Today I was listening to the Invest Like the Best (ILTB) sister podcast, Founders Field Guide E2: with guest Justin Singer – How Regulation Unlocks Opportunity. Justin is a lawyer who started a new cannabis company in Colorado. My favourite quote: “there is no such thing as a free market”. He suggest the closest we’ve come to a free market in recent history is Russia, after the fall of communism. Here the free market was controlled by the guy with the biggest gun. This is a great reminder that regulation plays a critical role in strategy. It also helped advance some of my recent ruminations on capitalism. Why have I been thinking about capitalism? Just scan today’s headlines – everything from “new deals” and “great resets” to the blunt “failure of capitalism”.
Despite the headlines, it is hard to argue that capitalism is anything but successful. After all, it defeated communism. It moved most of the world’s population out of poverty. For a great summary, I recommend Steven Pinker’s Better Angels of Our Nature. In short, we are healthier and wealthier than we have ever been at any point in history. This is thanks to Capitalism.
Yet today we have significant wealth concentration in a very few. We have the commons being exploited without consequence. We have growth and shareholder value being viewed as if they are somehow independent of any other values or responsibilities. Justin has provided us with a key concept, there are no free markets. We need regulation to protect the commons and properly allocate wealth while still rewarding risk and innovation. I personally think that even the father of the invisible hand, Adam Smith, would agree. Before writing The Wealth of Nations Adam Smith wrote The Theory of Moral Sentiments. To quote from this tome – “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” Do we see happiness in the wild fires in California? The loss of ice and potential significant release of methane in the Arctic? Or closer to my Alberta home, the selling of abandoned wells as a package deal with productive ones to remove the liability from the balance sheet.
Maybe it’s time to honor Mr. Smith by regulating some values!
Some further questions to keep you thinking:
- What regulations are most relevant to you? Your business? Are they changing?
- Are values and regulations aligned? If not, how are regulations changed?
- What is working with capitalisms? What’s not working?
- What is the best way to protect the commons?
- Is it really environmentalism vs. capitalism? Or is it more nuanced?
Further explorations
- I strongly recommend you subscribe to the Invest Like the Best podcast by Patrick O’Shaughnassy
- Read Adam Smith