277 - Is capitalism a bad thing?

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Following on from considerations of ability to buy a house (270) and those of finance and resource (258 and 259), I began to wonder just what capitalism is and whether it might be a bad thing. Which perhaps would be better expressed as wondering whether the understanding of what capitalism is leads to Bad Things happening. As the missus would say, "Depends on" 1

George Monbiot in the Guardian [1] this morning says: Capitalism’s failures arise from two of its defining elements. The first is perpetual growth. Economic growth is the aggregate effect of the quest to accumulate capital and extract profit. Capitalism 2 collapses without growth, yet perpetual growth on a finite planet leads inexorably to environmental calamity.

I already agree that the presumption of perpetual growth is a problem. I see it as a problem with the economic model, as I find the parallel assumption over population (there will always be more people, so we work from that as an assumption) more disturbing still. How do we fuel growth? The economist talks about peripheries 3  and externalities. 4  Monbiot again: There must always be an extraction zone — from which materials are taken without full payment — and a disposal zone, where costs are dumped in the form of waste and pollution.  I see the extraction zone as being what I was discussing with rentier economies, where a nations resource is basically sold off, usually to others not of that nation, who I will call invaders. The assumption that full payment does not occur eludes me; I can see that profit lies in paying the rentier less than the invader will sell the resource for, but I do not see why that is considered less than full payment, since usually it is the invader doing the mining or equivalent. The whole point of a rentier economy is that money is collected by selling off the wealth of the nation. The crime, economically, lies in failure to move that income into the national economy. The historic crime (failure to produce success, to cause national economic benefit) lies in denying future generations of that nation the benefits accruing from the sale of the resource. Hence we have policies that say it is better to not-mine, to not-crop, to preserve for the future; often we explain this away as an economic decision, "It'll be worth more once the market has changed" rather than say something patently greener like "Selling this is wrong". Instead we suggest somehow that the sale will occur, but not now. So the complaint with extraction capitalism is that it moves capital value from the many (a nation) to the few (government, banking, even media [4]). Extraction wealth also occurs when you're charged a fee for each transaction. The complaint made in essay 258 centred around this extracted wealth not being returned to the nation but instead remaining with the wealth extractors. This is self-interest, but not enlightened self-interest. Nations that benefit from selling off a resource are those which manage to keep the gains within their borders. In the same way, those who garner wealth would benefit the nation by spreading their gains around in ways that benefit the economy as a whole, not themselves as individuals. Look then at the things that banks support (financial instruments — more wealth extraction) and don't support (R&D and manufacturing leap to mind from earlier essays).  One of the cries from the current wave of support for action on climate change is to point the finger at extraction capitalism, proclaiming that this economic assumption drives us to a precipice. Such a claim requires a lengthy explanation well supported by logical argument, but we so rarely can find such content. As I've written many times, it really should not be so difficult these days to include links to lengthy content in support of sound-bite length statements.

Wondering what is meant by extraction 'without full payment' and wonder if, in the case of mining, whether full payment has happened when the mine (say) is left as viable land as it was before the extraction occurred — that the operation is completed only when restoration to some acceptable level is completed. Which might, for example include returning the ground water conditions  to a situation no worse than before, often simply labelled 'pollution'. This reminds me about comparison between nuclear and coal as sources of energy. When the same demands are made of coal as are made of the nuclear energy business, the (full) costs of extraction are surprisingly similar. Source: brother in the business.


The Monbiot quote above referred to two zones, extraction and disposal. I started from assuming that this was indicating that all extraction leaves a mess of incomplete work—the gap between payment and 'full' payment—but that would make the two so intertwined we would not need two labels. Monbiot is quite clear, fortunately, that the disposal zone is where costs are dumped in the form of waste and pollution.  By which I suspect we mean all those problems we leave as not dealt with. As we spread across ever more of the globe, so this becomes more of a problem. 

Is it possible to have an economy in which waste and pollution do not occur? Can we turn the reduction of waste and pollution into one of the drivers of future economies? Can we do this without rejecting capitalism wholesale? 

Surely what needs to occur is a re-evaluation of what our self-interest is. If we were to accept as a principle that we leave any site (in any sense) better than we found it, if we make an economic virtue of improving the planet and if we turn our self-interest into not quite so much me-me-me but more nearly protecting the future, then this is entirely possible. How we incentivise that is a big problem. We need to make cleaning up after ourselves a profitable enterprise; that doesn't require the profit to be money but that is probably how we would force it to occur. Which rather suggests we have all sorts of penalty taxes for pollution and all sorts of subsidies for curing pollution problems. This might cause us to re-evaluate what we mean by paying for something.


I suspect that we're close to a reconsideration of many things that have become normal and are about to become unacceptable. 

Looking for examples of such things: 

• The microbeads of plastic from washing clothes may well result in far more than a better waste trap but instead a move to far longer-lasting materials that do not generate waste or generate waste that we can deem non-polluting. Longer-lasting clothes will cause a massive shrinkage in the garment industry; we could argue already that we're not paying the full price for clothes that add to what I'll call the plastic issue and we might recognise that every one of us is doing nothing (certainly not enough) to cause this class of pollution to stop.

