Thrive in a Capitalist Society By Understanding It First

As we consider our next steps, I’ve been thinking a lot about our choices that led us to pursue financial independence. In order to give a better perspective on how we got to where we are, I wanted to share my views about our capitalist economic system and its accompanying societal pressures. You have to recognize how the capitalist system works before you can make it work for you.

How Capitalism and Society Keep Us Trapped

Society likes to dictate the way we think, work, and live. In the Western world, we live in a capitalist society that is premised on perpetually increasing economic growth by growing the consumption of material goods.  The natural corollaries to the capitalism include:

  • Wealth is the primary indicator of success and profit is the ultimate goal of business;
  • Competition leads to better and more affordable products; and
  • Wage laborers are necessary to both produce and consume the goods.

Before I tear it down, let me state that I agree with capitalism as the lesser of multiple evils. Competition is a good thing. Workers are important to productivity and national well-being. But capitalism is a pyramid system that keeps many shackled in place, like what the machines did to mankind in the Matrix.

The Self-Sustaining Pyramid System

Capitalism creates a pyramid-shaped system where a handful of wealthy and successful capitalists sit at the top, well-educated elites in the middle, and the masses sit at the bottom. The capitalists duel it out for dominance of their respective markets, and some may get knocked off their perch.  At the bottom, the wage laborers grind away, making profit for the capitalists. How can a system built on taking advantage of the weak sustain itself without revolt?

capitalism pyramid rich poor worker
A pessimistic representation of the capitalism pyramid (artist unknown)

Well the answer is society. Society tells the wage laborers that, with hard work and patience, anyone can be successful. You have to work hard to become successful, but if you fail to become successful, it’s your own damn fault. It encourages laborers to think about the capitalists as their peers — peers who worked hard, became successful, and now are on top. Success stories, like Elon Musk and Mark Zuckerberg, are regularly featured in magazines and movies to help everyone else keep the faith. The mantra of hard work the essence of the “American Dream” without the dressage of the house, white-picket fence, and 2.5 kids. Increasingly, it’s an illusion that is difficult to sustain with today’s income and class inequality.

American dream marriage counselor
Cam Cardow: The Souring of the American Dream

The Career System Keeps Us Distracted

So even if wage laborers are realistic enough to realize they will not be the next Warren Buffet or Carlos Slim, there’s another system in place to keep them working hard and productive.  The capitalists developed a wage system to incentivize their workers to dedicate their lives to their careers. The capitalists “game-ified” work to allow the laborer to gather achievements like raises and promotions to allow them to continue to want to work. People are naturally motivated when their work appears to pay off.  This psychology also explains why people mindlessly play games like Farmville.

Career workplace gamification man collecting coins
Credit: Thinkstock

Consumption and Status, Driven by Advertising

Finally, as noted above, our economy is mostly driven by the consumption of goods. Since the wage laborers comprise the vast majority of the population, they themselves consume most of the goods using the salaries and wages paid by the capitalists who make the goods. (Of course, we are talking about capitalists and wage laborers in the aggregate, not presuming that the wage laborer is the one buying his/her capitalist’s goods.) As long as consumption increases, the capitalists can continue to reap a profit.  It’s a cycle that must keep growing to allow the capitalists to make enough profit while paying the wage laborers enough to sustain or even grow their level of consumption. Otherwise, the economy risks falling into a death spiral — decreasing consumption means less profit for the capitalists and less pay to those who consume the goods, who then buy less.

Society plays a role in sustaining consumption as well. Maybe it’s more human nature. We often gauge our success and the success of those around us by metrics set by society. People like to flaunt their supposed station in life by purchasing status symbols like BMW cars, Rolex watches, LV purses, etc. In reality, a lot of people who play this game are living paycheck-to-paycheck. Those who look up to or emulate them are bound for a similar fate.

Enter Advertising

Then you have advertising, which is a 24/7 siren blast of marketing information to encourage consumers to gravitate towards certain brands. It’s everywhere you look. Maybe someday you will even find advertising on this blog.  It’s a new currency that is a precursor to a sale of goods, like a dollar derivative.

A magazine is basically advertising cover-to-cover. Take a fashion magazine like Glamour. There are the outright advertisements which are on every other page.  Then there are top-10 lists or purchase guides, which are another form of advertising.  Finally, there are pictures of models wearing outfits with small print advertising what they are wearing and how much the outfits cost. It’s the same with tech magazines, except with gadgets. Or take movies where you have an actor conspicuously holding up a can of Coke or driving an Audi through a busy street. You’re basically treated as a head of cattle herded through a sea of advertising.

Running the rat race advertising consumerism happiness around the corner
Rat Race from http://polyp.co.uk

A Lethal Combination of Status-Seeking and Advertising

Here’s a classic example that always drives me crazy when I see my friends fall into this trap. William wants to marry his girlfriend, Sally. Sally has been indoctrinated by the orchestral allure of DeBeers commercials and the glitz of fashion magazines.  Sally has been dreaming of a 2+ carat engagement ring because all the girls in the office have one (thanks to said advertising), except Kate whom everyone secretly pities. Even William’s friends and co-workers sport expensive rings. Poor William feels pressured to shell out at least $25K to keep her happy.  Then they need to throw a wedding at least as nice as her best friends’ sister’s wedding featured in Brides’ magazine, which will cost another $100K. That’s the lethal combination of status-seeking and advertising at work. What a way to start out married life…but hey they are helping the economy grow right?

Know the Game You Are Playing

How does someone navigate this world of capitalism and consumerism? You have to first understand how the system works. Only then can you figure out how to game the capitalist system and make it work for you! Bruce Lee famously said:

Bruce Lee be like water

You must be shapeless, formless, like water. When you pour water in a cup, it becomes the cup . . . Water can drip and it can crash. Become like water my friend.

So be like water. Avoiding capitalism is not going to help you succeed. Are you going to live off the grid or move to Africa? Other systems are arguably worse off for inequality like Communism.  Even Communists countries are becoming more capitalist, like China and Vietnam. Learn to navigate the system we have and reap its rewards while avoiding its traps and pitfalls.

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