In my first post I wrote about the need to question our premises in order for us (as humanity) to better things in this world. This week, I want to start a little series about the problems and underlying assumptions of our economic system. Much has been said about this, yet it seems many still don’t grasp just how disastrous it really is. In a piece I recently discovered, the author (a libertarian) is wondering why so many people blame capitalism for many of the systemic evils on this world. She notes:
After all, capitalism is simply the economic system where people are free to trade what they wish with whom they wish. Capitalism says that if you want to interact with others, then you cannot use force, threats, or fraud. You must interact with others based upon the principle of trade, the principle of voluntary exchange to mutual benefit. How could that simple principle of freedom of trade be the cause of so much evil, as critics of capitalism allege?
Well, as nice and harmless as this sounds in the first moment, it is not only an over-simplification (which is pretty typical in our times), but a blatant misrepresentation, leaving out crucial aspects. There are several issues about this that I would like to dive into, but I’ll just focus on one for today. Now, first of all: Capitalism is not merely a system of voluntary trade – this element could be found in other systems, too; rather, a unique feature is that trade and production are ends in themselves. Think about that for a moment: the original need for production – in order to fulfill (more or less basic) needs – has developed into something in which human beings are not front and center any more, but where the system itself has attained the main role.
You know the headlines after natural disasters: oftentimes, they primarily focus on the economic damage that is being done (despite there being human victims). When did “the economy” become more important than human beings themselves? The answer is as easy as it is obvious: with the development of capitalism – and this development hasn’t even finished yet. The marketization of basically all areas of life is proceeding with rapid speed. More and more things are turned into private property[1] because this is supposedly better for efficiency and thus for “the economy”, who- or whatever that really is. (It ain’t us, that’s for sure.)
The fact that production is an end in itself, combined with other factors, leads to capitalism being a system that requires constant growth (it’s called “Growth Theory” for a reason). Don’t take my word for it: see here, here and here.[2] The conventional wisdom is that we need growth; even many (or most?) critical people believe this; take this article in Foreign Policy, for example: “We can’t live with growth, and we can’t live without it.”
This continuing growth[3] has serious repercussions, especially on the environment. When I wrote about environmental problems we are facing, I think I didn’t stress enough their severity. One commenter on Reddit wrote that the situation on earth isn’t actually that bad – admittedly, there is no world war going on, so yes: it could be worse.[4]
The difference is that we are facing something which might affect humanity as a whole. So, to make this very, very clear (and this is something that every serious environmentalist will tell you): if we continue on this path (or slightly different versions of it!), we are headed for global catastrophe. Climate change, dramatically altered ecosystems (oceans without fish, rapid species extinction, problems with agriculture), water scarcity, waste (by the way, we all have plastic particles in our bodies, and not too few of them) – not even to mention that we are destroying this wonderful planet which we live on and which should have more intrinsic value to us. Furthermore, we are not only destroying and littering our planet, we are also exploiting it. Since we live on a finite planet (repeat: finite planet!), the current levels of usage of natural resources are not sustainable in the long run; this is so obvious that the fact it has not yet changed our behavior fundamentally is mind-boggling. Some economists (like Nicholas Georgescu-Roegen or Herman Daly) have actually talked about it, but most of modern economics simply disregards this fundamental fact. Even worse: when they actually do talk about it, they assume (as did the arguably most important growth theorist Robert Solow) that the Natural Resource Productivity will increase exponentially; it is not very hard to refute this inconceivable stupidity.
Conventional environmentalists, albeit talking about sustainability and zero growth, do not address the aforementioned issues, at least not at the core. You cannot talk about “sustainability” as long as there is an economic system in place that demands constant growth; it is a contradiction in substance. Simply making production processes more efficient is a nice thought, but it is also naïve; it is just not good enough. Let me illustrate this: It is all fine to “build green”, i.e. to make buildings more energy-efficient, but as long as you keep on constructing more and more of them, more resources are going to be needed. Same goes for green energy: It’s nice that they’re building windmill instead of burning fossil fuels, but as long as we don’t address the issue of why we need so much energy in the first place, any approach will not be enough. Not only is there nothing like a free meal (although I think there could be and should be), there is also nothing like sustainable growth.[5]
You’re still not convinced we should give up growth? In the second part I’ll write about why this paradigm has come to exist in the first place, why the assumptions that underlie it are faulty and we therefore don’t need growth anyway, nay, we would be better off with less than we have now. Seems contradictory? Well, it really isn’t. Anyway, feel free to comment.
