Capitalism is essentially good

Mickey Mouse original

Capitalism has a bad reputation. People blame it for wars, consumerism, corruption, crime, lack of equality, hunger, and pretty much everything else that is bad. This is unfortunate because capitalism is the only thing which can resolve all this. And the main driver of capitalism are companies and their brands.

In my experience capitalism is a very specific and simple thing. I spent the first half of my life in communism so I can easily tell what is capitalism and what is not capitalism. Capitalism is a set of rules which allow anyone to own something, increase its price, and sell it for profit. For example, you can buy a house, fix it up, and sell it for more. The house is your capital. This was simply not possible in communism.

Everything else that happens around capitalism is not capitalism, but human behavior under the rules of capitalism. For example, Pump and dump is not capitalism, but an act of few people. Capitalism is a set of the essential rules, it allows a temporary increase of equity through such tricks as Pump and dump, but it is most efficient when based on real value. Capitalism craves real value.

On a whole, people, us, the customers, are very smart and we want and accept only real value. Out of billions of transactions there will always be some that are based on cheats and tricks, but many will always be based on value. The only misunderstanding was that all values are hard values. With the definition of soft values, which are equally important as hard values, there is much more clarity on how capitalism works.

So there are two methods a company can grow in capitalism:
1) Trick customers, find a hook and exploit it as much as it can, without offering any real value;
2) Offer real value which is accepted by customers, and grow organically.

Tricking customers will never succeed in the long run because it is against the main idea of capitalism. Tricks, cheating, and corruption exist in all social systems which means they are not an exclusive trait of capitalism and therefore do not define it. Only capitalism allows increase in equity by offering customers real value. This is why capitalism is essentially good. By good I mean that it does not work unless companies invest in developing and offering real values and customers truly accept them, both hard and soft. Capitalism is an exchange of real values, and the only way to succeed in capitalism is to create and offer real value.

Written by: Nikola Tosic
Publishing date: 7 May 2018