A tent revival for capitalists

Attending the Berkshire Hathaway annual meeting isn't quite a religious experience, but it's one of the rare places where good capitalists make a strong argument for being good

"Habits are a hugely powerful force. I see every day the holes that people dig for themselves."
- Warren Buffett

✶ For more than a decade, I've set aside one Saturday each spring to travel to Omaha to listen to two wise old men carry forth for hours at a time on a stage with no script, no light show, no backup dancers, and no other entertaining enhancements. And yet the Berkshire Hathaway annual meeting, with its question-and-answer period featuring Warren Buffett and Charlie Munger, is one of the best experiences a person can have -- if they seek to reinforce good habits as a capitalist.

✶ What do "good capitalist habits" look like? It's both an honest question and a terribly under-explored one. On one hand, it's a question of what habits might make a person successful at being a capitalist. But on the other, it's a question about what makes a capitalist "good", in the sense of behaving in a respectable, decent manner worthy of imitation.

✶ I say that the question is under-explored because there are two very prominent schools of thought that each look right beyond the second question. There are those who adopt fantasies about "eating the rich" and abolishing billionaires. Those people deserve to be ridiculed. People are different, and no matter how you try to level the playing field, there will always be some individuals who are very good at inventing, coordinating, or organizing things that other people want. And when they accumulate wealth through the ownership of businesses making lots of individual lives incrementally better, then "abolishing" them is nothing more than a revenge fantasy.

✶ But I have no patience -- and I hope you don't have any, either -- for those who want to strip the concepts of responsibility and honor away from capitalist activities. A market economy takes place within a society: People are exchanging goods and services with one another, using money as a medium. There is no such thing as a society that can endure without certain underlying values of duty and decency.

✶ Milton Friedman wasn't entirely wrong when he wrote:

"[T]here is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud".

✶ But Friedman did tend to under-emphasize a different point, even though he acknowledged it freely:

"Of course, the corporate executive is also a person in his own right. As a person, he may have many other responsibilities that he recognizes or assumes voluntarily -- to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country."

✶ Ultimately, I think Friedman was mainly right about the duties of the business itself: Its responsibility is to make a profit and behave within the law. But I also think it's a mistake to try to separate anyone's occupational life entirely from the rest of their existence. We often use the word "integrity" as a synonym for "honesty", but I prefer a broader definition.

✶ "Integrity" is another word for "wholeness". A person's character isn't strictly compartmentalized from work to home life to recreation to wherever else it takes them. If you're the kind of person who cheats at, say, bowling, then there's fair reason to suspect that you might not behave above-board when it comes to a business deal. (The reverse is true, too.) We all can and do engage in limited compartmentalization -- my fandom for the Cubs doesn't translate into cutting special deals just because a client is from Chicago. But those people who have "many other responsibilities", in Friedman's words, are also the people who transact the business of a company. The firm itself may have but one social responsibility, but everything the firm does is carried out by individuals who have more than one.

✶ And that's why the trip to Omaha is so important. Buffett and Munger differ in their particulars, but they share a common and oft-cited belief in the good of capitalism, and in the need for capitalists to be good. At their 2014 meeting, Munger sagely advised:

"The way to get a good spouse is to deserve one. The same thing goes with a partnership in business. If you behave yourself correctly, it's amazing how well it works."

✶ Hearing that kind of admonition from an unapologetic champion for market economics is worthwhile. It's a lot like attending a religious revival once a year; but, rather than hearing readings from the Bible, the audience is treated to reminders of the connections between well-established personal virtues and economic success. Those virtues have to be exercised as habits to really take effect. It may come in the guise of a shareholders' meeting, but for those who listen carefully, it's really an event for evangelizing good capitalist habits.