Socialism, Capitalism, or Social Capitalism

by Dan Robles on 01/31/2009

pl096che-guevara-havana-cuba-1963-postersThroughout history, technological change has also brought changes in the organization of society around the new ways to allocate resources.  The industrial revolution spawned the two prevailing economic theories of our time; Capitalism and Communism.  The current wave of technological change will likely spawn new economic theories and social organization systems as well.

Capitalism arose from feudalism and is roughly characterized by a merchant class that owns the factors of production (land, labor, and capital) and a working class whose physical toil adds value to natural resources.  The capitalist acting in their own best interest is ultimately acting in the best interest of society by creating jobs that employ people.

Then Karl Marx came along and noted the inherent conflict where the workers would seek to maximize their wages and the merchants would seek to minimize wages.  He argued that class struggle would ultimately result in a communist system replacing the capitalist system. The communist acting in the best interest of society is ultimately acting in their own best interest.  Socialism is widely regarded as the transitional stage between capitalism and communism.

But the struggle is really over the control of the means of production, or factors of production. Are land, labor, and capital private property or public property?

Today, computer enabled society engaged in an innovation economy presents an entirely new set of conditions.  What happens when the factors of production are social capital, creative capital, and intellectual capital?  How are these “means of production” going to be controlled and by whom?

This is a serious philosophical quandary that will be brought down upon us in the next generation of social media because neither socialism or capitalism are applicable in a traditional sense. Like Heisenberg’s theory of indeterminacy – the more control you have over one factor, the less control you have over the other.  This is not a condition related to the ability to control someone or something, rather, it is a condition related to the nature of the system itself.  That’s a big deal.

For the socialist: in order to control social capital, one must equalize society – as such, the system retains little innovation production value.  In order to control creative capital, one must standardize creativity – likewise, the system retains little innovation production value.  In order to control intellectual capital, one must control the intellectual development of another – again, the system retains little innovation production value.

Likewise for the capitalist, many people understand social capitalism to be capitalism with a social benefit.  While this is correct, it is likely not scalable in the current form.  There is no ROI to curb global warming, there is no ROI to educate the poor, there is no ROI for human rights, and there is no ROI on the national debt, etc. As such, the system is constrained by the social burden to innovate.

There is, however, a business plan to liberate social capital, creative capital, and intellectual capital as tangible financial instruments in their own right, by definition, reflecting social priorities in an innovation economy.  This is where the next generation of social media is leading to – and it scales magnificently.  Have you noticed? That is Social Capitalism.

The Ingenesist Project is an open source economic development program promoting an innovation economy.

{ 7 comments }

Dan July 28, 2010 at 8:02 am

Robert, Thank you for you comments on this topic. Your body of work is impressive. The problem is that it is irrational to expect corporations, politicians, and bankers to wake up one morning and “get it” then voluntarily en masse lay down their power to the masses – it will not happen. I read academic papers that astutely identify the problems then conclude with “government should do this…and corporations should do that…, etc. Again, this will never happen. Finally the expectation that people will rise up with a direct and intentional challenge to the great empire simply will not happen. The best we can expect is for a set of governing principles assigned to social media which reward social priorities over wall street priorities so that people can meet their basic needs, then letting the existing market capitalism collapse on it’s own. Please see my YouTube channel “ingenesist” and my blog “ingenesist.com” for a wide range of topics on this matter. Again, thank you for your comment.

Robert Corfe July 28, 2010 at 4:20 am

The industrial revolution, with the transformation of society in the advanced economies over the past 60 years, has produced a third alternative to rentier capitalism or socialism, and that is SOCIAL CAPITALISM, defined in terms of the individual through personal empowerment via share-ownership and legal control over management, taking oover the means of production, distribution and the means of exchange. This is something very different from collective control, or that managed by elective committees which mutate into tyrannical elites in their own right. SOCIAL CAPITALISM as elaborated in Robert Corfe’s 3-volume book, “Social Capitalism in Theory & Practice” (Published by Arena Books), presents a practical alternative to existing ideologies for a just, equitable and free society.

ingenesist June 6, 2010 at 12:44 pm

RT @TopsyRT: Socialism, Capitalism, or Social Capitalism http://bit.ly/aX2fPw

ingenesist (ingenesist) September 11, 2009 at 2:48 pm

Twitter Comment


RT @JDeragon Socialism, Capitalism, or Social Capitalism | The Relationship Economy…… [link to post]

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Mary Adams February 2, 2009 at 3:27 pm

The knowledge economy actually turns the concept of control on its head.

The productive assets of the knowledge economy are human, relationship and structural knowledge capital (like process, software and IP)–these are collectively called intellectual capital (IC). Of the three kinds of IC, only structural capital can be owned. And it quickly loses value without the other two.

People and relationships cannot be owned. Thus, successful knowledge era businesses have to behave in a way that keeps their stakeholders engaged. The control of productive assets has shifted to the stakeholders. Organizations must earn their participation.

That’s why I call reputation the “new bottom line”, in my list of the ten new basics of business at http://www.i-capitaladvisors.com/new-basics

Ole Kristensen January 31, 2009 at 7:43 am

Well it’s all about capitalism, no doubt.

I see 4 different approaches – more is emerging:
1) Commodity capitalism – physichal goods wrapped in a box ….
2) “Give-away” capitalism (Google, Open Source, social networks) …..
3) “Save the World” capitalism – reducing energy consumption, corporate social responsibility ……
4) Climate capitalism – windmills for example is producing more energy for consumer growth and not saving energy ……

prblogs January 31, 2009 at 5:48 am

RelationshipEcon: Socialism, Capitalism, or Social Capitalism: The industrial revolution spawne.. http://tinyurl.com/c2corn

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