Capitalism comes with a potpourri of sweet-scented prefixes, all of which presume that there is something wrong with capitalism per se. There are some other prefixes we commonly hear—crony capitalism and unbridled capitalism—that suggest that we aren’t doing it right.
Perhaps it is Goldilocks capitalism we need? Not too mean, with just the right amount of good will and charity, a measured dose of state regulation, a safety net – not too big and not too small, and the rest left to the free market?
Or is capitalism just capitalism in the context of people being people? The system swings between the poles of libertarianism and social democracy according to the changing tides of voter opinion. Some capitalists have more feeling for their fellow humans than others, while there are always greedy, selfish sorts lurking to do one over the rest of us, and certain trends are inevitable according to the incentive structure inherent in the system.
It is this last point, that outcomes tend to be inevitable according to the incentive structure operating, that serves as the starting point for a book I have recently written, titled 150 Strong: A Pathway to a Different Future, published by ClubOrlov Press. Over the coming weeks it will be serialised on Renegade Inc, with extracts presented.
On the topic of incentives, the book begins with an Author’s Note:
This book began as a response to the use of the word “sustainability,” a concept I became connected to through my training in sustainability engineering: the design and incorporation of environmentally-friendly practices into commerce and industry. It is based on principles such as these:
- When one cuts down a tree, plant a new one.
- We should try to use the waste from one process as a resource for another.
- Polluters should bear the costs of their actions.
That is not to say that profit is inherently a negative thing. The creation of a financial surplus, in its most earnest expression, could be equated with prudent and efficient house-holding. But if nature is to serve as our model, then we can see something of how our current approach to profit has become problematic.
The accumulation of a surplus is a natural process: a plant accumulates surplus energy and nutrients to be able to bear fruit; a polar bear accumulates a surplus in the form of body fat which enables it to survive the winter; and our hunter-gatherer ancestors collected a surplus of food so that they would be able to survive in lean times. But in the monomaniacal pursuit of profit that we are engaged in at present, there is little that is natural about it, little sensitivity to the intricacies of the environmental and social systems that sustain us.
The reason for this can be deduced from a simple formula:
Profit = Income – Expenses
From which we can see that the profit motive and the “sustainability motive” are diametrically opposed: If sustainability initiatives were to truly succeed beyond the narrow realms of such things as waste minimization and embracing new technology, they would result in less income (due to reduced consumption) and more expenses (due to the cost of mitigation measures) leading to lower profits.
This inverse relationship between profit and sustainability is hugely important, and it is the proper starting point in any effort to confront our large-scale environmental problems. Yet it is almost universally ignored in official circles, and political efforts to address sustainability issues give it almost no coverage.
…
In our current way of doing things, the conflict between profit and sustainability is resolved through regulation, where all must comply with certain rules that hurt profitability a little bit but avoid worse damage. And, indeed, this approach has produced many good outcomes: the air is cleaner in Los Angeles, the fish are returning to River Thames, and many large areas of undeveloped land have been protected as national parks. But, for many reasons, it is an approach that is flawed: it doesn’t handle complexity well; it breaks down when there are different laws in different countries; and it only works when there is a social context in which the law is supported and enforced.
As soon as one tries to address these problems, sustainability becomes an unapproachable subject: to address it at the big-picture level one has to address the underlying economic and social context, but that is something of a taboo. Nevertheless, there is some mainstream discussion opening up on this topic, including some positive response to Naomi Klein’s book, This Changes Everything: Capitalism vs. The Climate (2014), and increasingly, it seems, the need to consider alternatives to our current system is being recognized.
The main message of the book is that we are blind to the significance of the reconciling force of our current system, which happens to be inherently negative, and that it is only by understanding this that we might have some chance of finding a better way of doing things, for anything else would be but tinkering around the edges.
In seeking to provide a bridge to something better, a very successful and proven system that operates with an alternative, positive reconciling force is examined. It is based on Dunbar’s number, which originates in evolutionary biology and proposes an upper limit to the number of people that humans can maintain effective social relationships with, which is approximately 150 people.
If you wish to read the book in full, it is available on Amazon.
[This article was originally published by Renegade Inc.]
20 comments:
I think the "ultimate solution" to all our current problems will not be theoretical or intellectual at all, but rather just come down to the simple recognition that we can't go on living in a mindset that is fundamentally at war with humanity and the natural environment that sustains us, including all the other species we share the planet with. Unfortunately, when we do that, we'll wake up to the fact that 7B+ of us is in no way sustainable whatsoever by several orders of magnitude, and the first order of business will be to get our population numbers down to historic levels in the short space of a generation or two. Talk about a daunting task!
