Chicago, Collaborative Capitalism and Free Markets

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 An interesting battle is playing out over the nature, future and trajectory of the idea of capitalism in reality and in the pages of many online news formats.  In the past such as the cold war, the battle was capitalism versus communism.  It seems at one glance a straightforward battle of markets versus state planning and control and which system could better deliver benefits to people.  Many claimed that state planning and control lost after the collapse of the Berlin Wall and the end of Soviet Union.


The new battle shaping is more oriented towards which form of economic organization will best address the climate crisis and inequality more generally.  Many serious business years such as Bill Gates of Microsoft and the Gates Foundation and Larry Fink of Black Rock are stating that companies must develop zero emission plans and take leadership to make changes for example that will build inclusive and equitable growth which we will explore in detail later. These overall approaches assume that capitalism continues in some form but with a class of enlightened business leaders who make changes to their operations.  This goes by the name of stakeholder or conscious capitalism as we discussed in an earlier post.


Chicago is implementing a strategy related to these ideas of transforming capitalism.  As outlined recently in an article in Chicago Crain's Business, Samir Mayekar (Deputy Chicago Mayor) wrote about collaborative capitalism.  The focus is on using corporate spending, corporate balance sheets and hiring practices to ensure equitable growth for those who have been left out of the growth and prosperity. The idea is that corporations should consider other factors than mere short term profits and use their power to bing more people into the prosperity tent.  At first glance, these all seem like reasonable goals.  Some of the language is more concerning from an ILE perspective when Deputy Mayor Mayekar writes about "we must also step in when the free market fails Chicagoans in disinvested neighborhoods." (Crains, Feb 18, 2021)*.  From an ILE perspective, we prefer to talk about the how the government establishes and frames the market system as opposed too naming it the "free market”.  


Why does this matter? Because market outcomes are not natural or free but based on the rules and institutions in place from the beginning.  Appealing to business peoples better angels (to paraphrase Abraham Lincoln) is fine and may work in some cases, but the role of government is not just to fix the free market after the fact.  Rather the market is intertwined from the beginning with government and civil order.  Corporations exist because the government and the people have passed laws that allow for such social organizations to exist and for people to benefit from limited liability and other factors.  The rhetoric of “intervention” and “free market” implies that the government only gets involved after the fact.  This is a misreading of law, economics and history.













* https://www.chicagobusiness.com/forum-ideas-future-capitalism/chicago-must-be-model-collaborative-capitalism

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