The question should not be whether capitalism works or not, it all boils down to ethics, trust and confidence. Many people are asking for more regulations and rules to rein in the financial industry. Extremes are pushing to bringing our system to a communist one. People are also starting to wonder whether capitalism is failing. The reality is that capitalism did not fail, ethics (or the lack of) failed.
Ethics: Our economy is based on the assumption that everybody is ethical in the way they do business. The right regulations were already in place. They were not enforced, and people went for the quick-buck instead of playing a long-term ethical game. Ethics are not luxuries, they are essential for capitalism to work the way it was intended to.
Trust: Where I grew up in Lebanon, you never trusted the other party in a transaction and always assumed that the purpose of a transaction was based on one party trying to take as much money from the other party. You always had to watch your back and negotiate, negotiate, negotiate. Both parties always felt as if they lost which hindered economic growth.
Confidence: The word “conman” originated from “confidence man”. Just like Madoff, he became a person of confidence and was able to take people’s money. Once consumers lose confidence in the economy, a downward vicious cycle takes hold of businesses. To break the cycle, you need ethics, which drive trust, which in turn drives confidence.
Note: The term "Ethical Capitalism" is borrowed from Brother Louis DeThomasis who wrote about the subject in his book "Doing Right in a Shrinking World".
Ethics: Our economy is based on the assumption that everybody is ethical in the way they do business. The right regulations were already in place. They were not enforced, and people went for the quick-buck instead of playing a long-term ethical game. Ethics are not luxuries, they are essential for capitalism to work the way it was intended to.
Trust: Where I grew up in Lebanon, you never trusted the other party in a transaction and always assumed that the purpose of a transaction was based on one party trying to take as much money from the other party. You always had to watch your back and negotiate, negotiate, negotiate. Both parties always felt as if they lost which hindered economic growth.
Confidence: The word “conman” originated from “confidence man”. Just like Madoff, he became a person of confidence and was able to take people’s money. Once consumers lose confidence in the economy, a downward vicious cycle takes hold of businesses. To break the cycle, you need ethics, which drive trust, which in turn drives confidence.
Note: The term "Ethical Capitalism" is borrowed from Brother Louis DeThomasis who wrote about the subject in his book "Doing Right in a Shrinking World".
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