number of the purposeful businesses, the greater the positive impact, and the better the world is.
If capitalism is judged by the amount of the money created, then the metric is money. If capitalism is judged based on the businesses ability to produce products and services that genuinely benefit people, then the metric is the number of the meaningful and the purposeful solutions. This is the main difference.