Capitalism doesn’t stand alone.
Nor even isolated in a small room with its uncomfortable flatmates, Command and Mixed Economies. Many economic theories have come before and will come after.
Indeed, Adam Smith’s original conception of Capitalism is alive and well, yet in our era it is has seen some changes. We are realizing the effects of instantaneous global communication; we are beginning to confront the demons of the prior industrial age. I invite you to consider economic models that have thrived under conditions very similar to the Age of Transparency that we are embarking into.
This post will preface our discussion of Alternate Economies through recounting some history and exactly how we are becoming one global community.
Big Boss Man: Not so tall, after all.
Industrialization, economy of scale, and massive shipping infrastructure led us toward this epoch of material accumulation. Now the first world is burdened with disposable items in excess and the third world starved of necessities. This is due to the aggregation of power to those already in power, with the resources (i.e., capital) to generate exponentially more.
This makes sense: those who prove skillful are rewarded. Similarly, many feel that it is a threat to their value system to see this basic doctrine in light of widespread corruption of our industrial magnates. Yet, this is only the half of the equation.
Social Approval prevents (Economic) Cancer
Our buying behaviors are linked to perceptions of quality, accessibility, and myriad other factors, the unquestioned king of which is social approval. This is well known to marketers and increasingly supported by empirical science. This means that businesses are in the business of not just attaining clients and serving them, they are called upon to act as fair and reputable humans.
Adam Smith told us about the “Invisible Hand of the Market” that sets prices and guides transactions. This ethereal hand dwelt in an era where communication was about the reach of your voice, the biggest megaphone of the time (print) being accessible to only the best-off. In short, if a customer didn’t like a business, they could shout just as loud as the business owner.
Then something happened: communication changed channels. Mass production meant that a few people could control vast amounts of information. Those in charge were given a new scepter, making the marketplace more monolithic than any other point in history. The customer, disgruntled or enthusiastic, didn’t have more than a whisper at a ballgame.
More importantly yet, significant obstacles awaited those bold individuals who sought to organize. Their messages were lost unless they could reach receptive others who shared their passion, equally ready to raise a rallying call to change the market.
Consumers only reluctantly sat in this backseat. If you purchase a product today, be it manufactured 5000 miles or next door, you can easily talk to the people in charge. Communication has changed. It takes 60 seconds to let thousands of peers know your feelings, affecting their buying behaviors forever after.
Back to the Future
This sea change is bringing plenty of growth. Some see that the overhead of maintaining personal, human communications increases drastically with company size. This may very well mean an algae bloom for our near future: millions of small businesses thriving on the markets once dominated by big businesses.
Yet, it isn’t really that simple. While the sea reaches the whole globe, it feels a lot different in stormy Cape Horn than a crowded beach on the Mediterranean. Every industry will realize different effects from this new wave of globalization.
What we can be certain of, however, is that business will be more personal. The degree with which your company fulfills that basic criterion, the more prepared you are for a future not too unlike our past.