What is 'Common-Good Capitalism' and How Does it Differ from our Common Idea of Capitalism in the US?

Joe Biden, supporter of “common-good capitalism.” Creative Commons Image.

Religion Unplugged believes in a diversity of well-reasoned and well-researched opinions. This piece reflects the views of the author and does not necessarily represent those of Religion Unplugged, its staff and contributors.

(OPINION) Both President Biden and Republican Senator Marco Rubio subscribe to “common-good capitalism.” What then is preventing it from being our reigning model of capitalism?

Last week I touched on the shortcomings of the Protestant Work Ethic. Max Weber said it’s mostly about organization and efficiency, squeezing as much as possible out of time and space, trapping workers in an “iron cage” of rational calculation and control.

It’s our reigning model of capitalism. And it’s done much good. But modern western capitalism tends to narrowly focus on maximizing shareholder value, elevating personal choice while dissolving ties of community. The mantra is the market determines value. But this often comes at the cost of social wellbeing (what the Bible calls shalom).

We see this in the K-shaped recovery coming out of Covid. The two arms of the letter K depict the diverging paths between the wealthy (upward) and workers (downward). For instance, this past year, 2020, pay surged for 206 of 322 CEOs. The median raise for CEOs was nearly 15 percent.

This had been a trend for a while. CEOs now earn 320 times as much as a typical worker (as opposed to 40 percent in 1980). I’m all for the people who take the big risks that generate wealth reaping the big rewards. But Biden and Rubio sense something’s off here.

Rubio described it in a 2019 address at the Catholic University of America. He said we need to “restore common-good capitalism.” This model of capitalism is based on Catholic social teaching, a pre-Enlightenment work ethic that President Joe Biden also subscribes to.

That’s promising. What then is preventing it from being our reigning model of capitalism? Well, for starters, few Americans can imagine what Catholic social teaching looks like. Try this image, a figure-eight of two interconnected spheres. The right depicts social wellbeing. The left is economic prosperity. In this model, the right sphere drives the left.

This happens to align with how the brain’s two hemispheres interact. The right is broadly vigilant. It sees a larger picture, thinking both/and. The left hemisphere is narrowly focused, good at organization and efficiency. It thinks either/or. Today’s capitalists tend to bias the left hemisphere, focusing on economic prosperity while neglecting social wellbeing.

This is evident in tech and social media. Ask anyone who’s done well financially in social media or tech if they feel they’re destroying a generation. You’ll typically hear, “Not my problem.” This blindness defines too much of modern western capitalism.

Before the modern era, before the Enlightenment, Catholic social teaching yielded a capitalism that’s both/and, social wellbeing driving economic prosperity. I’m not Catholic, but I think it’s correct. My concern is that few Americans, Protestant and Catholic, seem to be familiar with Catholic social teaching.

Some of this is due to Protestants often being allergic to anything Catholic. But it’s more the result of 95 percent of the western world biasing the left hemisphere. We “narrow-frame” capitalism. This is evident in Democrats demonizing capitalism for ignoring social wellbeing. It’s evident in Republicans applauding capitalism for maximizing individual shareholder value.

But the biggest problem might be the fact that only 0.1 percent of organizations in the US have the infrastructure to think both/and. This means 99.9 percent of our institutions, including our political parties, think either/or. So Biden and Rubio can subscribe to common-good capitalism, but they’ll most likely be pulled by their respective party’s institutions toward a narrow focus on social wellbeing or economic prosperity—not both.

The way forward is restoring institutional thinking. Good ideas (like common-good capitalism) don’t succeed because of their inherent truthfulness, wrote Peter Berger, “but rather because of their connection to very powerful institutions.” Restoring common-good capitalism requires our political institutions institutionalizing it. Can this happen?

Of course it can. But how likely is this to happen? I don’t know, but it’ll never happen apart from institutional thinking. We just happen to have written a little book on the subject. You can download it for free. It might make for good reading on this Memorial Day.

Republished with permission from The Clapham Institute. The author is the president and founder of the institute.