Capitalism Run Amok, Part 4

Capitalism Run Amok, Part 4

For to all those who have, more will be given, and they will have in abundance; but from those who have nothing, even what they have will be taken from them. Matthew 25:29

Last week I shared my layperson’s understanding of the evolution of society’s money-handlers, from local banks to investment banks, venture capitalists, and private equity firms, each structured to make significantly greater amounts of money from the funds they invest – often with devastating consequences to workers, product quality and availability, and the overall rate of inflation. What began as a stabilizing cornerstone in the marketplace has become a ravenous beast, threatening to devour everything of value in its path. Similar to the steady progression of the effects of global warming, changes in the ways money is made and invested began in subtle, limited ways that are now exponentially more invasive. And we wonder who is to blame. Greedy corporate executives? Unscrupulous shareholders? Corrupt politicians? Inept regulators? Certainly there are guilty persons in those categories, but the folks who can most powerfully right this wayward ship are the average everyday consumers, small investors, and taxpayers. Like me. And like you. The ones we accuse with fingers of blame are, for the most part, only responding to the behaviors of the rest of us based on our purchasing and investing decisions.

Most of us with money invested in mutual and other stock funds are supporting companies whose operations are harming our overall economy with short-sighted, often-harmful business practices. Especially at fault are those of us who do not monitor the companies in whom we invest. Of course, we want to see the value of our accounts grow as quickly as possible, so we (or our investment advisors, acting on our behalf) invest in the funds increasing in value most quickly. And those funds primarily invest in companies whose value is projected to increase quickly, which is often private equity and others whose practices increase value without regard to the longer-term impacts on workers, consumers, and overall inflation rates. Because I have a few investment accounts for retirement, I am a person of privilege who can direct my funds toward companies I wish to see prosper and away from those I choose not to support. It requires some research on my part, and the rates of growth will be affected by my decisions. Regardless, if I am inattentive to what I do with the money I have, I not only unwittingly support detrimental business practices, I benefit from them at the expense of others. So I share responsibility for our current mess; and if you have retirement or other stock accounts and don’t know what you’re invested in, so do you.

Several years ago, a financial advisor introduced me to socially-responsible investing (SRI). These are mutual funds that invest in firms committed to ethical and socially-responsible business practices – those with policies and practices committed to sustainability, social justice, environmental impacts, and the betterment of society. Apparently, the rate of return on SRI funds has been less than a half-percent lower than for many popular non-SRI funds over the last five years. Alternatively, we can invest in businesses with a B Corp Certification, who are committed to (1) demonstrating high social and environmental performance, (2) being accountable to all their stakeholders (which includes employees, consumers, and other affected communities) and not just to their shareholders (owner/investors), and (3) transparency in how they perform against the B Corp standards.[1] And there are other excellent options for supporting conscientious players in the market. By making well-researched, conscious choices in our purchasing and investing behaviors we can reshape our economic environment.

As consumers, we normally seek the best product at the lowest price, whether we are buying groceries, a car, or investing for retirement. And the market responds accordingly – it supplies what we purchase. But the downstream costs and unintended consequences of our purchasing behaviors are seldom obvious. Consumer demand drives the market, and when we blindly support lowest prices, other areas of society pay the balance. We contribute to the rising rates of unemployment, inflation, and homelessness. When we support companies who can offer cheaper prices because of careless business practices, we become co-conspirators in the resulting devastation. Outsourcing jobs to foreign companies where worker protections and wages are abysmal, purchasing materials from suppliers with similar practices, and cutting the numbers, salaries, and benefits of the local workforce may result in lower prices, but only when our research stops at the listed price.

The point is that uninformed consumers perpetuate destructive market practices. Those of us with investment accounts and who are able to pay somewhat more for our products are best suited to

support companies running their business in sustainable ways that provide wide-spread benefits to society. Once we make unethical business practices unprofitable, the market will abound with companies that provide good products at fair prices, treat their employees well, and support the communities that support them.

This is the 17^th in a series titled The New-Old Social Pandemic. The opinions expressed here are mine. To engage with me or to explore contemplative spiritual direction, contact me at ghildenbrand@sunflower.com.

---

[1] https://www.bcorporation.net/en-us/certification, accessed May 27, 2024.