Capitalism's Greatest Trick

First published on

[ this is a draft ]

Capitalism's greatest trick has been to give companies legal rights, thereby channeling very strong human instincts towards economic prosperity.

Part 1 - Survival instinct is extremely powerful

There are human forces that drive our behavior. These have been shaped by basic evolutionary measures. Here are two, but there are more.
  • All humans have an evolutionary developed need for survival. Survival instinct is real and a very strong force. People under existential threats will do amazing things to survive.
  • Some humans have a competitive desire to conquer, to wage war and take resources of others. The competitive desires results in higher chances of passing on genes, but is less strong than Survival Instinct.
In most of human history, these forces have focussed on basic human needs for survival and gene reproduction: owning food, land, power, sexual relations.

Part 2 - Humans act as groups 

As humanity progressed, humans have collaborated and acted as groups. Humans strongly identify with the groups they belong to, sometimes exchanging their own values and needs for those of the group. People have fought wars for their countries, religions, etc.

Part 3 - Companies are legally people

In modern western law, there is the concept of a Legal Person. A Legal Person is something that has the rights that humans have. This includes companies. Companies have rights and obligations and employees are in a sense merely agents acting on behalf of the company.

Unlike most giant organizations (countries, religions), most companies are short-lived. It is trivial and socially acceptable to start a company, to join or leave one.

Capitalism gave companies super powers

Extending basic rights to companies is the greatest trick that capitalism has ever pulled off. It gave companies legal rights independently of the rights of the humans that are working for it. Now companies can be born, can grow or can die just like humans. Thanks to humans acting as part of their group, this mechanism allows humans to channel their evolutionary instincts without hurting other human beings.

This has two consequences:
  • Companies that have a competitive drive can result in the death of other companies, but not of human lives.
  • Companies that come under existential threats will find extremely creative ways to survive.
I believe that giving these very strong human instincts to companies while separating the consequences from human suffering has been the key differentiator for our capitalist economy.

Think about this the next time your company talks about crushing the competition. is under serious threat, I bet you can feel the survival instinct kicking in.



Disclaimer: I am not a biologist or economist.

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