Print

 Email

Apple Computer Founder & CEO Steven Jobs

At its best, capitalism is an immensely powerful economic engine. Its power comes from our universal human inclination to feather one’s own nest. Thus, driven by billions of people working, striving, planning and strategizing for their own personal benefit, capitalism drives economic activity to the benefit of everyone.

Robert Butche

Cupertino

Entrepreneurial Capitalists: Instruments Of Construction

Steven Jobs, founder and once again CEO at Apple Computer, is one of many superstar capitalists — the men and women who drive our economy.  Capitalists like Jobs are not anything like the denizens of Wall Street, for Jobs is a classic entrepreneurial capitalist. Men like Jobs and women like Meg Whitman are dreamers, visionaries and doers who transform our world to their benefit and ours.

Capitalists And Entrepreneurs

We depend on capitalists for all that we do and all that we have. That’s because the men and women who, in companies large and small, knowingly choose to invest their energy and economic well-being in things new, different, or better benefit us all.

Being pushy, aggressive, creative, cunning and opportunistic are the skills each and every entrepreneur brings to their  economic endeavors. We all benefit from these people working for their own benefit and purpose. They create everything that’s new — from iPods, Google, Windows, Fords, 747s, YouTube and even Newsroom Magazine.

Entrepreneurial capitalist are all around us — in every country and field of endeavor. They are the engines that bring about new companies, new products and services. While they have profit in mind, it is not the sole purpose behind their risk taking and hard work. What they see is opportunity, better ways to do things, alternative approaches toward activities we all take for granted. They expand our lives by moving entertainment from the stage to broadcasting and movies. Extending journalism by way of electronics.

Transformative entrepreneurs are the constructors of what’s new even when the new destroys what no longer has economic merit. Thus the investors of the Internet changed how we communicate. One result has been the creation of massive new businesses and the end of others. Journalism has not been damaged by the Internet, but newspapers surely have because the ways we share information today makes communication by printing press less desirable.

In his career, Steve Jobs has not always been well understood by short-term oriented investors, but he has always been faithful to his calling.  Remove him from Apple and he launches Next Computer. Then Pixar. No matter where Jobs applies his talents, his focus is on the future. What can we do that’s new? Or capable of changing the course of history? Or simply fun?

Jobs is not about perfecting a cash flow generator, he’s about growing a new market, product or service — or a better one. But Job’s entrepreneurial approach to business is only one end of the capitalist activity continuum. At the other end are people with very different skills who are just as important to a successful capitalist economy. Like Mr. Jobs, each of them has a compact with capitalism in which their service to the economy, which benefits everyone, also includes direct and immediate personal rewards.

Technical Capitalists: Instruments Of Destruction

At the other end of the spectrum are technical capitalists — you probably know them as MBA’s because they seek to master the skills of administration. MBA’s have very different skill sets, ambitions and visions. In small numbers, the technical capitalists are the worker bees who make things run better and more efficiently. In large numbers, or worse, when MBA thinking is the only value set among managers, technical capitalists tend to mindlessly and endlessly optimize short term performance at the expense of long term viability. Think Enron, Arthur Young, General Motors, CBS, Lehman Brothers to better understand how MBA thinking moves outside the capitalist compact to where it becomes an instrument of destruction.

Unlike entrepreneurial capitalists who identify new markets, invest new products or expand into new markets, technical capitalists seek to perfect the profitability of existing businesses. Optimizing to achieve the highest possible short-term performance is legitimate to the degree that it reduces waste and improves efficiency. Many companies become complacent, or too focused on the what can be aspects of management to the detriment of economic efficiency.  That said, what’s most efficient can be overdone and when it is, as if often the case, technical capitalism becomes a destructive activity that trades off long term values for short term values.

Commercial broadcasting, banking, securities underwriting, insurance, auto manufacturing are industries that have been crippled, or in some cases perhaps destroyed at the hand of technical capitalism and its unshakable focus upon short term thinking, short term goals, and instant gratification. Look at what Enron did for the accounting business and you see how unfettered capitalism infects businesses that deal with or depend upon what emerges as a predatory economic vehicle. Another example is the open corruption that swept through Standard and Poor’s and Moody’s Investors Service.

Among the most successful technical capitalist are men like Warren Buffet who is a cunning investment value capitalist and Carl Icann who is one of many successful enterprise disassemblers — people who take a whole and divide it up into its constituent parts.

