Richard Branson: "Capitalism has lost its way."

"I truly believe that capitalism was created to help people live better lives, but sadly over the years it has lost its way a bit. The short-term focus on profit has driven most businesses to forget about the important long-term role they have in taking care of people and the planet."—Richard Branson, quoted in The Guardian. (thanks, @stevebrant)


  1. He was on my flight to New Zealand just a few weeks ago… definitely putting his efforts where his mouth is as he was doing a tour through Christchurch to help in the effort to stimulate growth in the city post-earthquakes. Easily forgotten after the horrific events in Japan but the center of Christchurch is still completely blocked off and signs of the destruction are still quite physically evident throughout the city be it crumbled buildings or the business flight to the outer edges of town, let alone in the general mood.

    Anyway, just a small anecdote of him playing a part and showing the role of capitalism for the good…

  2. Doesn’t Virgin America and Boing Boing have some sort of business relationship (BBTV is on VA flights, BB readers got to name a plane, etc)?  Shouldn’t that have been disclosed with a footnote or something?

    1. Whatever. No. We do not have a business relationship in the respect that Boing Boing does not receive any payment from Virgin America, nor have we ever. 

      Our Boing Boing Video content is played on one of their in-flight entertainment channels, just as it is made freely available on the internet, on any website or distribution platform, without ads. Perhaps you missed the CC license on all of our content that permits this.

      They asked me to name a plane when the airline launched, and neither I nor Boing Boing received pay for that, either. 

      I can shit-talk Richard Branson and not lose a dime. I happen to like some of the stuff he thinks, says, and does. My colleagues may not. Boing Boing didn’t write this post, I did. 

      I think explaining all of that in one of these short-format “quick link” posts is totally overkill.

      1. Xeni,

        C’mon…the profit motive is central to Capitalism, not taking care of the world and the planet. Branson is spouting a wooly headed and counter intuitive argument… capitalism hasn’t lost it’s way, it is just being its own destructive self…

  3. Well, I gotta say that even though I applaud the message, there’s still a strong element of “easy for him to say, now that he has his $4 billion net worth.”

  4. It was my understanding that the focus on short term profits was the whole point of capitalism. Any improvement to people’s lives is purely incidental.

    1. I would disagree and argue the the core-most essence of capitalism is the belief that it is more efficient for small bits of capital to be controlled individually, than it is for the vast majority of capital to be controlled as a single block by the state (ostensibly on behalf of citizens).

      Where capitalism went wrong was in its failure to realise that even in the bottom-up system capital would be able to form quasi state-like, very large, and singly controlled (though again, ostensibly on behalf of shareholders) clumps, whose inefficiencies would exactly mirror those of state control. The problem with Big Government and Big Business is the same – the “Big” part.

      1. False dichotomy. The alternative to privately owned capital is not just state owned capital. Not even Marx advocated that. The idea is that capital is commonly and democratically owned, rather than by a handful of individuals who are either CEOs or bureaucrats.

        1. The idea is that capital is commonly and democratically owned, rather than by a handful of individuals who are either CEOs or bureaucrats.

          Questions of ownership are distraction, because ownership can be assigned de jure without any actual impact. The only question that matters is control (i.e. when push comes to shove, who has the final word?), and control does not scale very well. You can genuinely have equally shared control over capital between three people, but not between 300 million. In the latter case you will have significantly delegate control over capital to a small handful of representatives, at which point – good luck in preventing them from deploying that capital to prevent themselves from being removed from that delegated position. It is exactly what happens when citizens delegate control over capital to the government and when shareholders delegate control over capital to the C-suite. You can try not delegating at large scale, of course, but that quickly leads to the tragedy of the commons.

          Instead of everyone owning everything, the original idea behind capitalism was to have every individual have full control over some bit of everything. Capitalism is like crowd-sourcing the economy – each individual contributing what effort he or she wants, when he or she wants to, to whichever shared endeavour he or she chooses. The problem arises out of the need to distribute the benefits from that shared effort, and again it is a question of control. It is simpler for digital goods because you, me, and a million other people can simultaneously download and individually use the same piece of software, but me, you, and a million other people cannot simultaneously get in and individually drive the same car. It is out of this problem that “the profit motive” arises, but it is an imperfect solution because it effectively positions profit as being an end, when it is actually a means to an end – you do not need to earn profit, only to deploy it to a particular end, if you can achieve that end directly. The end, of course, can be whatever a given individual wants – including taking “care of people and the planet”.

