Wednesday, February 3, 2010

The Perfection of Capital

There are a lot of things in the economic sphere that are necessary but, in practice, imperfect. For example, competition is necessary, but it is imperfect. Markets are necessary, but they are imperfect. Government oversight of the economy is necessary, but it is imperfect. Keynesian intervention is often necessary and effective, but it too is imperfect.

What is perfect, then? Authentic, unbiased compassion is perfect. But how can we enact compassion in the economic sphere? In most general terms, we can do so through the six economic virtues of generosity, ethics, tolerance, diligence, focus, and wisdom. More specifically, we can do so by creating a Civil Endowment System (CES).

At the core of the CES is civil capital, a base of resources permanently invested for the common good of humanity. It is not asserted here that civil capital could be perfect in execution. What is asserted is that it is perfect in conception. George Soros talks about the radical fallibility of human actions, and there is actually nothing in this assertion that contradicts that principle. What is asserted is that something in the realm of pure idea can be perfect, just as the mathematical formula for, say, a circle is perfect, and even though an absolutely perfect circle could never be drawn.

To understand why this is important, or even worth talking about, we need to go back to Folkert Wilkin's brilliant characterization of capital. He broke it down into two simple parts. The first is geist, a German term that can be translated as spirit or idea. This is the mental component of capital, the part that not only generates a business plan in its practical manifestation, but is also the spirit that governs the behavior of the capital altogether. The second aspect is wealth or financial power. This aspect, usually embodied in money, is the means by which the geist is put into action. There is a common assumption that the only geist of capital is to provide financial return on a selfish basis to the parties that provided the money. This assumption needs to be challenged. The logical outcome of applying universal unbiased compassion to the capital geist is to arrive at a form of capital that benefits the universal beneficiary.

The idea that the income or productivity of a body of capital could be assigned to the universal common good is, from a social and legal point of view, no different than designating a specific beneficiary of a trust fund. The macroeconomic effects of such a system could be truly transformative. Indeed, every major problem that we face globally in the economic sphere could be positively addressed by the formation of a CES. I do not say solved, here, because there remains the question of scale and implementation. This is not a Utopian proposal.

Though the Socially Responsible Investment (SRI) movement is a step in the right direction, it is not a complete transformation of the capital geist, since those who invest the capital are still the recipients of its productivity, albeit profits that are more ethically earned than with “reptilian” capital. As we consider the possibilities of civil capital, we should also keep in mind that the proposal for the CES (also called the Special Proposal) is an open-society initiative. One important implication of that is that nothing in it is meant to prohibit anyone from investing for their own benefit. What is challenged is merely the assumption that selfishness is the only geist available in the operation of capital.

Since geist resides in the sphere of mind, we can talk about the perfection of geist. The leap to a geist of universal benefit brings capital to its perfection. It is perfect in the sense that it is the most beneficial. As well, it completes the very conception of capital, so to speak. I use the term “perfection” here somewhat in the sense of the Tibetan term dzogpa, which also means completion. Thus, the notion of perfection of capital means not only civil capital, but also means recognizing the full extent of the range of qualities of geist behind it, from the least beneficial (pure selfishness) to the most (pure universal compassion).

Granted, it could be argued that it is an unproven assertion to state that authentic, unbiased compassion is the perfection of capital geist. However, the attitude of compassion in general is in accordance with, not just Buddhism but, I would argue, all the major spiritual traditions. Ultimately, one's acceptance or rejection of this idea is a personal matter, but in any case it is the basis for the assertion that civil capital is the perfection of capital.

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