Capitalism: A Short Primer For Gen Z
In early Februrary of this year, Inc. magazine published an article titled “Capitalism Needs a Rebrand To Win Over Gen Z.” In this article a request was made for ideas for how this rebranding could work. In response I submitted the following, which has been slightly edited, to Inc.:
I am writing in response to your article in Inc. titled “Capitalism Needs a Rebrand To Win Over Gen Z.”
As a capitalist and long-time champion of this system, my strong view is that nothing is needed in regard to changing or “rebranding” capitalism — not everything is a “brand” and that absolutely applies to capitalism.
Per the article, while Gen Z and younger Millennials have an understanding and agreement with some of the basics of capitalism, i.e. property rights, profit and competition, these are not nearly enough for them to fully grasp all that capitalism entails and what it offers. I suggest, regarding Gen Z and younger Millennials, that what is needed is a more fulsome education in the basic philosophy and workings of capitalism and, perhaps more importantly, the behavioral qualities required in order to flourish within a capitalistic system. To that end, I offer the following:
Value For Value
At its most basic, capitalism is a system of non-coerced “value for value” transactions. A prospective employee has certain values that are sought from a company for which they would work. On the other hand, a company has certain requirements that it desires to be met for employees for each specific role within the company. What is unique is that it is non-coercive. No one forces anyone to work for a particular company and at least in theory, no one forces a company to hire an individual. Yet, this is not a perfect system nor will it ever be. An individual may have multiple interviews for their first job and in the short term have to settle for a job that lacks some or much of what is desired. In this situation, the highest value for the employee is the need for income in order to support themselves including for many, making agreed upon payments on their student debt. But, that does not change this basic non-coercive component of capitalism that often gets overlooked. A true socialist system does not provide this level of freedom of choice.
No Instant Rewards
With some exceptions, in a capitalistic system, there are no instant rewards. When a first job is sought, even though the job seeker may have superb educational credentials, they have not been in the real world and as such have not developed the experience, skills and track record that lead to higher paying and/or more fulfilling jobs. Too many in the younger generations expect instant gratification from their employers because they have university degrees. That is simply not how capitalism works — it never has and never will. At the beginning of a career, the value that an individual can offer a company is limited. And, while training may be provided by a company, it is ultimately the responsibility of the employee to increase their value to their current and/or prospective future companies. In short, the more value that can be offered by the employee, the greater the reward. A core part of developing value is the willingness to “go above and beyond” the basics of what a job requires. While this is anathema to many in the younger generations, don’t expect to ever move forward without functioning in this manner and on a consistent basis. If an individual develops significant value and is not recognized or rewarded by their employer, then they are free to seek employment elsewhere or to start a business of their own. And, in this case, the practice of “going above and beyond” will have laid a strong behavioral foundation for any and all future endeavors. Most important to understand is that capitalism is a system that is long-term in nature and that requires certain things from each individual in order to progress. See more in the section on Agency & Personal Responsibility below.
The Only System That Allows the Full Development Of An Individual’s Potential
In order for an individual to develop their full potential during their lifetime an essential requirement is Freedom. Capitalism, or what we have left of it in the US, is the only economic system that can provide the freedom that our Constitutional Republic politically requires. This is directly tied to the concept of Non-Coerciveness described above. While parents, educators, peers, close friends, the current zeitgeist and a host of other “influencers” may attempt to sway an individual as to what life path or career to choose, within the capitalist system the ultimate choice lies with the individual. No one can make another do anything as the final choice is always in the hands of the individual. And, there is no government agency within a capitalist system that makes this decision for any individual. There is, however, a tough caveat: Full potential development (and even basic functioning within a capitalistic system) requires agency and personal responsibility.