          At its core, capitalism is about direct, individual control over small bits of capital – about doing everything at the lowest level possible, and only escalating up as necessary. It lost its way on two issues – the fact that some issues are really society wide (or otherwise require very large scale co-ordination), and the fact that each person is born controlling exactly zero capital. People attempted to address both of these issues through the construct of the limited liability corporation (1, by pooling capital and 2, by trying to break the natural cycle of birth and death), but this counteracted the very essence of direct control and decentralised distribution of capital. Address inheritance and the corporate form, and have a strict accounting for externalities, and the idea of individual, decentralised control over capital will work just fine.

    2. Focus on profits does not imply focus on short term profits. A business where the owners expected to still be the owners in 50 years would be run with an eye to long-term profits, which necessarily include long-term impacts on the communities in which they operate, customer perceptions, employee well-being, and environmental sustainability.

    3. I think the point of Capitalism is “the most profit,” so it’s still better to earn one dollar a day for twenty days, than ten dollars on the first day and then nothing else.

      It’s probably hard to extrapolate this out to years and decades, but that is the idea.

    1. Absolutely. Despite the rhetoric of many, there’s nothing natural or inherent about capitalism (or any -ism). It’s just as contingent and malleable as any other means of organizing society. 

  5. Adam Smith thought that capitalism (via free market, etc) would benefit everybody.  Never occured to him that people with more power and fewer scruples than than most could rig the entire system.

    1. Quite the contrary, he was against big merchantile constructs of any kind (it was written at the time of the east indies company after all). In the end i think Wealth of Nations may well be the second most selectively quoted book after the Bible…

    2. Oh, it occurred to him, all right. Smith opposed the creation of limited-liability corporations, on the grounds that distant investors, with no personal involvement in the business, would demand profit above all other concerns, including social responsibility and financial prudence. He argued for essentially a 100% tax on inheritances (over the amount needed to provide for dependent children) on the grounds that free enterprise meant nothing if the children of those who did well got too large a starting advantage. In short you’re quite mistaken: he specifically said that power and corruption would undermine free markets, and offered advice on how to counter them. That the powerful and corrupt have managed to portray all constraints on their rapacity as anti-capitalist plots is a measure of how badly we have misunderstood and misrepresented Smith’s ideas.

      1. If you’ve scrolled down to here and have skipped over some of the message in the middle go back to Dominic’s comment.  It’s required reading.

    3. Actually, Adam Smith was surprised that free markets benefited more than just the rich and unscrupulous. Others took this notion and ran with it… to somewhere else.

    4. Maybe in his time the world was just smaller. I don’t believe people are so different from then or each other.

      It is just, if you as a person own a company it is important for you what happens with this company in a few years.

      If you are working in a multinational company which belongs to shareholders you probably don’t give a damn about the future of this company. After all, who are those owners? All you care for, is getting as much money as possible while it lasts.

  6. True liberalism (which is where capitalism more or less derived itself from initially) places the individual property owner first. The *individual* property owner — the emphasis there is important, the most important idea in liberalism.

    A proper, good liberal government is as small as it can be while still protecting the rights of the individual, and the safety of their property. This goal does still lead to some surprisingly large governments, so be wary of anyone telling you a *really* small government is a good idea. Social programs will also naturally arise from this goal — you cannot guarantee the safety of individuals and their property when there are other individuals so unhappy with their situation that they wish to kill people, take their property, and tear down the system.

    This is where capitalism has lost its way. Social programs are inherently necessary for liberalism to survive, but capitalism has stripped them away and lost the focus on the *individual*.

      1. I find it generally arises in minds that choose to ask the question, “Why do I believe the things I believe?”

        1. Or simply boil it down to “why?”. This simple question may well be the source behind all knowledge humanity now possess.

  7. Hypothesis:

    Capitalism is based on a system where somebody is gaining while somebody else loses. What we are seeing now is the natural outcome of operating under such a system. Any effort in reverting back to a previous state of capitalism will not fix the problem and will only delay the result of capital concentrating back into the hands of the few.


    1. I’ve been wondering about a system built on exploiting inequality, that demands imperfect information.  Crazy thoughts like “all profit is theft.” 

    2. “Capitalism is based on a system where somebody is gaining while somebody else loses.”

      That blanket statement is not fair. Private parties engage in exchange of goods, services, et al that both find mutually beneficial, otherwise one side or the other opts not to go through with the exchange. The broken system we currently have now in the US is not capitalism (let it be known I don’t think that “pure capitalism” is the remedy).

