Re-Inventing Capitalism

Back in 1931, during the Great Depression, many other countries thought the end of capitalism had come.  They looked to communism and socialism as the failed attempt at capitalism seemed imminent as the Depression dragged on. Hitler rose to power in Germany and Stalin in Russia.

In the past 50 years, the US has managed to:

  • Shed its manufacturing jobs with a combination of thirst for profit (outsourcing) and being out-competed by a country with few natural resources, but better method – Japan.
  • Ruined its world standing with risky loans from US banks (no matter who is to blame)
  • Increased the government deficit to the point that we have lost the coveted AAA credit rating and stand to lose the dollar as the currency of choice for the world
  • Running an unemployment rate of over 9% with the reality is the real number is much larger
  • Compromise whole organizations by executives maximizing corporate profits through manipulation to increase their personal balance sheets

Most of this has happened in more recent history and certainly isn’t a comprehensive list.  W. Edwards Deming told us that the peak for the US was 1968 and been in decline ever since.  All is not lost, but a wake-up call anyone?

Today’s turmoil with budget deficits and high unemployment rates leaves many questions about where the United States is heading.  It made me begin to question what capitalism is.  So, I looked up a definition:

An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.
Source: Dictionary.com

Somehow profits has been bastardized into meaning that if my own individual balance sheet is better off – that is profit.  Executives and investors get a bulk of the profit because that is who should profit in a capitalist system.  Somehow we have left the worker behind in favor of the other groups.  Aren’t the people that DO the work important?  What about the work itself?

Seems to me that making the work and the worker relevant again would be a good thing.  This has less to do with trickle down economics and more to do with greater profit.  And can we start making things again?  Products and services create value, shifting money around does little to improve our standing – the results are obvious.  Investment banking has become gambling.

Naturally a reset on how we design and manage work needs to happen and soon.  US businesses using industrialized design and economy of scale thinking for manufacturing and business will continue the slide Deming warned us about 30 years ago.  Little has changed . . . and in fact entropy has taken over and the decline accelerating.

Capitalism is still the best thing that is going, but some of the “add-ons” to the definition of capitalism or how they have been played out need evaluation.  The principles are there, but the details need rewritten.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Read his articles at Quality Digest and his column for CustomermanagementIQ.com.  Learn more about the 95 Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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