Against economic absolutism

March 31, 2021, 10:55 AM UTC

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Good morning. David Meyer here in Berlin, filling in for Alan.

Majorities of millennials and Gen Zers view socialism favorably, while most Gen Xers and baby boomers tend to see it in a negative light. That’s according to Fortune‘s latest poll with SurveyMonkey—a sneak peek just went out here, though premium subscribers will have seen it already.

As Fortune‘s Lance Lambert writes in that newsletter: “The big question for the future of business: Are these diverging views a result of age (in other words, Gen Zers and millennials will change their views over time) or a signal of a true generational shift in economic thinking?”

That’s a great question. Personally, I think the time is ripe for a shift in economic thinking—but I’m not convinced that the capitalism-versus-socialism dichotomy is the best framework in which that should happen.

I’m writing from Germany, which is a capitalist country that combines free markets with a hefty welfare state and strong workers’ rights. This “social market economy” was created largely to ward off the threat of militant socialism, and in that regard it has worked—although parties still try to pull things a bit towards the economic right or left, there’s broad consensus around the middle way.

I’m not saying the German system is the glorious culmination of economic evolution, but it is certainly very odd viewing the American capitalism/socialism debate from this vantage point. And, from this perspective, it’s not hard to see why a generational divide is emerging in the U.S.

The problem, I would posit, is one of absolutism: in this case, the Cold War-era idea that deploying the words “socialist” and “capitalist” is a self-explanatory debate-ender.

It is clear even to most capitalists that the system is not currently working for everyone as it should—hence the push for a more thoughtful, inclusive stakeholder capitalism that this publication rightly champions. So what do advocates of capitalism expect will happen if they tell younger people that significant changes to the system, such as stronger workers’ rights or a lessening of inequality, are inherently socialist and should therefore be dismissed out-of-hand, for fear of the slippery slope? The result will be the inadvertent promotion of what they’re trying to fend off.

It reminds me somewhat of Reefer Madness, the 1936 propaganda film that was intended to warn youngsters off the demon herb, but was so absurd in its claims about marijuana’s effects that it became a stoner classic. Young people aren’t stupid. They can handle nuance, and they can judge attempts at persuasion by what they see in front of them.

The situation is also confused by the fact that few people, socialists included, can agree on what socialism is. Is it the precursor to full-blown revolutionary communism, with the state owning everything? Is it a set of reformist tweaks for gradually making our world more just? Both arguably qualify as socialism, but—as with the vast capitalist spectrum that lies between Milton Friedman and Elizabeth Warren—there are many stances in-between.

The result: an unproductive argument in which no-one is really talking about the same thing.

Ultimately, we may need new ideas and perspectives that are wedded not to 19th century -isms, but to the emerging reality we see around us—a digitized and heavily interconnected world in which the line between the so-called working and middle classes is getting ever blurrier, the “means of production” is increasingly staffed by A.I., and economic inequality keeps worsening.

But in the meantime, the promises of the stakeholder capitalism push could count for a lot—if companies follow through on them in a way that’s visible and truly meaningful to those younger generations.

News below.

David Meyer



London's biggest IPO in a decade fell flat, as Amazon-backed Deliveroo's shares fell as much as 30% on their trading debut this morning. The food-delivery company had already cut its IPO target range, after investors reacted badly to its share ownership structure and indicated that, with workers' rights being strengthened by recent court rulings, the gig economy might not be such a smart bet right now. City AM

Gender inequality

A new report from the World Economic Forum suggests that the runway to gender parity has lengthened from 99.5 years to 135.6 years, because of the pandemic's disproportionate infliction of economic harm on women. Fortune

COVID report

The WHO has conceded that its own report into the origins of COVID-19 is inadequate, due to China not handing over sufficient data. "I expect future collaborative studies to include more timely and comprehensive data sharing," said director general Tedros Adhanom Ghebreyesus. "I do not believe that this assessment was extensive enough." Fortune

Boosting productivity

A new McKinsey Global Institute report suggests "there is potential to accelerate annual productivity growth by about one percentage point in the period to 2024," which would be "more than double the pre-pandemic rate of productivity growth." Much of this potential can be realized through "accelerated digitization and automation," the consultancy suggests, though it also warns of inequality and unemployment hurting demand. McKinsey


Robinhood IPO

Fortune's Shawn Tully has written a great piece on Robinhood's imminent IPO: "Retail investors who enter when trading starts purchase at almost exactly the same price as small and large investors who participated in the auction. The little guy gets just as good a deal as Wall Street's favorites. If Robinhood wants real IPO democracy, it should open the door so that all comers, not just its own customers and the Wall Street big shots, are welcome on the same terms." Fortune

Bad Volkswagen

Volkswagen isn't really changing its name to Voltswagen in the U.S., the company has admitted after issuing false statements over the switch. Apparently the announcement was supposed to be a "pre-April Fool's Day joke." Problem is, that's not a thing. Fortune

Chipotle bitcoin

On Thursday, which is both April Fool's Day and "National Burrito Day" in the U.S., Chipotle will be giving away $100,000 in bitcoin. People visiting a "Burritos or Bitcoin" website will be able to guess a six-digit code that could unlock up to $25,000 in the cryptocurrency, or just some free food. Fortune

Public transit

The pandemic has hit the finances of public transit systems hard, but investment in them is essential for our recovery from COVID-19, write San Francisco Mayor London Breed and Milan Mayor Giuseppe Sala in this piece for Fortune: "Achieving a green and just economy requires bold thinking about our future destination, instead of reversing to the previous stop." Fortune

This edition of CEO Daily was edited by David Meyer.

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