A Just Capitalism
Photo by Dimitry Anikin on Unsplash
In the 1970s, Milton Friedman articulated a myopic mission for corporations to concentrate solely on serving the interest of the investing class. He said that if their interests are served well, all will benefit. Society now bears the results.
American corporation’s strict adherence to this hypothesis has driven a divide in our society where two different cities cohabitate in one nation. The citizens of one of those cities find themselves in tremendous hurt and desperation as they fight to survive. While the other city’s inhabitants economically insulate themselves with an unbreachable moat made from the ownership of assets.
This is America. This is the non-empathetic capitalistic machine we’ve created for ourselves. Adam Smith’s “invisible hand” is more discriminatory than many care to admit—directing the flow of power and capital to determine how people are valued and viewed. The resulting fragile societal structures are direct fruits of the behaviors incentivized by America's capitalism.
While the structure of American society makes it easy for Corporations to create perpetual growth and make meaningful impacts in the lives of Americans, we’re also reaping the negative social side effects of what we’ve sown. Now, we find ourselves pondering, when our economy is built on broken societal foundations, should we be surprised when storms threaten to knock it all down?
Slavery is the result of a society that prioritizes financial gain over human dignity. We can say that slavery is “in the past,” but it was this free labor that allowed American capitalism to unlock the wealth of this nation. The racial injustices we see every day are the direct result of an economy that grew from the free labor of the very people it refused to value. Slavery is no longer legal, but if the racism that seems so core to our societal structures tell us anything it’s that laws alone don’t change the ethos of a nation.
Racial injustice is not a problem for government and social programs alone. It’s an economic issue. It’s one that requires the focused efforts of entrepreneurs and investors alike. It’s a problem that requires us to unwind the discriminatory policies that concentrate economic capital in specific areas and stop allocating capital, calculated and applied at scale, to benefit one group of people to the exclusion of another.
It's hard to believe that racial injustice can be reduced to economic and financial decisions, but that is exactly what occurs when economic decisions do not consider human equality. Discriminatory asymmetries were exploited in order to concentrate our nation’s resources and wealth in certain locations. Business leaders are just doing their job to maximize their own profits.
This common power struggle surfaced during the creation of America. The Founding Fathers wrestled as they formed the Constitution, knowing that to recognize every man as equal and with unalienated rights was in direct conflict with the a slavery-driven economy. Thus, you find a “compromise” where a black man is considered 3/5ths of a man.
In the 1930s, racial discrimination became a formalized policy called redlining where essential government capital resources and services that seed wealth capacity in a locality were denied to largely black urban areas. Again, a “compromise” was made to concentrate capital in largely white neighborhoods at the cost and decay of black urban areas.
As we see very clearly in our society today, what starts as an objective and non-empathetic financial decision begins to hurt and deteriorate society in personal and intimate ways. Business leaders, entrepreneurs, and investors cannot ignore and be indifferent to the societal problems we face in our society. For how healthy can America's Corporations be if America’s Society is not healthy?
Our economy claims to support the ideals of equal human dignity and to reward those that work hard to realize the American dream. However, the reality of the experiments we have run so far, fall tremendously short of these ideals. American's economy is not compassionate and empathetic to human dignity. The decisive decisions that have been made throughout history show that specific human races are sacrificed to benefit and reward the economic gain of other specific human races.
As Christian marketplace leaders, we can't stay indifferent to this injustice. Even more, we can't settle, rest, and operate within economic structures that reward greed arbitraged from the intentional subjugation of fellow image-bearers of God. All men and women are equal because they bear the image of our Heavenly Father. We are called to follow the example of Jesus, who stewarded His privilege as a ransom that He might serve humanity.
We must then ask ourselves—how much am I willing to sacrifice to enable and empower those that have experienced forced and discriminatory setbacks? What does this look like for an early-stage investor? Have I taken a hard look at not just the diversity programs, but the actual structures and rewards of the economic systems I am operating in? Are there groups of people who are being intentionally left out of the room?
I am a passionate capitalist who finds great joy in making a profit. I am also a black man who has experienced institutional racism. I am a Christian for whom Jesus Christ died and rose again that I might have life, and I belong to His family. I am His child. And as His child, who is being crafted in His likeness, I can't suffer being satisfied in blindly operating within an unjust system. I must take action to do justice in the businesses I operate in. I must join hands with my brothers and sisters to find new and redemptive ways to be a compassionate, empathetic and just capitalist.
One of the most amazing things about living in Silicon Valley is to have seen and experienced how capital unlocks and galvanizes productive human potential to create amazing and valuable companies. Like a heat-seeking missile, Sand Hill road capital seeks to fund great teams of people with the outcome of outsized economic returns. However, when their black and brown demographics are cooled by the cold-hearted institutional systems of racism, capital, as a heat-seeking missile, never finds and unlocks this group's productive potential.
Everyone in America suffers when capital is boxed in to fund only great ideas and teams that look a certain way. When there are demographics in our country whose unlocked productive potential have never been fully capitalized, we all lose. The real and more compelling vision is to end economic racism and unlock the productive potential of Americans that have never been given a chance before.
At the heights of the Civil Rights movement in 1968, the Apollo project put the first human on the moon. 42 years later, as protests over racial injustice broke out yet again across the streets of America, SpaceX executed a successful mission becoming the first private company to launch people into orbit.
Lifting off to space will always capture the world’s imagination. And in very practical terms, the work to build a successful space endeavour unlocks tremendous amounts of innovations that touch and improve people's everyday lives. From the Apollo project came GPS technology, breakthroughs in material science, and new ways to organize. The external benefits that society reaped were in the trillions of dollars.
Going to space requires men and women to stretch and stress every single building block of science, physics and engineering to complete a launch. As Chamath Palihapitiya shared in an interview about his company Virgin Atlantic, “[space travel] requires you to reimagine all the basic things we have today in a new light.”
These current protests have captured the hearts of Americans to the reality of racial injustice. Similar to the reimagining thought processes and work to launch into space, men and women who hope to launch society beyond the inertia of racial injustice must reimagine and reconsider very basic fundamental structures of our economy.
I am hopeful that we can change the landscape of America to a more just and profitable capitalism. With certain demographics forced to stay put at the starting blocks, we have only experienced a limited version of the might and productivity of American’s Capitalism. But once everyone is running the race, we can finally push the whole competition to new records.