Real Capitalism?
We’ve never actually had real capitalism in this country. Instead, we’ve had crony capitalism— the kind that allows some to live off the lives of others.
May 4, 2015
For more information about how land reform can create meaningful work, restore our ecology, and bring more wealth into our local communities, I invite you to read my book Land: A New Paradigm for a Thriving World.
Truth be told, we’ve never actually had real capitalism in this country. Instead, we’ve had crony capitalism—the kind that allows some to live off the lives of others.
Our current form of capitalism allows some of us to extract money from society without adding any corresponding value to society.
But why is our current implementation of capitalism not real capitalism? The answer is simpler than you might think: our current form of capitalism allows us to not only make money by adding value to society, but also allows us toextract money from society without adding any corresponding value to society. One of the biggest ways this is happening is through our ownership of land.
When a human being owns a piece of land, that person owns something that exists in a limited quantity for each particular location. Ever heard the phrase: “location, location, location”? Well, that phrase points to the reality that land is scarce for each location: there’s only so much of it for any given area! Because land is scarce for each location, land therefore acts like a sponge that sucks up the surplus value that people create in that location. That’s why land is more valuable in some locations than in others: for example, urban land tends to be much more valuable than rural land.
When people and institutions profit from land, they profit from the contributions of others.
The more people contribute to society through their hard work and ingenuity, the more value they add to their local community. This added value, however, crystalizes itself into land-value increases. The problem is that property owners—and the financial institutions that finance them—then legally extract that value as a result of their property ownership. Simply put: when people and institutions profit from land, they profit from the contributions of others.
This privatization of community wealth lies at the heart of why our current form of capitalism is actually not real capitalism. In theory, capitalism ought to provide a competitive free market. But the ownership of land creates what is called an entry monopoly: An entry monopoly occurs whenever a market is closed to new participants because overall supply can’t be increased—and since land is naturally limited for each location, the ownership of land creates an entry monopoly. Capitalism has prided itself on the efficiency of the free market system for centuries, but because capitalism allows people to monopolize land and other gifts of nature, we may realize that we never have had real capitalism, in the sense that we’ve never had truly free markets!
(The market for top-level Internet domains is also an entry monopoly. As many people who want to register Internet domains already know, many good domain names are owned by individuals and companies that don’t actually put them to productive use, but rather control the names solely in order to resell them at exorbitant prices.)
Our current form of capitalism does not distinguish the gifts of nature from capital goods such as machines and other human-made products.
Another reason we don’t have real capitalism is because we treat all gifts of nature—including land—as capital goods! Our current form of capitalism does not distinguish the gifts of nature from capital goods such as machines and other human-made products. That confusion—whether deliberate or due to ignorance—is why our current form of capitalism isn’t real capital-ism to begin with.
In short, we have a misunderstanding of historical proportions on our hands. Because of this misunderstanding, many of us tend to look upon capitalism—or at least what passes for capitalism—with great disdain. And rightly so: Our current implementation of capitalism is deeply responsible for the exploitation of nature and the decline of social well-being.
I reveal more thoughts about this in my book Land: A New Paradigm for a Thriving World, as well as in my other writings. Until then, I would invite you to take a few moments to contemplate the thought that life may hold a far greater promise for us all—a promise that, if we begin to truly share this Earth with one another, we might be able to unleash a cultural, technological, ecological, and even spiritual renaissance that might be able to liberate us in ways we cannot even begin to imagine.
For more information about how land reform can create meaningful work, restore our ecology, and bring more wealth into our local communities, I invite you to read my book Land: A New Paradigm for a Thriving World.
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MARTIN ADAMS is a systems thinker and author. As a child, it pained him to see most people struggling while a few were living in opulence. This inspired in him a lifelong quest to co-create a fair and sustainable world in collaboration with others. As a graduate of a business school with ties to Wall Street, he opted not to pursue a career on Wall Street and chose instead to dedicate his life to community enrichment. Through his social enterprise work, he saw firsthand the extent to which the current economic system causes human and ecological strife. Consequently, Martin devoted himself to the development of a new economic paradigm that might allow humanity to thrive in harmony with nature. His book Land: A New Paradigm for a Thriving World is the fruit of his years of research into a part of this economic model; its message stands to educate policymakers and changemakers worldwide.