Post Capitalism

    After the invention of a steam engine by James Watt in 1776, a mass production called “The Industrial Revolution” began. Adam Smith established the theory of Bourgeois Capitalism in the same year that says “As far as the individuals do their own economical activities by pursuing their own profit, eventually the social profit will be achieved.” It shows that the historical period of Capitalism is only slightly over 200 years. The start of Capitalism, however, did not improve the overall society as it only benefited those Capitalists who have the production resources.  　

    Some people who were not happy with Capitalism came up with another theory - “We should take back these production resources from Capitalists and redistribute them to the Labors so that we will not have any more disparity and everybody can enjoy a happy life.” Yes, this is Socialism. However, this also benefited only a privileged few.      

     After World War 2, the world was divided by Capitalism and Socialism (Communism) and that was when The Cold War between US and Soviet began.   

     Following the collapse of The Soviet Union in 1991 (20 years ago), the Capitalism system started to become stronger. 10 years later, in 2001, a new word called “BRICs” was formed. Emerging countries which were formerly Socialist countries started to adopt Capitalism. This movement transformed the world from Western Capitalism to Global Capitalism, which every country sets as a top priority for their economy. The world began participating in the short-term money games which created a lot of unprecedented monetary crisis in various regions as easy ample funds were found everywhere. 　

     The discussion theme of last year’s Davos Conference is “Rethinking Market Capitalism”. They mainly discussed if there should be international rules in setting certain limits for investment speculations.  Recent article, “Capitalism for the long-term” by Harvard Business Review says that the enterprises are told to satisfy all stakeholders. However, should they also satisfy traders who only keep their shares for a few seconds to reap a very short-term return?

    In a nut shell, if everybody goes for Capitalism and believes solely in it, the voice for short-term return will increase in enterprises and the realization of social needs which they originally aim for will become difficult as long-term investment is required. Eventually, innovations will fail to incubate. 　

   Japan follows Capitalism but has a unique seniority system, life-long employment and so on, which display the characteristics of Communism. Ironically, she was sometimes named as “The most successful Communist country”. Particularly in the 1980s, Japanese Capitalism was regarded as a new, successful style of Capitalism. However, this Japanese style of Capitalism did not work out well in the rising stream of Global Capitalism. The lack of diversity in Japan hindered innovation.  

       So how should the post Capitalism be? We should have a new form of economic system which allows enterprises to work towards achieving their original goals, so that they are able to invest in R&D and human resource for a long run. And these activities should be well recognized by investors such as a SRI (Socially Responsible Investment). Only then can enterprises be sustainable and have more opportunities to look at innovation.