Why HR must understand capitalism, socialism, and power

In more than two decades of working within the banking sector, I have attended countless meetings, trainings, and strategic discussions. Yet, one observation continues to disturb me: I have rarely, if ever, heard a Chief Human Resources Officer (CHRO) speak meaningfully about economic systems.
Not once have I seen a serious discussion linking human capital decisions to the foundational ideas of capitalism, socialism, or communism. This silence is not accidental—it is systemic, and it is dangerous.
Human Resources today claims to be the “people champion” of organisations. It speaks of employee engagement, well-being, diversity, and inclusion. But beneath this polished language lies a critical gap: a lack of intellectual depth about how economic systems shape workplace realities. Without this understanding, HR risks becoming a compliance function — or worse, a corporate public relations arm designed to protect executive interests.
To understand this failure, one must first revisit the economic frameworks that govern our institutions. Capitalism, most famously articulated by Adam Smith, is built on the principles of free markets, competition, and profit maximisation. It has driven innovation, wealth creation, and global economic expansion. However, it also carries inherent risks—income inequality, labour exploitation, and the prioritisation of shareholder returns over human dignity.
In contrast, communism, rooted in the ideas of Karl Marx, advocates for collective ownership and the elimination of class distinctions. Marx challenged the capitalist system by arguing that it inevitably concentrates wealth and power in the hands of a few, leaving workers alienated and undervalued. While communism as a political system has struggled in practice, its critique of inequality remains deeply relevant.
Between these two lies socialism — a hybrid model that seeks to balance market efficiency with social welfare. Socialism recognises the role of the state or institutions in ensuring fair distribution of resources, access to healthcare, education, and protection of workers’ rights. It attempts to humanise capitalism without completely dismantling it.
Now, where do modern organisations stand? The truth is uncomfortable. Most corporations today operate within an aggressive capitalist framework, where performance metrics, cost efficiency, and shareholder value dominate decision-making. HR departments, instead of acting as a counterbalance, often reinforce this system. They design policies that reward output over well-being, silence dissent under the banner of “culture,” and align themselves closely with executive leadership.
This is where CHROs must be held accountable. A CHRO who does not understand capitalism will unknowingly promote its harshest elements. A CHRO who has never engaged with Marxist critique will fail to recognise systemic inequality within the organisation. A CHRO unfamiliar with socialist principles will struggle to design policies that genuinely protect employees while sustaining business performance.
Instead, what do we often see? HR leaders who prioritise pleasing CEOs, CFOs, and boards over questioning structural injustices. They speak the language of “talent optimisation” while ignoring burnout. They implement “performance improvement plans” without addressing toxic leadership. They celebrate diversity in presentations but fail to address wage gaps or unequal opportunities. This is not leadership. This is alignment without conscience.
Imagine, for a moment, an HR function grounded in economic awareness. Such a function would ask difficult questions: Are compensation structures reinforcing inequality? Are productivity targets realistic, or are they extracting unsustainable human effort? Is the organisation creating value for society, or merely accumulating profit?
An economically informed CHRO would not blindly reject capitalism but would refine it. They would incorporate socialist principles—fair wages, equitable opportunities, employee protections—within a capitalist framework. They would understand that long-term productivity is not achieved through pressure, but through balance.
More importantly, they would challenge leadership when necessary. Because the role of HR is not to serve power—it is to humanise it. Organisations today are at a crossroads. The world is witnessing economic uncertainty, rising inequality, and growing dissatisfaction among employees. In such a climate, HR cannot remain intellectually passive. It must evolve from administrative management to philosophical leadership.
Reading Adam Smith alone is not enough. Engaging critically with Karl Marx is equally important. Understanding socialism is essential. These are not abstract theories confined to textbooks—they are living frameworks shaping salaries, policies, hierarchies, and lives.
If CHROs continue to ignore this, they will remain functionally efficient but strategically irrelevant. But if they rise to this intellectual responsibility, they can redefine the workplace. They can build organisations that are not only profitable, but just. Not only efficient, but humane. And perhaps, for the first time, Human Resources will truly live up to its name.

Mohammed Anwar Al Balushi The author works at UTAS