      1. “Private parties engage in exchange of goods, services, et al that both find mutually beneficial, otherwise one side or the other opts not to go through with the exchange.”
        I think nekosprocket’s statement was fair, because the profit created in capitalism comes from paying workers less than the total value they create. If workers got the full value of the products or services (the fair amount), then there would be no profit left for investors or bosses or the people with capital. If there weren’t some workers or maybe customers getting short-changed, there would be no profit going back to the investor. There can be a lot of coercion in the system in different ways so that one side or the other basically has no option other than accepting an unfair exchange.

        1. “There can be a lot of coercion in the system in different ways so that one side or the other basically has no option other than accepting an unfair exchange.”

          An “unfair exchange” is a completely different category of exchange than one where one party gains while the other loses. One party winning less than the other party is might be “unfair”, but it is still mutually beneficial, and hence a net gain for society over the alternate where the exchange did not occur.

          If you’re unhappy about having a job that you feel is costing you more to do than it pays, then why don’t you quit? You’d be better off that way. We abolished slavery in most places more than 100 years ago.

          1. “If you’re unhappy about having a job that you feel is costing you more to do than it pays, then why don’t you quit?”

            It must be nice to be unfamiliar with this very common situation. When your options are one crappy job or an even crappier job, or twenty other crappier jobs, then it doesn’t become a wonderful or fair or acceptable situation just because a person has choices. When a robber says “Your money or your life,” a person acting on his own interest might hand over his money. The fact that the victim rationally chooses to hand over his money instead of forfeiting his life doesn’t mean it’s “mutually beneficial” or that he shouldn’t complain because he was given a choice.

            Anyway, I didn’t say that unfair exchange = one party gaining while the other loses. I tried to spell it out earlier exactly how I think one party gains by making another party lose. A person with capital is generally able to make a profit by paying workers less than the value of the product they create or service they provide. (I suppose that “overcharging” customers would be another way, but it seems like there’s more competition for customers than there is for workers.) Just because there are a lot of workers desperate enough to willingly work for much less than they deserve doesn’t mean they are in a situation where they are benefitting mutually from the situation.

          2. It’s unfortunate that you’ve misunderstood my argument. Yes, I’m lucky not to be familiar with such a crappy situation, but if you can show that a worker is *losing* in a labour-for-money exchange, then there exists a very simple remedy that, while it doesn’t fix the overall situation, certainly slows the bleeding: you can quit. If you’re spending $1000 commuting to a job that pays $800, you shouldn’t be doing that job!

            While the social outcome is “unfair” in some sense, I hesitate to (automatically) accuse the $800 employer of acting unfairly – they’ve offered you something you’ve agreed to, without duress. Granted, there are scenarios where there is an element of economic duress applied by a specific employer, but these are rare. Rather, it’s a sort of emergent unfairness, with no particular employer being at fault. There’s no robber holding a gun to your chest.

            If you want to argue that employers in an industry actively conspire against workers, then that’s a pretty strong claim and I’d like to see a pretty strong argument in support of it before I believe it.

            “Anyway, I didn’t say that unfair exchange = one party gaining while the other loses. I tried to spell it out earlier exactly how I think one party gains by making another party lose.” – I don’t get it – which is it? You say now you didn’t say it, but in the very next sentence you go ahead and say you did!

            Yes, an employer makes profit by capturing some of the labour surplus (the difference between the value of the labour and its cost). You do know that workers too capture some of the surplus? (Otherwise, why work there?) It may be a small part, or it may be a large part, but generally the division of surplus occurs somewhere in the middle – determined by the negotiating power of each of the parties. And yes, one of the reasons we don’t like monopolies is that they can (and do!) extract more of the consumer surplus (by overcharging, as you mention) than we like companies getting.

            Just how much does a worker “deserve”? And again, if they and their employer aren’t mutually benefitting, then one or the other should simply not continue that relationship. To make excuses and say you “can’t” is disingenuous, in that it’s discounting some benefit you are, in fact, getting. Maybe that’s a pension, or medical insurance, or whatever.

  8. Say it quietly, but maybe if people like Richard Branson bothered to pay tax on their income the world wouldn’t be in quite such a state. 

    Branson has not only been convicted for tax evasion, but he’s a notorious user of offshore trusts, most of his companies operate through tax havens and it’s only a few months since he moved Virgin Enterprises from the UK to Geneva to avoid taxes. And a good part of his income comes directly from the British taxpayer through his (sucky) Virgin Rail and now Virgin Money (ex. Northern Rock).

