In his Akimbo podcast [https://www.akimbo.me/], Seth Godin teaches us how to adopt a posture of possibility, change the culture, and choose to make a difference. Here are my takeaways from the episode.
In this podcast, Seth discusses the concept of a free market and how it differs from capitalism.
A free market is a place where, the buyers and sellers try to figure out what others want or can provide. We like the opportunities that a free market can provide. In our complex society, the free market is fragile and hardly stable.
Capitalism is the idea that capital money can be invested to build systems and to make things that would improve our productivity. Many people use the terms of free market and capitalism interchangeably. While capitalism can fuel the free market, but it is not the free market.
Capitalism also can lead to a ratchet called progress. But capitalism also comes with three challenges.
The first challenge is that capitalism encourages monopolistic behaviors. A monopoly takes away people’s choices. When we do not have a choice, we must do what the capitalist wants us to do.
The second challenge is that capitalism encourages short-term thinking. The short-term thinking comes from that capitalism measures return on investment, and return on investment is time-based. As a result, the short-term thinking of capitalists combined with short-term thinking of consumers produces an environment where nobody is thinking about the long-term.
The third challenge for capitalism is corruption. Without boundaries and left to its own devices, bad actors in the market will attempt to use any means necessary to get an advantage. The outcome is Gresham’s law, where “bad money drives out good.”
On the other hand, the free market dislikes monopoly because the free market works when people have choices. The free market also does not work well when we make it very difficult to build things for the long haul. It is already difficult to focus on quality and meaningful things that will last. The free market also does poorly with the weight of corruption. When a capitalist acts like a bully who is trying to power its way through the rule and structures of the free market, we all lose.
If we care about choice, investing for the long-term, and making progress without the threat of corruptive influence, we must stand up and defend the free market. Defending the free market is not the same as defending capitalism. Crony capitalism is a selfish act that tries to make the market work for itself and walks away from the very idea of the free market. A free market is about making better things and creating a better future for everyone.