Neoclassical and other (close-to-)mainstream schools of economics are telling us that growth is natural. During my time as an economics student (admittedly, not a very committed one back then), not even once did I witness the paradigm of growth being questioned. This is a prime example of one of our premises that are seldom challenged. Unfortunately, even people like Daly or most environmentalists do not recognize the fact that growth is inseparably linked to the current economic system per se and that therefore a zero-growth policy within it is unfeasible. We are headed for the destruction of our planet as long as this need for growth isn’t eradicated. We must not be slaves to our own economic system; isn’t it supposed to serve us anyway?
[1] Especially on this topic, but also in general, I strongly recommend (a must-see, actually!) watching The Corporation, a Canadian documentary about the nature of said organizational form. It can be found on YouTube.
[2] Other than these authors (especially the last one), I think that the main reason for the demand for growth is to be found on an even more basic level, but this will have to do for now.
[3] Now, when I am criticizing the paradigm of growth, I am, of course, mainly referring to rich industrialized countries/regions. It goes without saying that underdevelopment is still a big problem and that many issues are linked to it. (This shall be dealt with in future articles.) However, the levels of economic development the First World has are not even close to sustainable, which means that reaching them must not be the goal of any responsible development theory.
[4] Actually, I must say it’s a pretty stupid argument to compare our current situation to, say, the Second World War; you’ll always find something that is worse than what you have – which seems just like optimism, but really is just a blatant disregard for reality.
[5] To my knowledge, one of the best experts on this topic is Niko Paech, professor of Economics in Oldenburg. Unfortunately, he only publishes in German. This is his website: http://www.produktion.uni-oldenburg.de/39380.html
I think that your article is well written, but is lacking any real purpose. You have exposed that this system of growth is flawed, but you haven’t offered any real alternatives. How can we break out of this economic system that we are enslaved by?
What alternative are there to capitalism? These are the kind of questions that I would have liked to see addressed. All in all though very interesting and an enjoyable read.
I think your comment is well written, but lacking any real purpose. You have exposed that this article leaves some things unanswered; certainly open-ended but, you didn’t go about how he should do that.
Its an essay my man, you cant critique it by stuff it doesn’t say.
Very well written and interesting! It is extremely frustrating to see how people just are not capable of seeing any possibilities, or advantages with living in a non-moneycentrist societal structure. We have come to a point were economical development (growth, increase of profits etc.) has become the definition of development itself.
However, with an all powerful company-like state handling both economical and social ethical issues and interests, and applying free-market morals on the people, rather than the other way around, it is logical that it all has ended up as it is now with capitalism being the dominant base for societies around the globe.
Really looking forward to your next post. Keep up the good work!
As a response to David’s comment above:
Since people are stuck in the dogmatic values and ideas of Capitalism, and only see alternative systems within Capitalism, it is necessary to start off with pointing out its flaws to make people interested and even consider to read about alternatives. One has to identify the problem before solving it.
Personally – based on the widespread urge for power and control (money being control in a capitalist society) – I am skeptical to the idea of a state at all. Smaller communities, ruled by the inhabitants themselves, is a very interesting idea. This however would have to be after getting rid of the capitalist idea of constant competition, or the hierarchical gaps between the smaller communities would increase and turn it all into a business-driven “anarcho”-capitalism. At a smaller scale it would be much easier for everyone to make their voice heard and have a say in a direct democracy. Hierarchical structures would be preventable, and overproduction would not be a problem (since one has less of a hard time estimating the production of goods and need for resources to less people) and would thus reduce our negative impact on the environment.
There are many problems and dilemmas that need to be solved, and hopefully a solution, benefiting us (the people of the world) instead of them (the market), is available at a hopefully not to distant future!
I think this is a very informative and interesting article. I agree we are killing are planet. Capitalism though has become such an important part of everything. There has to be an answer to the problem. It seems the only way anything is judged as being good is by it’s economic growth. That is what everyone talks about. If were not growing economically then we are in trouble. There has to be an answer to this. I look forward to hearing about solutions to this issue. If something is not done there will be no natural resources left and our planet will suffer greatly or be destroyed.
David & Bonnie: Thank you for your positive feedback. I am going to write about possible solutions; in fact, this is the very goal of this blog. In order to do this, I have to demonstrate what the problems, especially those at the very basis of our thinking (i.e., the underlying premises), actually are (as Tjarre already pointed out). There is no doubt in my mind that, contrary to conventional wisdom, alternatives to capitalism exist, and that we can live a more healthy and sustainable as well as peaceful life on this planet.
Tjarre: Wonderful comment. In fact, we share many of the same ideas and, since I hope this blog can be a place for discourse, I’d be glad if you continue following it.
Rob, loved the article, hope to see more! Wanted to point to this article, might give some ideas about possible alternatives http://avbp.net/?p=1462
Thanks, I’ll check it out!