26 June 2006

Compassionate Capitalism?

Well played Warren Buffett! The world's second biggest billionaire gave US$37bn (or 85% of his wealth) to charity. Hats off to you sir.

It kind of restores your faith in capitalism. The free market does have the capacity to make people's lives better. Sadly, however, it doesn't always do so. I don't need to explain it because everyone knows about it. America, Africa, enough said. There are clear problems with the system. While it makes it possible for a man to become rich, the marlet makes it equally possible for someone else to become poorer as a result.

I'm no economist but from my understanding, what it comes down to is how the system is worked. It's the people who make it what it is. The good side of capitalism is that it gives people the freedom to make choices. If you want to better your financial well-being, there is nothing in the way to stop you doing so. And there's absolutely nothing wrong with wanting to be rich. If people want to make a better life, why stop them? Let them do whatever they need to improve their lot.

The bad side of this freedom to choose can arise once we get the money we worked for. We can choose to do good things with it or we can choose to do less good things. Greed can set in. It's easy to become ruthless and work only for yourself even to the point where we don't mind if someone else suffers as a result. That's where the unfortunate effects of inequality set in. For example, look at what colonialism has done. The old ruling countries have got all the benefits of the resources and wealth of the countries they used to rule and left them with very little. Unfortunately when we think of the effects of the free market, this is what we see happens.

What we see less of is people like Buffett who has shown the positive side of what the system can do. His success has come because the free market has allowed his business to succeed and, in admirable fashion, he has used the fruits of this success to help others by giving a vast amount of his wealth to people who need it. This is not to say that capitalism is the best or anything like that but it does demonstrate the possibilities it opens up for good things to be done. The system gives choice to the individual so it is ultimately down to the individual to make the system work for the benefit of everyone. It may not exist at large but it is possible for such compassionate capitalism to exist and, hopefully, help improve lives.

It's interesting to note that at 76 Buffett is, shall we say, in the autumn of his years. All human beings, rich or poor will die one day. Whatever inequalities exist between us in life, death is one thing we all have in common. It is the single great equaliser of life on earth. As a result, it makes sense to send the money to people who need it more because we can't take our material possessions with us to the grave. They stay in this world for people who are still alive to use.

Perhaps his choice to give what capitalism has allowed him to earn is because he saw this bigger picture. It may therefore be that if we remember the bigger picture of life that capitalist thinking exists within, the free market may be able to create better lives for people. It would probably be easier to forget but I do hope I can keep this in mind once I start work in the massive money-making machine that is the City of London.

The choice is ours. How will we use it?


Anonymous Sidra said...

well said.


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