Warren Buffett: Practical Philosopher of Capitalism
Lawrence Cunningham’s Essays of Warren Buffett is a useful and well-ordered collection of Buffett’s thinking on a number of topics. As such, it serves as a profoundly useful textbook of clear thinking for corporate America.
The book also highlights an aspect of Warren Buffett to which less attention is paid now than will be in the future. That is of Warren Buffett as history’s greatest Philosopher of Practical Capitalism.
In the last decade many people have lost trust in our capitalist system. Yes, we like the material abundance that it generates, but who can subscribe to and defend the rampant, unchecked, and amoral version of capitalism that we have seen recently?
We are all too familiar with the cast of ugly characters: The bankers who lost millions while still collecting their outsized bonuses, Bernie Madoff who masqueraded behind his façade of public spirited financier and philanthropist while he was actually ripping off widows and orphans.
How can we subscribe to a version of capitalism that seems to regularly allow the greedy to endlessly and senselessly enrich themselves while bringing the rest of us to the brink of financial ruin? Although many of us were brought up on Adam Smith’s invisible hand and the free market of Milton Friedman that delivers goods, services, welfare and justice to all, the way this has played out practically over the last decade is indefensible.
In a bygone era this unpleasant side of free market capitalism was at least part of what drove Karl Marx to write Das Kapital, and what led to whole societies practicing Socialism, creating so much of the human misery of the last century.
For those of us who still believe in capitalism, free markets and maximum individual liberty as expounded by John Stuart Mill, what is the answer to these excesses? Can we not find a new Milton Friedman, Hayek or Adam Smith for this century? Someone who intelligently and charismatically clarifies why big government and more regulation are not the answer.
But the new defenders of free markets are not towering figures – indeed quite the opposite. Can you name one charismatic defender of free markets around today who is a match to Mill, Friedman, Hayek or Smith? I can not.
Perhaps a new kind of politics can do it: British Prime Minister David Cameron is a Compassionate Conservative who does not want to make government smaller; he only wants to make it more efficient. Indeed, he had Britain’s socialized healthcare system celebrated at the London 2012 Olympics in front of a world stage.
But Cameron and his ilk are deeply unpopular in today’s Britain, and the jury is still out as to whether he will be able to take a victory lap for his austerity program – the way Margaret Thatcher and Ronald Reagan were able to do. And in the US, while Paul Ryan was a much more credible figure than Sarah Palin, he still does not seem to quite capture what we are after. Especially in an age where politicians are as reviled as bankers.
Into this breach steps Warren Buffett. Not in the cloak of a politician – like his father – nor that of a thinker, speaker or writer. But as a businessman and an investor. Yet most of the chattering classes still see him as only a businessman and investor, and have not yet cottoned on to Buffett’s Practical Philosophy of Capitalism.
In this philosophy, it is perfectly ok to get obscenely rich, and free market capitalism works without excess. In this version, you get rich by “telling the truth and selling cheap”, to paraphrase Rose Blumkin, the Russian refugee founder of Nebraska Furniture Mart. You do business within a web of deserved trust, contracts are short, accounting is conservative and options are properly accounted for. Rather than lying and obfuscating for personal gain, you apply the golden rule and tell your partner what you would have liked to know if you had been in his shoes.
And if the proverbial hits the fan, Salomon scandal style, you fess up in front of Congress, without having lawyered up. Lastly, when you have made your fortune, you give the vast majority of it away for the benefit of society.
Warren Buffett irrefutably demonstrates his vision of capitalism with his fabulous success. Who can argue against his investment track record, or his company, one of largest, most valuable and admired enterprises on the planet, and a monument to his vision, or, as he would say, “his canvas”?
By making his life a practical demonstration of his vision for a better, kinder form of capitalism, Warren Buffett towers above all of his contemporaries as well as many who came before him.
By bringing Buffett’s thinking together in textbook-like form, Larry Cunningham enables the philosophy of Warren Buffett to cross the bridge into the academy and to be taught there to future generations of capitalists. They will learn much more useful things from him than earlier generations who were fed ivory tower theories like Black-Scholes option pricing theory and rational expectations, which did so much to contribute to the problems of the last decade.
In the modern world, leadership has very little to do with telling people what to do, or being a great orator. More than anything, leadership is now about setting an example for others to follow: Convincing people through action. Mahatma Gandhi and Martin Luther King were great examples of this sort of leadership, to which we can now add Warren Buffett.
Larry Cunningham’s book highlights Buffett’s quiet and profound leadership role within American society and is the first, but by no means the final step of turning Warren Buffett into the world’s leading philosopher of Practical Capitalism.
Guy Spier is a Zurich based investor. In June 2007 he made headlines by bidding US$650,100 with Mohnish Pabrai for a charity lunch with Warren Buffett. Since 1997 he has managed Aquamarine Fund, an investment partnership inspired by, and styled after the original 1950′s Buffett partnerships. Prior to starting Aquamarine Fund, Spier worked as an investment banker in New York, and as a management consultant in London and Paris. He serves on the advisory board of Horasis, and is a co-host of TEDxZurich.