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COEFFICIENT CAPITALISM

Coefficient Capitalism is a modern economic system that aims to achieve a perfect balance between various factors to create sustainable, equitable, and prosperous growth. A coefficient of 0 represents the ideal state of balance and harmony between economic, social, environmental, legal, and reputational factors, resulting in an economy that benefits all stakeholders without harming the environment or violating legal requirements.

Capitalism is an economic system that empowers individuals who have capital to fully develop, while those who do not have the possibility of accumulating capital are excluded or left in a precarious situation. The unequal distribution of profits generated by economic growth in capitalist economies is having a serious negative effect on democracy, since it undermines one of its fundamental principles: equality [3]. Income inequality is commonly measured by standard statistics as the Gini coefficient[1]. The Gini coefficient can theoretically range from 0.0 to 1.0, with higher values indicating greater inequality [2]. Different distributions of capital and labor describe different economic systems. Two polar systems are particularly relevant. In classical capitalism, a group of people receives incomes entirely from ownership, while another group receives incomes entirely from labor [4].

The Kuznets Curve predicts that as nations become wealthier, inequality initially rises and then declines [2]. However, economists hypothesized inequality would rise as workers transitioned from low-paying agricultural work to higher-paying industrial jobs but then decline as they moved into service jobs[2]. Unfortunately, this transition has stalled because educational costs have risen so much that less educated families are unable to gain the education required to complete the transition[2]. One interpretation of the data is that inequality naturally grows from unfettered capitalism[2].

In capitalist systems, norms of equality exist implicitly. The equality that exists in the standard form of utilitarianism can be interpreted as assigning the same positive coefficient to all individuals[5]. Classical capitalism tends to be associated with higher income inequality than liberal capitalism. Liberal capitalism lies between classical capitalism and homoploutic capitalism where compositional inequality is low and a society can be seen as homoploutic capitalism [4][1].

  1. https://stonecenter.gc.cuny.edu/files/2021/11/Ranaldi-and-Milanovic-2021.pdf
  2. https://www.theatlantic.com/business/archive/2011/05/income-inequality-around-the-world-is-a-failure-of-capitalism/238837/
  3. https://cepr.org/voxeu/columns/capitalist-systems-and-income-inequality
  4. https://www.journals.uchicago.edu/doi/full/10.1086/686480

The SEPG coefficient measures Sustainable, Equitable, and Prosperous Growth as follows:

SEPG Coefficient = (Economic Output Score * (1 - Environmental Impact Score)) * (Social Impact Score / (Income Equality Score + Compliance Score + Reputation Score + Character Score))

In Coefficient Capitalism, the factors of production go beyond the traditional focus on labor, capital goods, entrepreneurship, and natural resources. Instead, it also considers the impact on stakeholders and the environment, legal and reputational compliance, and social responsibility.

The components of the SEPG coefficient are:

Economic Output Score:

measures an entity's economic performance, with a score range of -1 to +1. A score of -1 indicates extremely poor economic output, with negative growth, and significant negative impact on stakeholders. A score of 0 indicates neutral economic output, with stable growth, and little to no impact on stakeholders. A score of +1 indicates extremely good economic output, with positive growth, and significant positive impact on stakeholders, but potential for unintended negative consequences such as overconsumption or resource depletion.

Environmental Impact Score:

measures an entity's environmental impact, with a score range of -1 to +1. A score of -1 indicates significant negative environmental impact, with no initiatives to reduce carbon emissions, energy usage, or water consumption. A score of 0 indicates neutral environmental impact, with significant initiatives to reduce carbon emissions, energy usage, and water consumption, and positive impact on stakeholders. A score of +1 indicates significant positive environmental impact, with extensive initiatives to reduce carbon emissions, energy usage, and water consumption, and significant positive impact on stakeholders, but potential for unintended negative consequences such as increased costs or reduced convenience.

Social Impact Score:

measures an entity's social responsibility, with a score range of -1 to +1. A score of -1 indicates significant negative social impact, with no support for local communities, employee welfare, or ethical practices. A score of 0 indicates neutral social impact, with significant support for local communities, employee welfare, and ethical practices, and positive impact on stakeholders. A score of +1 indicates significant positive social impact, with extensive support for local communities, employee welfare, and ethical practices, and significant positive impact on stakeholders, but potential for unintended negative consequences such as increased costs or reduced efficiency.

Income Equality Score:

measures an entity's efforts to promote income equality, with a score range of -1 to +1. A score of -1 indicates significant income inequality, with no fair and transparent lending or investment options for all members. A score of 0 indicates perfect income equality, with fair and transparent lending and investment options for all members, and positive impact on stakeholders. A score of +1 indicates significant income equality, with no income gaps, fair and transparent lending and investment options for all members, and significant positive impact on stakeholders, but potential for unintended negative consequences such as decreased motivation or reduced innovation.

02-16-2023

-egod 


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