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February 1, 2014 / compassioninpolitics

7 Flaws of Modern Capitalism for Solving Problems

I believe in the power of capitalism and mostly free markets to change the world, but I would suggest capitalism has 7 core flaws:

1. Inability or refusal to deal with Public Goods well. Basically The Prisoner’s Dilemma and the collective goods problem.
2. Lack of transparency or effective feedback loops. The consumer is not always in a position to make the best decision given distorted or incomplete information.
3. Extreme focus on stockholders over stakeholders. Primacy of investors over other relevant parties and stakeholders (this also theoretically causes short-termism in terms of payoff, which boxes in solutions which may have longer term payoff).
4. Focus on tangible over intangible. The risk of the hyper-metrics to the expense of intangibles. If it can’t go on a spreadsheet it doesn’t get as much priority. (note: I’m all for data & feedback loops, etc.)
5. Motives for Monopoly. Motives for lack of transparency. (See also #2)
6. Focus on Gross Domestic Product over other methods of Comparing Countries.
7. Race to the Bottom. Companies have an interest in moving to the least regulated areas. Ideally, workers and consumers have an opposite motivation–so this may help mitigate this issue–but not without transparency.

Lack of concerns for the commons, lack of transparency, the risk of “race to the bottom” type regulation, stakeholder issue, and monopolization seem like the worst.

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