How to Do Well in a Capitalist Economy

Business thought leaders agree that capitalism needs to be improved. There are at least three possible routes for reformation, including A Kinder, Gentler Capitalism: Enterprise in a New Reality, and Reimagine Capitalism in a World of Fire. Pope Francis has criticized capitalism.

Capitalism and socialism are both foils to one another. A majority of Americans think capitalism is better than socialism, according to a new survey. The basic definitions of the primary economic approaches are often misconstrued. Under capitalism, the means of production are owned by individuals. Under socialism means of production are publicly owned by the government.

Whether it's better to have more or less of that depends on the extent to which the government controls the economy. Adam Smith studied this question when most economies were run by the government. Private ownership was the reason why nations were better served. His perspective of an invisible hand moving goods and services to their highest purpose was revolutionary. Over the last 200 years, the United States' population and standard of living have increased.

Smith was a moralist He believed that private ownership led business owners to serve their customers better than the government could. The approach did not eliminate all problems.

• Monopolies: Companies that controlled various industries through anti-competitive behavior, where success was determined by thwarting competitors rather than serving customers. Legislation was born to limit this.
• Fraud of one form or another: For example, the production of pharmaceuticals that had little to no value, with consumers who have no way to determine good from bad. Again, legislation paved the way for the FDA. Today, mass media and social media tend to expose and consequently, reduce fraud.
• Concentration of wealth: While some individuals flourished, others did not. In some cases, the level of poverty became a scandal. This led to a progressive tax system to fund entitlement programs.

It must be said that the term capitalism is associated with historic frauds such as WorldCom and Wells Fargo. This makes people dislike the entire operation. Individuals committed fraud in order to get short-term gains. The result was a destruction of wealth for these companies. Wealth is not generated by fraud. Privately-owned companies are not the only ones that suffer from fraud.

Large variations in wealth are caused by capitalism. People who work harder, are smarter, and are luckier generate more wealth. People who start with wealth have more wealth than people who don't. A number of notable capitalists secured enormous wealth by pursuing their own best interests. Steve Jobs, Bill Gates, Warren Buffet, Jeff Bezos, and many more. Their wealth is tied to their success. Is the rest of us better or worse off because of these and other people?

Their progress was made possible by their excellent service. They helped grow the workforce. They paid a lot of taxes. What if the private owners were only interested in making money? Is it possible that they would have served their customers well and paid taxes? It's important to do these things in order to build wealth. Most of them have become philanthropists. Smith said that private ownership and wealth need to be morally correct. The relationship between capitalism and morality is what it was in 1776.

The relationship is dependent on the everyday business owner and what they choose to do in the economy. What do you think that means for you?

• Are you serving your customers well, continually striving to better address their needs?
• Are you making the company's economic goals clear to every employee?
• Are you transparent with your employees about the company's performance?
• Are you sharing wealth with your employees, improving their standard of living?
• Are you encouraging employees to contribute their ideas to improve results?

You are doing good business if you nod along. There's a business that's strong in economic engagement. According to our research with the Harvard Business School, the five drivers lead to double the profits of your peers. If you want to learn how to improve your company's economic engagement, you need to complete this survey.

Capitalism is a perfect system. It's certainly not. Not even the strongest defender in the last 50 years would suggest that. Capitalism is the best economic system to date. The individual has control over the power. The responsibility is placed on the shoulders of reinforcing the relationship between capitalism and morality.