Agency & Personal Responsibility
Agency is the ability to take control of your life and direct it in the direction you want to go. Personal responsibility is closely aligned in that the individual who assumes personal responsibility solves their own problems and creates their own results rather than waiting for some outside entity to do it for them. Said another way, the individual who has agency and demonstrates personal responsibility is not controlled by circumstances and does not blame others, the past, institutions et. al. for their current situation. This does not mean that this type of individual ignores current circumstances. In fact, it is just the opposite as the greater the agency and personal responsibility the more honest an individual is about the current state of reality. The key is that they are not controlled by these circumstances but instead understand that current reality is simply one key data point that must be acknowledged in order to move toward their goals and dreams. Capitalism is a wonderful system that provides enormous opportunity. However, there can be no freedom without agency and responsibility. At its core, capitalism challenges the individual to go as far as the combination of personal talent, ability, hard and consistent work, continual learning and imagination will take them. This is simply not possible without agency and personal responsibility. Those individuals who lack agency and personal responsibility and are thus controlled by circumstances will find capitalism and its demands to be daunting. No improvement in history has ever been accomplished by whining about circumstances. Those who embrace and internalize agency and personal responsibility will find capitalism exciting and liberating.
Capitalism Is Not “Fair”
For many years and accelerating in the last decade or so is a denigration of capitalism because it is not “fair.” For far too many, “fair” translates into something that approximates some kind of equal outcome. In that regard, capitalism is not “fair.” The reason that it is not “fair” is that no two individuals are the same. There is a wide dispersement among individuals of innate talents, abilities, proclivities, etc. Not everyone has the ability to be a neurosurgeon nor does everyone have what it takes to be a champion bull rider. This is not contradictory to the above segment regarding the development of an individual’s full potential. That full potential is different for each and every individual. In this context capitalism is not “fair” in that outcomes will vary across the spectrum of individuals. Capitalism is the system that is most in alignment with the extensive diversity in talent, ability, desires, etc.
Imperfect System
It is absolutely essential to understand that capitalism is not a perfect system. That said, its imperfections almost always involve either bad actors (think Enron) or government intervention in, and/or manipulation of, the market. The rule of law is essential for freedom to reman viable and thus essential for capitalism. But the existence of laws does not always prevent fraud, private actor market manipulation, egomaniacal managers and others. Nor do laws stop the government or the Fed from engaging in ways that may seem to be helpful but over time result in calamities. All of this and more give capitalism a bad name when in actuality in many, if not most situations, it is not capitalism per se that is the problem but some distortion thereof. Again, keep in mind that at its most basic, capitalism is no more than the voluntary exchange between two parties of goods and/or services. And it is not just the younger generations that fail to grasp this. For example, a prominent financial and economic journalist and editor who rales against “neo-liberal capitalism” fails to understand that she is a capitalist. She entered into a voluntary value to value agreement with the publication for which she works yet she admonishes the very system that makes her career possible.
I believe that all of the above are important to understand deeply in order to grasp the real value of capitalism. That said, there is a feature that is by a wide margin more important than the others: Agency & Personal Responsibility. Those who have not developed these character traits will struggle in a capitalist system. All the education in the world about the economics involved in capitalism will make no difference if an individual believes that their life is controlled by circumstances. Conversely, those who do develop real agency and personal responsibility will find, over time, not a perfect world, but one in which they can carve out a increasing level of achievement and a sense of aliveness that only comes from the combination of freedom, responsibility and the pursuit of their own unique (not their parents’ or society’s) dreams. As the classic line in the film Flashdance states, “Don’t you understand? When you give up your dream you die.” In varying degrees, that is exactly what happens when an individual does not embrace agency and personal responsibility and allows life to be controlled by others or circumstances. On some level, that is what I believe is happening with many in the younger generations. It is a horrendous loss for each of these young people and provides significant worries about the future of the U.S. Social psychologist Jonathan Haidt, who has studied Gen Z extensively, stated during an interview by The Wall Street Journal, “Warped by social media and a victimhood culture, today’s young people will imperil American culture and capitalism.” He goes on to say, “Here they are in the safest, most welcoming, most inclusive, most antiracist places on the planet, but many of them were acting like they were entering some sort of dystopian, threatening, immoral world. Once they enter the workplace, they’re less innovative, less inclined to take risks, and that may undermine American capitalism.”
Should you have an interest, I would be more than happy to discuss this further.
