“Capital is different from money. Money is used simply to purchase goods and services for consumption. Capital is more durable and is used to generate wealth through investment. Examples of capital include automobiles, patents, software and brand names. All of these things are inputs that can be used to create wealth. Besides being used in production, capital can be rented out for a monthly or annual fee to create wealth.” Investopedia
The etymology of the word “ciao” reveals its origin as “schiavo,” which translates from Italian into “I am your slave.” Thus I shall answer the question in the title when I sign off on this article.
Thomas Piketty’s “Capital in the 21st Century” demonstrates that the economic inequality decried by the Occupy movement is due to a higher rate of return on capital than on labor in the long run. For those who didn’t study economics at university: the 1% get richer and we don’t.
In the Agricultural Age feudal lords became land-owning gentry; in the Industrial Age aristocrats passed their capital to heirs through factories and land; in the Information Age capital is primarily transferred intergenerationally through brands names, property, family businesses and trusts.
Now let’s say you are an “Independent Contractor” (laborer) that gets hired gig to gig (and is not provided with the security of health insurance, a retirement plan, and one steady paycheck from one employer that covers all of your food and shelter). Firstly, let’s assume that you spent some capital – anywhere from $2,500 (yoga teacher training) to $100,000 (private psychology graduate school) – to gain the necessary education to perform your job. To start, in the Information Age, everyone needs a website, such as the one you are reading this article on. Most of us are too intolerant to spend hours in a public library in 1 hour snatches of free computer time or in a Starbucks for free WiFi, so let’s assume that we all live in homes with rents or mortgages and those homes have cable Internet connections for $65 per month (does anyone still use dial-up?). Most website hosts that are “free” (e.g. WordPress) still require that we purchase computers, smart phones with good cameras, domain names, maybe some software like Photoshop or Microsoft Word or Powerpoint… maybe some of us even bought decent video cameras and digital audio recording equipment… maybe even a cheap lighting package from Amazon or B&H to make the requisite embedded Youtube and Vimeo videos on our websites look somewhat professional (if we couldn’t afford to hire a film school graduate to shoot something for us)… and maybe some of us even hired web designers and pay monthly fees for hosting plans and upkeep, etc.
Quite simply: as Independent Contractors our Internet “presences” are sunk costs – probably from $5,000 to $50,000 (maybe more) – and I am not even going to mention here the time it takes to create and maintain a decent website.
And if you cannot afford a publicist at $2,500 to $6,000 per month or Facebook Ads or Google Adwords to promote that website and your “brand,” it will require much “social media” in order to pique potential clients’ interest to lead them to your website to purchase your services. Twitter, Instagram, Facebook, LinkedIn, Google+, email blasts, blogging, and everything needed to “launch” (market, promote) your business can suck hours and hours from each week (which is why I usually refer to it “Business Media” rather than “Social Media”).
If you agree with Monsieur Piketty then you will note that the majority of the 1% did not begin their lives without “capital.” And yet the media consistently focus on outliers such as Steve Jobs, Bill Gates, and John Paul Dejoria who started with very little and became billionaires. Our media propagates the myth of meritocracy: that if you work hard, you will succeed (financially). But really, as Malcolm Gladwell demonstrates, it takes hard work PLUS opportunity, which mostly consists of being in the right place at the right time (Warren Buffet calls it “The Lucky Gene Club”). I mean, if you happened to be at Wharton or HBS in the mid 1980s or in the engineering department at Stanford in 1990s then you would have had to go out of your way to avoid becoming a multimillionaire – right?
My main point is that without “capital” most people do not have the basic security to be entrepreneurs and follow their dreams AND THUS BE IN THE RIGHT PLACE AT THE RIGHT TIME. Following dreams requires investment (websites, education, networking, marketing); investment requires capital.
Spending 20-30 hours of week “producing content” (blogs, Youtube videos, Instagram photos) does not have direct or immediate financial return. Economic exchanges are no longer so clear as exchanging 1 apple for 1 dollar. To “launch” a business now takes months of “building trust;” trust is primarily built by giving away “content” (blogs, videos, daily quotes via email, cool Instagram images, etc.) for free.
Entrepreneurs who have “capital” can afford to take risks, can afford to keep the electricity running while they make countless Youtube videos, Instagram ditties, and write weekly or daily blog posts.
Just keep in mind the possibility that in 300 years when historians look back on us entrepreneurs, spending what economists would call “leisure time” to produce endless content for free while corporations earn billions of dollars in advertising revenue and share those profits exclusively with shareholders (other people who have capital to invest) instead of the people doing the heavy lifting, that historians may consider us to be even more docile and subconsciously controlled than slaves on plantations in Confederate states were in the 1600s.
Yes, the capital owners (the major telecom corporations, the major pharmaceutical corporations, the Big Agriculture corporations, the major media corporations including Facebook and Google) are quick to inform us that we are always free to leave their plantations.
But where would we go?
Ciao for now!