We're Failing Capitalism: Part 4 of 5We all know that junk food has taken over our diets and made us physically sick... But there's equally strong evidence that a kind of junk values has taken over our minds and made us mentally sick.- Johann Hari, in conversation with Sam Harris
I used to personify capitalism as an entity with intentionality (malicious intentionality, in fact). But capitalism is just a collection of ideas, and we've adulterated some of the best parts. In this next segment of the series, we'll be looking at a handful of specific ways in which we're failing capitalism.
The five parts to the series are:
- The source of the world's problems?
- Some of capitalism's successes
- The winning formula
- We're failing capitalism
- The way things are. Or not.
Capitalism (with its partner, science) has played an instrumental role in making this one of the safest, healthiest, and most comfortable periods in human history for the average person. However, the canaries have started dying; this prosperity has been built on such an unsustainable foundation that global socio-environmental dilemmas are imminent.
Capitalism is an easy scapegoat - it appears that those who seem to have benefited most from this seemingly exploitative and unsustainable system are perfect poster children for greed and decadence. Just as easy as it is for some to call the poor lazy, we can blame capitalism for all of our societal and environmental issues. In this context, the dissolution of capitalism then looks like quite the panacea.
But maybe capitalism isn't to blame for all our problems. In fact, perhaps capitalism isn't to blame at all. What if it's just how we do capitalism that's problematic?
We're failing capitalism with:
Unfortunately, social and environmental debt never make it into ledgers - they are externalities. An externality is "a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved" (Oxford dictionary).
So one of the foundational principles of capitalism, trust in the return on investment through the repayment of debts and dividends, is fundamentally not honored through the existence of social and environmental externalities. How? Because social and environmental debt will have to be repaid. We increasingly pay for carbon pollution with superstorm cleanup; we pay for worker exploitation with the various growing costs of inequality, such as war, aid programs, refugee projects, etc; we pay for superbug threats with suffering and higher health care costs.
The escalating evidence of the impacts of climate change, pollution, resource depletion, antibiotic resistance, and species extinction are highlighting that we can no longer view environmental debt as an externality to never be repaid. We will have to repay that debt, and the longer we delay, the more interest accrues.
Interesting note: those who say we can't afford to deal with those issues now are ignoring that the price goes up the longer we avoid dealing with them. We will pay for it - when is up to us.
I'm grateful for the many successes of capitalism. From my current vantage point, my previous willingness to join a movement to overthrow capitalism was a case of throwing the baby out with the bath water.
What makes it so evident that there are problems with capitalism is that regardless of overall metrics, many people aren't benefiting. In previous posts in this series, I only mentioned the exploitation of people as part of the path that led our society to where we are today.
I think it would be immoral/unethical to ignore those past and current transgressions against mostly brown and black people as evidence that this system is flawed and it needs fixing. Slavery and sweatshops are two examples of pretty effective ways to optimize profits at the expense of the well-being of millions of people, and this is just one of many practices that demonstrate we're failing capitalism.
I think that it's not okay to shrug off the exploitation on which our current prosperity was and continues to be built. We don't need to feel guilt or shame, but we should let it lead us in a more equitable and ethical direction.
Income inequality, in the U.S. anyway, is at nearly unfathomable numbers. It's not only a demonstration of a failure for the majority of how we do capitalism, it also points to a weakening of the system itself.
Even though statistics rarely serve to change a person's behaviors, here's an interesting set of statistics published in early 2016 by Oxfam:
Capitalism is an easy scapegoat - it appears that those who seem to have benefited most from this seemingly exploitative and unsustainable system are perfect poster children for greed and decadence. Just as easy as it is for some to call the poor lazy, we can blame capitalism for all of our societal and environmental issues. In this context, the dissolution of capitalism then looks like quite the panacea.
Source.
But maybe capitalism isn't to blame for all our problems. In fact, perhaps capitalism isn't to blame at all. What if it's just how we do capitalism that's problematic?
We're failing capitalism with:
- Negative externalities
- Exploitation of people and the environment
- Inequality
- Disassociation between consumption and production
Externalities - social and environmental debt
One of the most important rules of capitalism is to pay back debts to those who invested. As discussed in part 3 of this series, The Winning Formula, capitalism could not have succeeded if debts were not repaid. Investors have always financed the expedition (research and development), prototyping, production, and more with the expectation and trust that their investments would be returned (and with profit).Unfortunately, social and environmental debt never make it into ledgers - they are externalities. An externality is "a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved" (Oxford dictionary).
