Is Capitalism, Like Communism, Doomed To Fail?



The inspiration for this post started with a story shared on facebook. Some of you might have already read it:

An anthropologist offered to children of an African tribe to play a game. He put a fruit basket near a tree and turned to the children and announced: "Whichever one of you will be the first to run to the tree, will be awarded all the sweet fruits in the basket”. When he made a sign to the children to start the race, they firmly held each others hands and ran all together, and then all sat together and enjoyed the delicious fruit. The anthropologist was surprised by this and asked the children why they ran together, because any one of them could have been the one to enjoy the fruit all for himself. To which they answered: "Obonato." Is it possible for one to be happy, if all the others are sad? "Obonato" in their language means: "I exist because we exist." 

 
I don’t know if this story is true or just yet another urban myth that is running around the Internet, but it is inspiring.  It reminded me of Robert Reich’s movie “Inequality for All”, where he preaches for a more equal distribution of wealth, by taxing heavily the rich and giving more money to the poor. I was very impressed by his theory, yet keeping in mind that this is a theory I asked different people around me for their opinion on it. The most interesting opposing comment I heard in the matter was that a government should never be trusted with the public’s money. 


The 2008 real estate crisis that caused a global economic recession made me wonder if capital gain and social gain can be achieved together. In my continuous search for an economic model that might provide a better solution for a more balanced distribution of wealth in our society, I came across the 2009 Cleveland Model; a for-profit green cooperative called Evergreen, comprised of 4 companies all owned by the employees. The doctrine behind this model is that poverty couldn’t be eradicated by merely creating jobs, but rather by creating wealth.


The Cleveland Model got its inspiration from the Mondragon Corporation in Spain.  Founded in 1956, this employee-owned corporation is today Spain's seventh largest company. During recent recession, when many companies around the world cut back on their work force, Mondragon did not lay off any of its 80,000 employees, instead the employees/owners voted to cut back on their salaries. Today the company has an annual revenue of €15B. 

 
In my search I also learned about employee-owned companies that started as privately owned companies.  In 2010 Bob Moore the founder of Bob’s Red Mill decided to transfer the company he started in 1978 to his 209 employees, acknowledging their part in the company success.  In 2013 Joe Lueken of Minnesota decided to give his company to his 400 employees. His family owned Lueken's Village Foods since 1966. In an interview with him he said: "My employees are largely responsible for any success I've had, and they deserve to get some of the benefits of that. You can't always take. You also have to give back."


It seems to me that worker-owned companies might be a middle ground between communism and capitalism.  Communism hoped to create an equal society, but it failed because people had no incentives to motivate them to work harder. They got paid the same regardless of their effort.  Capitalism on the other hand encourages people to work harder for bigger economical success, but in reality it turned the weaker social-economic groups in to an easier target to be abused by the rich, strong and greedy, while social mobility becomes harder to achieve. The employee-owned cooperatives is a system where, unlike communism, people are compensated for their effort and yet, unlike capitalism, there is an agreed upon salary gap between management and workers. The success of an employee-owned  organization is a personal success for each worker/owner. This Obonato economical model, I succeed because you succeed, might have a chance to make the world a better place for all people.




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