Friday, March 14, 2008

Does capitalism make a constructive difference?

One of the ethical debates around business and capitalism arises from a skepticism that profit-seeking, driving market behaviors and resting on private property can ever achieve moral outcomes for society.

I argued in my book Moral Capitalism that human dignity, morality, ethical behaviors, can't happen very well in a society that has no private property to support individual autonomy and self-reliant decision-making. Moreover, a life in poverty has fewer opportunities for personal achievement and service than a life lived in more comfortable circumstances where access to various forms of power is more readily at hand.

A recent news story on Russia, I thought, made a similar point about the constructive advantages of capitalism.

From 1999 - after its financial collapse - to 2007, the Russian stock market total capitalization rose from US$60 billion to US$ 1 trillion, it was reported. At US$1 trillion of market cap, a society can have many investors and a middle class worth notice.

Russia, now a more market grounded society, has been growing in wealth at 10% a year in real terms. Russians are becoming home owners. They are nearing the European standard of living - for the first time in history.

Russia is now a country with widespread property ownership and has millions of consumers brimming with confidence.

While such growth and its distribution has not solved all Russia's problems and has not of itself generated a viable multi-party electoral democracy, Russia can never be the same as it was under the Tzars or the Commissars.

Something fundamental has changed in the circumstances of the Russian people thanks to early stage capitalism and so significant political/cultural changes will not be that long in coming as well.

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