Is is possible someone as well respected as Warren Buffet could be destructive? In a word, yes. Not because he is a bad person, but because his job is to identify companies with great investment potential. Mr. Buffet seeks out companies that are well suited to optimizing short-term profitability potential to enhance market value for shareholders. Then he invests in those companies, and where appropriate, imparts his unique capitalist values and strategies to officers and managers. Warren Buffet is not a visionary, nor has he any interest in transforming the world beyond his own business interest. But it is men like Warren Buffet and Carl Icann who keep capitalism from becoming flaccid or inefficient by optimizing value.

Every action produces expected and unexpected consequences. Visionaries who take too great a risk more often than not fail with immense economic consequences. Technicians who overpower a company by forcing short-term decision making that produces unexpected long term consequences likewise produce failure.

Government’s Job Is To Define The Envelope

Unfortunately, capitalism is not always at its best — not because its foundations are are in question, but because left unchecked, striving to feather one’s own nest easily gets out of hand. As government adopted a less governing presence in the western economics in the last 25 years, the seed were planted for a capitalist explosion. Now we are reaping the consequences and re-learning what the world learned from the Great Depression: That at its worst, capitalism is an oppressive and demanding dictator absent either empathy or concern for anything beyond the simple mechanics of markets.

For this reason, capitalism cannot be left unfettered — for the envelope that defines what’s in everyone’s interest must be explicitly defined through laws and enforcement. Fettered capitalism is what works because the fetter are rules known to all participants and universally enforced for the good of all.

Establishing the fetter is the job of government — and no matter what one thinks about the bankers, financiers, corporate CEOs they were doing what our capitalist system demanded of them:  trying every which way to feather their own nest. Today the world is angry at those who knowingly or not cooked the books, broke the rules, suborned the governing mechanisms and poisoned the economic well. That’s as it ought to be, but it’s you and I, and everyone else who voted for those who used high office, all parties, all branches of government, to abdicate government’s responsibility to set the rules, define the limits and enforce the rules of the game.

Non Adversarial Capitalism

When government looked the other way the bankers, CEO’s and financiers saw opportunity in doing what was not previously acceptable. Not just for their own greed and avarice either — because failing to do so would put their organizations and personal best interests at risk. Next time you hear someone roast the bad guys, and there are millions of them, remind others that capitalism doesn’t succeed by practicing restraint. To the contrary, capitalism must rely on non participants to define the rules and enforce them.

Western nations, and others who have chosen the classic capitalist model for their national banking, finance and economic mechanisms, have benefited immensely from the underlying truth of capitalism — that people universally work toward their own personal interest.

One Cost Of Unfettered Capitalism: Executives Bonuses At The Expense of The Unemployed

Capitalist systems depend on a governing mechanism in the form of laws, oversight and courts whose purpose are to establish the rules and police conduct. Just as self-interest drives economic activity governance is essential to restrain those who may seek to go too far in their zeal to achieve, or those whose actions become overtly destructive to others.  Given that unrestrained capitalism is prone to escalate toward disproportionate distribution of wealth, the role of government is to assert political will as the principal instrument in defining societal goals and setting the limits for all capitalist-driven economic activities.

Restraint, in the form of ethics, education, sophistication and personal accountability are of immense importance — just not so much as governmental oversight and regulation. Absent clear consequences, definable standards of comportment, and criminal sanctions, capitalism is all to easily suborned by those who seek to add to their own personal self interest by diminishing that of others.

The ongoing collapse of capitalist institutions is due to those seeking to serve their own personal interests being far better at their job than those responsible for protecting capitalism itself from untoward manipulation and wrongful dealing. Capitalism as practiced in Britain and The United States has clearly failed. Not to where it is permanently damaged, or discredited as a means of economic engagement, but clear to where it must be repaired, restructured and rebuilt.

Apple’s Life After Death Rumors

And what about capitalists like Steve Jobs? Do investors value the men and women who drive every capitalist society? The answer is yes — and they ought to — for by feathering their own nest, the world’s brightest capitalist investors, managers and entrepreneurs make the world economy work for the benefit of us all.

And now the rest of us have to do our part by making more intelligent political decisions so that office holders who are willing to govern for the good of us all do their job: define the rules, set the standards, restore economic order and enforce the laws. The place to begin is now clear.

One last point. Consider how Apple stockholders reacted to rumors about Steve Jobs’ health. What we learn from how capitalists viewed Job’s recent illness is the immense importance of strong, clear and ethical corporate leadership. That’s when capitalism best serves the real-life needs of us all.

Investors Flee Day After Steve Jobs' Illness Reported

Mikael Blaisdell And Jeffrey Slee Contributed To This Article