The end of capitalism – or an immune reaction

Since 2008 I see countless articles proclaiming the end of capitalism. What’s this gobbledygook on the end of capitalism about?

It’s not the first time that I invoke my childhood memories to make the wider point in an argument. So here we go.

At the tender age of 11 my parents decided that we had to own the house we were living in so we moved into a small village just 5 km off the border of what was then Czechoslovakia. That was not my first brush with the Iron Curtain but my most enduring one. As kids we frequently took our bicycles for some border fun. It always was an eerie feeling standing on our side of the border (we could walk up to the actual line) having a sign there that this is the end of Austria (for us the civilized world) and beyond that line the wild lands of communism spread out.

No capitalism, just financial markets …

It did not take me mental flips and twists to imagine that a system needing all those watchtowers, barbed wire, shooting areas and whatever else was dreamed up by the communist prison wards in order to hold their own population from running away to the west, was not good for humans. I knew I was happy to be in the West (although it’s debatable of how much Austria had mentally ever joined the Western world).

But my real brush with capitalism came when I tried my luck on the free market for the first time. At the time I wanted to make my job (being a bodyguard for rich Arabs) a business. It was a colossal failure as at the time I did not understand the basic premise of all business. No clients – no cash. No cash – no party.

I was good at what I did and I thought that would work out for itself, but it didn’t. It’s not even enough if others know how good you are – they had to feel that they are buying something special. That’s when marketing entered my life.

Fast forward to 2008. The world as we knew it ended because easy money and pie in the sky projections were no more in a single minute. And as the bribery system did not work anymore, as the fabric of business was tearing up in shrivels, all the ugly warts and scars of the last 20-30 years got exposed. We were overspending, underachieving, over expecting, underpreparing. A whole generation grew up expecting the world would beat a path to their doorstep and that a living was owed to them from the minute they were born.

This permeated everything.

Much of our generation thought that we are going to have a free ride and the generation after us expects it even more than we did or still do. This has nothing to do with capitalism or communism or any other belief system. It has got everything to do with taking chances and the value of self-responsibility.

Capitalism, as some want it is thought to be the reign of capital. But I equate it with something else, something more. Capital is present in communism as well; just the methods of employing it or doling it out are different. Or are they?

Let’s take a deep look into today’s corporate world. How is capital being allocated? By committee – in big corporations single managers never take real decisions. They always envelop every little bit they do in a thick layer of consenting opinions so in case something goes wrong they can always argue it was not them who took the bad decision. That’s not very different from what communism did.

In the end it’s not the battle between capitalism and communism as the differences are just philosophical. The difference is between freedom and the dictate of educated elites (or whatever they call themselves). It’s the battle between red blood, free range entrepreneurs and bureaucrats; it’s the battle between free choice and a guided and cushioned life. It’s the battle of the will against the machine. It’s standing up to the matrix in us. Because the matrix has every one of us and just like Neo we cannot claim to be free while enjoying all its benefits.

It just hits me when I see corporate officers of big corporations being hailed as entrepreneurs. They are invited to entrepreneur shows, write entrepreneur books, talk the entrepreneur gobbledygook and when they want some credit they always get it. And in most cases they have climbed through the corporate ladder without ever having spent one single day doing what real entrepreneurs do. Raising some cash to get a small business going, listing to twitchy customers, changing their business plan for the 18th time because itchy banks are still not happy, living to the whim of those who pay a buck for the services you offer – or not.

Those corporate officers have nothing to do with an entrepreneur. They are just window dressing. Just imagine Steve Jobs having a coordination meeting.

And here it all goes back to the totalitarian system – call it communism if you like. Totalitarian systems are full of those apparatchiks just as are corporations, the top echelons of government and any other organization with a hierarchy.

Maybe, those who are entrepreneurs at some moment roll back to become apparatchiks in time – I don’t know.

No crisi, metamorphosis …

Fact is that today we are living in a world where the real entrepreneur counts for nothing and the apparent ones are the heroes. It’s a time of easy money and quick returns. It’s a gamblers paradise and that’s where we join in with what happens in the gas world. It’s all about trading, quick wins, spreads and how certain indexes are going to develop. We still care more about the spreadsheet when we should take a deeper look at the fundamental business.

My grandfather told me to never trust lawyers and financial counselors. Too bad I am a lawyer by training myself today.

But if we take a deeper look to those lines – the true meaning I that the financial world is a thin layer on the real economy which is bricks and iron, food and beverages, haircuts and paperclips. The financial industry needs the underlying real economy for a living – it’s the secondary thing. The real economy on the other side does very well without the financial hubris on top.

Unfortunately, business and entrepreneurship are confounded with the financial markets today. Today, a FOREX shark in the docklands is called a trader whereas the scissors and buttons peddler is being treated as some better bum.

Capitalism is not the financial markets – they are just a metalayer on the real thing, the real market which is bread and beans and not financial spreads.

So, is capitalism dying. No way. See what happens today as some sort of immune reaction by the underlying organism. Capitalism is purging itself and breaks the metalayer in order to make space for the real thing. That’s always painful and as we were lulled to believe that world is going to end without corporate services, higher management and the financial world we are afraid of what’s getting us right now. But worry not.

The real economy is coming back with a vengeance. Better, stronger, much more resilient than ever before. Capitalism is having its Renaissance and it’s going to be better than anything we have ever imagined. James Shepperd said in a forum that capitalism is consuming its last layer because it grows up. As long as there is basic freedom to shape one’s life, there will always be those who will pick up the torch and carry it to light the fire. Labels are of no importance – what really matters is those who will build on the ashes.