I’m a fan of capitalism.  But increasingly, I have begun to see socialism in a light that has softened my view somewhat.

As I blogged about earlier, you can take capitalism to its extreme and see that it doesn’t work at every level of society: what would it be like, I asked, if capitalism were employed at the family level of society?  It would be absurd to not have things in common, or to let the fastest children eat first and let the others starve.  But on the other hand, capitalism has clearly taken us (humanity) a long way—in fact, it is still at present the most efficient economic system in the world—but I wonder if some of its underlying assumptions might be changing.

Adam Smith’s “invisible hand” is a remarkable product of the exchange that happens when an individual makes a prudent decision in behalf of him- or herself—more often than not, the decision also benefits society in a way that leads to progress for the whole.  In contrast to competition in the marketplace, however, cooperation is almost always more beneficial for the individuals and the group.  The problem is that cooperation does not scale.

Things are changing, though.  Technology is shrinking the distance between people and cultures, and enabling us to see more, connect more, and even think better about large-scale problems (for example, see this visualization presentation by Hans Rosling on world statistics). Given this trend, what if cooperation could outsmart and outperform even the almighty market?  What if cooperation could become scalable on the level of a whole country, or even the entire planet?

I think of capitalism as the most efficient system with the “lowest common denominator” for a large number of independently acting agents.  Because these agents (i.e. you and I) have no way of making intelligent decisions in behalf of people whom we don’t know and don’t understand (i.e. almost everyone else), then the best possible decision we can make is whatever will most benefit us and those we are aware of.  So capitalism can be a local “win” when it is moderated by good judgment and compassion.  On the flip side, though, capitalism is often harmful to many people even though the people doing the harm can’t see a direct connection between a decision and its effects.  (If you’d like a good example of this, see the documentary film, The Corporation. Many of the CEOs of large companies don’t know or don’t want to know what their bottom line is doing to people.)

So you have this interesting paradox where smaller communities and even smaller families work on socialist principles—for example, having access to public parks, or sharing bedrooms, toys, food, living space, etc.—while the larger communities (corporations, multinationals, each of the states, and the federal government) are primarily working on capitalist principles.  Somewhere in the middle, these two ideologies meet and we have flames from both sides erupting into a firestorm of words and blame.  We have the Democratic party and the Republican party.  We have public schools, and private schools.  We have the USPS and we have Fedex.

What I’m really curious about is whether or not technology—specifically internet-based social networking—can help bring these two apparently paradoxical ideologies into some kind of hybrid that is better than any system we’ve ever created.  One inspiring video was created by a professor of Cultural Anthropology, Michael Wesch, at Kansas State University which explains where the social web is now and where it’s taking us.  Have a look at Web 2.0 … The Machine is Us/ing Us:


Professor Wesch brings home the idea that we are the machine.  It’s not just that we are using a computer anymore: we are creating something larger than ourselves—the computer is using us too.  This ties in very closely with the futurist ideas of Ray Kurzweil that I’ve been reading about.  In his book, The Singularity is Near, machines are described as an extension of what it means to be human.  The 1980s may have done us all a bit of a disservice by fixing us on a somewhat limited view of what a “robot” and “artificial intelligence” is.  Smarter and smarter programs are becoming a part of our everyday lives… whether it’s an automated flight system, or the bartering for electricity that happens at the utility company, or the massive flow of human information now available on the web.

In short, I think it will soon be possible for us to solve the capitalism / socialism paradox by making it easier to know about and understand others and by increasing our capacity to reason about problems on a larger scale.  When these two ideals meet, then perhaps we will become an even more efficient and compassionate society by capitalizing on cooperation.

Thanks to ReadWriteWeb for an excellent article on Social Media that pointed me to Wesch’s work.

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