• Reducing our use of fossil fuels could have a massive effect on the way we live. Improvements in energy generation from reusables (wind, wave, water, solar) suggest we have an immediate need for energy storage. We could choose to dramatically reduce travel and instead use communications; we could make much more effort to do travel by body power. The suggestions I have seen so far continue to push the male-oriented assumptions as to what we do and I see a need to think this through far better than we have done to date. So the energy issue rapidly reflects on national transport policies, on safety in communities (which is so much about trust in our society) — and by this point it is too big for practically everyone to see a route to a better life, so we revert to self-centred attitudes on the grounds that this is something we can effect, at the level of the individual.

• The current suggestion to eat far less meat is based partly on measurements of CO₂ and its sources. We can grow much more food on arable land than pastoral (crops not animals), so the perception is that we can feed more people on the same land if we were to move away from meat (and therefore dairy too). One early thought from me is that hill farming occurs where the pastoral is possible and the arable too difficult, so we could reduce meat production without implying it cease entirely. 

• Of course, one solution is to reduce our population. That requires some dramatic changes in society at a global level. We need agreement at a global level that we a re a lot of the problem and we need a change of attitude to reproduction that somehow prevents societies that believe in mass reproduction from simply swamping countries that think otherwise. That could be achieved if we turned our minds to how we accept immigration, what we demand from immigrants and residents — in a sense the social contract within a nation. We have to find solutions and we already know that it is very difficult to effect change at a global level without finding economic incentives. Simply, we need to turn our minds to how to achieve that.  One of the big issues in reducing population—which is far more than reducing growth of population—is that one assumption of our economies is too often that the population will grow. We need to change that. At the level of a nation such as the UK that is already discussed on these pages; Europe has several countries with negative population growth, which gives rapidly a change in the distribution of age and incentivises not only immigration but converting immigrants into nationals (agreeing with the national trends, so for example, dropping the birth rate of immigrants to fall into line with that nation's trends).


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The criticisms I keep reading [6 as example] is that capitalism causes pollution and that we are losing natural resource. That is built around an assumption that we are allowing the self-interest of the capitalist to be entirely self-centred. It implies that we have yielded power to permit this situation to exist. It allows climate change to be blamed on capitalism when we ourselves are the problem and, by suggesting that someone else is the problem immediately shifts the solution from us to them. That is not how we will reach any sort of solution. If instead we act at an individual level, what is referred to as enlightened self-interest, then it is not capitalism that is the problem but what it is that we see as being in our interests.

DJS 20190425

top pic from I waste so much time

[1] https://www.theguardian.com/commentisfree/2019/apr/25/capitalism-economic-system-survival-earth George Monbiot

[2] https://www.imf.org/external/pubs/ft/fandd/2015/06/basics.htm

[3] https://www.youtube.com/watch?v=yqZQpNkFfZs  I found this entirely impenetrable, much at the level I find sermons beyond comprehension. There's a 30 minute version of the same thing, but I'd already rejected the content as a hopeless waste of effort. You may feel differently.

[4] http://thepostconsumerismblog.blogspot.com/2010/03/end-of-extraction-capitalism.html

[5] http://socialistresistance.org/capitalism-a-system-of-growth-and-waste/696

[6]  https://www.huffpost.com/entry/is-capitalism-all-that-ba_b_7148084


 1 Badly taught English in China, where the little words are confusing but modify what we say and imply further words to follow. More convention than rule, perhaps. We say "It depends" and stop there with a dangling incompleteness, but we also say "It depends on <an event or occurrence>". Adding the 'on' suggests there is more to follow, but not adding the preposition is apparently an acceptable route to vagueness. I have moved from irritation at the failure to complete a sentence to acceptance that this is equally open-ended.


2 Capitalism is described as rational self-interest. {2] describes pillars of capitalism: 

private property, which allows people to own tangible assets such as land and houses and intangible assets such as stocks and bonds;

self-interest, through which people act in pursuit of their own good, without regard for sociopolitical pressure. Nonetheless, these uncoordinated individuals end up benefiting society as if, in the words of Smith’s 1776 Wealth of Nations, they were guided by an invisible hand;

competition, through firms’ freedom to enter and exit markets, maximises social welfare, that is, the joint welfare of both producers and consumers;

a market mechanism that determines prices in a decentralised manner through interactions between buyers and sellers—prices, in return, allocate resources, which naturally seek the highest reward, not only for goods and services but for wages as well;

freedom to choose with respect to consumption, production, and investment—dissatisfied customers can buy different products, investors can pursue more lucrative ventures, workers can leave their jobs for better pay; and

limited role of government, to protect the rights of private citizens and maintain an orderly environment that facilitates proper functioning of markets.


3  Peripheries [wikipedia link] This is a model that assumes refers to nodes of a structure and their connectivity. Major cities are hubs (highly connected nodes in the network). Remote agricultural places have low connectivity and are therefore peripheral. One of the criticisms of transport networks is that they are too much centre-driven, on the male-centred assumption that commuting is the major element of all travel. This is what causes the creation and perpetuation of central business districts; the failure to recognise quite how we do travel also perpetuates the need for individual transport.


4  Externalities

The circumstances external to a transaction; the environment in which a transaction takes place. From a short-term viewpoint, beyond control. The business attitude takes advantage of every opportunity, irrespective of how such attitudes change the environment itself, So for example if deceit is a successful strategy it will continue until prevented by an external change. A larger-scale attitude such as declaring deceit to be wrong requires the environment to be different — a society may make deceit so unacceptable that it only occurs rarely. So 'reputation' can have value and so becomes both worth moving in a positive direction and worthy of protection. [wikipedia link]

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