Capitalism: The Powers of Good and Evil

 
In July of 2008, the TED Spread, a financial indicator of perceived credit risk the the U.S. economy as a whole, suddenly spiked. The TED Spread is measured in basis points (bps) between the interest rates on interbank loans and the short-term U.S. government debt, also known as T-bills. The long-term average of TED Spread has been 30 bps with a maximum of 50 bps.

However, with the spike, we were then in the range of 150–200 bps. But, the worst was yet to come. On September 16, 2008, the spread exceeded 300 bps, which was higher than the Black Monday market crash in 1987. It continued to spiral upwards, and on October 10, 2008, it hit an astonishing 457 bps.

The financial crisis was in full swing.

Those were crazy days, with the market behaving erratically and many people in a near panic. Decisions were being hastily made, as the powers that be attempted to arrest what was quickly becoming a catastrophic event. Over the course of 2007–2008, the collective we lost about 25% of our collective value in the U.S.

But, things could have been much, much worse.

As the immediate aftermath cleared, we started taking a look into what had actually happened. Our economic system is excessively complex, and tracking down root causes can be notoriously difficult (if not impossible). The complexity of the situation allowed pundits from all political backgrounds to seize the opportunity to attack their rivals, throwing blame on anyone and everyone.

The Theory of How the Financial System Created AAA-rated Assets out of Subprime Mortgages

^^^ hover to reveal ^^^

I have no desire at this time to dive into the complexities of what happened. Instead, I’d like to look at some of the results.

Loss of Faith

At no other time I can recall has there been such stigma associated with being a businesswoman or businessman. The stories of excess and greed that surfaced as we peeled back the layers in an attempt to understand the financial sector meltdown were astonishing (and not in a good way).

The surfacing information fueled passions that would fan into movements such as Occupy Wall Street and the resulting Occupy Movement. Media coverage varied.

Regardless of where you come down on this debate, it is clear something is terribly broken. I’d like to suggest one thing that’s terribly broken is people’s perception of business and its place in society.

That’s hardly surprising based on some of the ideology we’ve bought into over the last 30 to 40 years. Greed and corruption have certainly been taking place, but is it truly the fault of capitalism?

Power for Good and Evil

The truth of the matter is that capitalism has the ability to do great good or great evil in the world. In and of itself, like money, it is amoral, waiting for the hand of man to shape it into its final morality.

Capitalism has been extraordinarily successful over the past two centuries at raising human living standards, life expectancy and life satisfaction. But the old way is not working any more. The world has changed so much and people have evolved so rapidly that we need to bring a higher level of consciousness to the world of business. When we do so, the results can be astonishing.
~ Raj Sisodia

So, it comes down to us and what we are do with it. With over 400 other business leaders, I recently attended Conscious Capitalism 2015, a conference dedicated to the teaching of how to do business correctly and consciously within our complex world.

You can read my notes from that conference including those on the talk given by Raj Sisodia. It was quite similar to the one he gave at TEDxNewEngland.

So, with the power to do good, let us go forth and do good.

What we do matters.