  9.   Richard Branson, Like many of the Nuevo Billionaire contemporary Massive, have merely come to realise the value of positive P.R. He has NEVER acted in a way that would mark him out as a “Good Guy” Billionaire apart from the easy way, over the years,  he convinces the gullible, as I’m sure he convinces himself, that this guise would be his fervent wish.
       The illusion of Mass media acceptibility of these self agrandizing Neo Plantation Owners is, as usual, a failure in the observer, the reader and the good citizen in not acting to loudly call them out on it.
       Branson deserves to have it explained to him, and not by some Ratings whipped News GutterHound or soft bellied political trough-warmer, that his ilk have to prove their ‘Worth’  to Us and Not the Reverse; We, who are too often made to Pay, Do Not Salute You… But we may yet Remove You..

  10. That whole “maximize profit” thing provides just as much impetus to be a smart longterm competitor who doesn’t engage in self-destructive practices as it does to be the short-term scrabbler.  Humans just seem to suck at noticing that; stupid greedy little apes.  Up with reason!

    1. This is only true if your stake in an enterprise is long-term, which is not the case today for most traders and investors.

      Recently there was an article (here on BB, I think) about a British financial firm wanting to build a new transatlantic communications cable in order to be able to execute trades a few tens of microseconds faster. They have reason to believe this would earn them billions each year, a sum which obviously has nothing to do with any actual business activity by the companies whose shares are thus traded.

      1. At the same time i think one of the more successful businessmen right now is mainly focusing on investing in companies with long term profitability (one example, i think, was investing in soap manufacturing in the middle of a tech boom).

  11. It would appear that this is the limit of involvement that Mr. Branson can afford, despite his wealth. “Capitalism has lost its way,” well thanks for that. We should be happy to receive such alms.

  12. I think we tend to become bogged down in the rhetoric we learned from studying the struggle of labor around the world and/or lingering cold war framing, that we are unable to forge any new narratives besides the capitalist/marxist dichotomy.

    Accept that humans will maximize their greed when it’s easy or when little effort is required of them to do so. Root out all the points in the system where people (“in the right place and right time”) can get away with massive amounts of theft, and increase the number of opportunities for all people to get a little bit of the pie.

    Engineer systems of flexible and fast-adapting regulation on all market systems.

    Cap CEO salaries, and increase scrutiny of shareholder lawsuits. Massively increase taxation on any corporation that engages in mass layoffs.

    Reverse the ruling on Citizens United.


  13. Richard Branson the awesome? Hmm take it you’ve never had to travel on his train service then….. Very un-awesome and also shows his concern for the environment is pretty superficial and PR-led. Number 1 concern of his train service – not getting people off the roads and onto public transport but trying to squeeze as much money as they possibly can off the passengers… It’s very sad. But not a very sexy story so kinda ignored..

  14. What Richard Branson is engaging in is not capitalism- as in the free market- but rather making his money off the backs of working people. For example, his roughly $200 million SpacePort America playground is being paid for by taxpayers even though he can perfectly well afford it himself. If he’s a “success” it’s that he’s successful at emptying other people’s pockets for his own entertainment.

  15. I agree, but then I also find that “Why?” alone is more susceptible to being sidetracked by nonsense non-answers, like “Because that’s what my mom told me,” or “Because my ancient book says so.”

  16. I think the obvious example is Warren Buffett, who, when asked how long he expects to hold anything he buys, said “Forever.” He has also said wealthy people don’t pay enough taxes.

    So yes, there are definitely very successful long-term investors. But, I don’t think our financial problems are caused by too many powerful people thinking about the long-term consequences of their actions.

    1. Yep, it was warren buffet i was thinking about. And the indicator suggested being used to find prospective buys was book-to-market ratio. Basically putting money into companies that have a whole lot of value on their books, but where the market do not consider them “interesting”.

  17. Like so many statements, this makes perfect sense if you assume that some people are worth talking about, and many others are beneath consideration. “…capitalism was created to help people live better lives…” if you mean capitalists when you say “people”. Of course it makes no sense if you try to apply it to everybody else.

    “I’d like to pay you as little as I can get away with, in order to make as much profit for myself as I can. That’s the best way I can think of for all of us to live better lives.” It doesn’t pass the laugh test.

    (By “capitalist”, I mean someone with capital to invest, not people who endorse capitalism.)

  18. I truly believe that capitalism was created to help people live better lives…

    …to help some people live better lives. At the expense of everybody else. Fixed.

    Capitalism has been a Ponzi scheme from the get-go. Ponzi schemes collapse sooner or later. This has been the biggest one ever, so the party lasted for centuries. But it has to end at some point. And there’s no walking away from a collapsing Ponzi scheme.

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