So one of the foundational principles of capitalism, trust in the return on investment through the repayment of debts and dividends, is fundamentally not honored through the existence of social and environmental externalities. How? Because social and environmental debt will have to be repaid. We increasingly pay for carbon pollution with superstorm cleanup; we pay for worker exploitation with the various growing costs of inequality, such as war, aid programs, refugee projects, etc; we pay for superbug threats with suffering and higher health care costs.
The escalating evidence of the impacts of climate change, pollution, resource depletion, antibiotic resistance, and species extinction are highlighting that we can no longer view environmental debt as an externality to never be repaid. We will have to repay that debt, and the longer we delay, the more interest accrues.
Interesting note: those who say we can't afford to deal with those issues now are ignoring that the price goes up the longer we avoid dealing with them. We will pay for it - when is up to us.
Everyone is supposed to benefit
During the 19th century, the United States entered the ranks of the world's most advanced and dynamic economies. At the same time, the nation sustained an expansive and brutal system of human bondage. This was no mere coincidence.
What makes it so evident that there are problems with capitalism is that regardless of overall metrics, many people aren't benefiting. In previous posts in this series, I only mentioned the exploitation of people as part of the path that led our society to where we are today.
I think that it's not okay to shrug off the exploitation on which our current prosperity was and continues to be built. We don't need to feel guilt or shame, but we should let it lead us in a more equitable and ethical direction.
...if the aggregate goal of human striving isn’t merely to maximize aggregate profit but to achieve a measure of happiness and sustainability for the vast majority, well then, perhaps we have a problem. Several problems in fact.- Igor Greenwald, writing for Forbes
Maybe the system is doing well, but it might not feel like it
The concentration of income in the hands of the rich might not just mean a more unequal society, economists believe. It might mean less stable economic expansions and sluggish growth.Our more subtle failure in implementing capitalism lies in the fact that despite whatever metrics we use to show that the system is doing well, many people don't experience benefiting from the system. Consider the perspective of many U.S. working class people that our system is so inequitable and flawed that their vote for president in 2016 was a vote to "break the system." Their experience is valid.
Income inequality, in the U.S. anyway, is at nearly unfathomable numbers. It's not only a demonstration of a failure for the majority of how we do capitalism, it also points to a weakening of the system itself.
Even though statistics rarely serve to change a person's behaviors, here's an interesting set of statistics published in early 2016 by Oxfam:
And here are a few more statistics brought up in a great conversation between Johann Hari and Sam Harris, #142 - Addiction, Depression, and a Meaningful life. The key idea here is that social crises in wealthier countries (like the opioid crisis in the U.S.) are the result of deeper existential pains experienced by average people in capitalist societies:
- More U.S. citizens die from opioids each year than who died in the Vietnam War
- 1 in 3 middle aged women are on chemical anti-depressants
- 1 in 10 13-yr old boys are on a stimulant drug
- 30% of children in the foster care system are on at least one psychiatric drug
- Suicide is significantly rising (24% increase between 1999 and 2014)
Johann Hari argues that, like the 18th century gin craze in England, the opioid crisis isn't the fault of opioids. Instead, it's the natural result of important social and psychological needs not being met by the status quo of survival in our society. (Source.)
Dissociation
The problem with evil is that in real life it is not necessarily ugly. It can look very beautiful...That is why it is so difficult to resist Satan's temptations.One of the expectations of capitalism is that it responds to the consumer. The market is supposed to shift in response to how people utilize their purchasing power.
In actuality, however, the consumer has become so disassociated from the means of production that we mostly have no idea where our products come from, who worked to create them, how they got to us, what materials and processes went into them, and what will happen to them once we're done with it.
This is a BIG deal for capitalism. When the product was manufactured across town from us by people we could see and meet, we could see the deforestation, taste it in the water, smell it in the air, and find ourselves incapable of ignoring those means of production. Our purchasing power could, theoretically, shift the market.
When the mining, processing, manufacturing, packaging, and shipping by people we can't picture occurs so far from our line of sight (half the world away for most of our products), our purchasing power is much less likely to reflect what our actual choice might have been in the matter. The invisible hand has no sight, taste, or hearing to true the system.
Capitalism depends on "level, transparent markets to work well." (Source.)
Capitalism depends on "level, transparent markets to work well." (Source.)
In summary, I think that the main failings in our implementation of capitalism are the following:
- Negative externalities
- Exploitation of people and the environment
- Inequality
- Disassociation between consumption and production
