Tim Cook’s Capitalism Should Be Copied

Apple’s CEO thinks businesses have a moral responsibility to help grow the economy. It’s a traditional capitalist idea that others should copy.

He expanded on that idea, according to a recent story in the New York Times, to say that responsibility falls not only on business “…but on all other areas of society to step up.”

Adam Smith would be proud.

Most of us know Smith as the Patron Saint of Greed, having written the book on the merits of disrupting the world with free markets and trade (“An Inquiry into the Nature and Causes of the Wealth of Nations” was published in 1776).

His “invisible hand” of the marketplace determines what’s best for us; every decision can be reduced to a winner and loser, and making money is the only way to keep score. Capitalism means encouraging businesses to do nothing more than pursue profits, putting the kibosh on any limitations to those activities, and relying on the give-and-take of the marketplace to sort it all out.

But before that tome, he wrote another book, back in 1759, when he was Professor of Moral Philosophy at the University of Glasgow. Moral philosophy is ethics (I had to look it up), and it used to be inexorably intertwined with study of law, medicine, and other liberal arts. You could even major in it, though the term wouldn’t be applied to business curricula for another 200 years.

Turns out the two books form a set. 

“The Theory of Moral Sentiments” starts with this sentence:

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”

Smith was deeply suspicious of structural bias in society, and envisioned the market as a way for people, businesses, and countries to over come such arbitrary limitations. This meant that institutions needed to stay agnostic to the subjectivity of morals, and embrace financial gain as the only objective measure of value, kind of like an Esperanto for commerce.

Open competition was meant to be the best way to achieve the best outcomes for the greatest number of people, driven by the self-interest of each individual hoping to see his own perspective prevail. Participants could vote up or down with their wallets.

But Smith assumed that people were inherently empathetic, and therefore concerned for the well-being of others, not just their own financial needs. He didn’t think we wanted our competitors to make bad decisions, or that someone had to lose in order for someone else to win. His free market was intended to discover the best win-win opportunities for everyone. 

This mean that the marketplace was a mechanism to match the initiative of pure self-interest with the desire for greater good, and not some Darwinian battleground where the fittest survived by any means. His “invisible hand” had a very real human body attached to it. 

Capitalism was conceived with a soul. That means anyone who thinks Adam Smith is Any Rand in a wig is misinformed.

So when Tim Cook talks about responsibility, he’s not talking about good works or charity, or the nonsense that brands buy when they run “purpose” marketing campaigns. He’s declaring that the best interests of Apple are interwoven with the interests of the people, communities, and planet it calls home.

We can quibble about whether or not the company lives up to those precepts, but imagine if every business copied the same approach.

The model for capitalism isn’t survival of the fittest. Capitalism is built on endeavors to be the best.

[This essay originally appeared at Recapitalism]