Western financialized industrial capitalism and it's sacred exponential growth paradigm have so polluted the souls of men with greed and avarice that it's impossible for me to imagine that we'll ever adopt a saner philosophy in time to save our industrialized bacon, especially since our continued survival in the short term (there simply is no long term anymore!) depends on it. Can't predict the exact manner or time frame this will all play out, but my guess is in all the historically proven ways - famine, pestilence, wars, murder, and mayhem - over the course of 20-30 years or so. Once the global reset is complete, perhaps a hearty bunch of new age neanderthal types (of which you've written about previously) might emerge to get things going over the long haul again, but given the magnitude of the climate and environmental changes we've already imposed on the earth, I'd say even that might be a dicey proposition at this point. We'll see!
My guess is the author has a much narrower definition of "Capitalism" than I have. To me, "Capitalism" just means "I'm free to trade things with other people." And that's the error here. "Capitalism" is not a political structure, it's not a pan-human solution to all challenges. It's just making stuff and trading it. And yes, you're going to do that where there's a net energy gain(profit).
Here's the difference: "Capitalism" is not a social system. Your society, your social mores are supposed to tell you if slavery is wrong, if extinction is wrong, if genocide is wrong, not capitalism. That's not what capitalism is for. That would be like expecting the Church to be the mechanism that delivers goods to your door. It MIGHT do it, but that's not its system structure, that's not its purpose. Society, morality, you and me, it's our job to restrain capitalism by not being selfish thugs, and not allowing others around us to be either. --It's illegal for one thing, under hundreds of existing laws that are not enforced.
So in that case we might discuss why our society, our self-story, has morally failed so absolutely and entirely that we actually look to Capitalism to replace it for us, **and can't even tell the difference**.
And here's why: when Capitalism only means I can trade stuff I have to get something else, it's always going on whenever two humans get together. It's not going to be changed or outlawed. In the Soviet Union, in Venezuela, in Utopian societies, it's still happening. What we need to do is have morality in ourselves, and hold that value with others, to curtail them, for the good of all. But that's our responsibility, not "Capitalism's."
Good comment about capitalism from the Professor, although I am sure pure Capitalists would argue with him about the true dimensions of capitalism. They would call simple trading the "barter system" (a pejorative term for them), and dismiss it as not capable of dealing with international trade, etc. etc. But he is right. People will always trade things for no other reason other than that a man might need a hammer instead of the saw he actually has. There is nothing wrong with trading unless it is done as "a way of life". Then, it becomes problematic.
I like the 150 rule because I miss kinship ties, which in America have all but died. The vast distances required to travel just to visit some cousins mean that they are essentially not there as part of your extended family.
As for the first comment, history shows us the all too unpleasant manner in which man and nature deal with overpopulation. Basically, man starts a war, and then nature pitches in by tossing a rare disease into a boatload of soldiers stationed in some remote corner of the world and then you have a Great Plague that wipes out the majority of both civilians and soldiers. With the age of antibiotics coming to an end, I do see that as our unwelcome future. Before WW II, war and disease always rode together. I would even say they share the same horse.
Corporations are supposed to compete on how cost-effectively they produce and deliver goods & services. In many situations, however, it's more profitable to compete in how well they can game the system, to fix prices and eliminate any rivals that might offer more for less.
Michael Hudson is good on what a 'free' economy was originally supposed to be 'free' of -- the parasitic costs of feeding a compound-interest financial sector... [more later; please bear with!]
I started out as a Robot Republican and then learned more and became a libertarian. After being a proponent of free market dogma I learned that it only works in theory, and that, unfortunately, the free market needs a watchdog to keep them in check otherwise they will do everything in their power to maximize their profits. Looking at American business today, I don't see how they could exploit the free market any more than they already are. Our current Crony-corporate oligarchy has given them everything they need in this regard and the only thing that can fix it is a hard reset. Likely, there will not be a peaceful way to make that happen. If history serves, empires only last so long.
"On the fateful morning of the Rana Plaza collapse, workers were reluctant to go into the building. Large cracks had appeared on the walls of the factory, and inspectors had declared the building a hazard. But management forced them to start working. A devastated mother later recalled that her eighteen-year-old daughter, who perished in the collapse, had been threatened with loss of pay for the entire month if she chose not to work that day.
This is a specific kind of dehumanization, born of deprivation and powerlessness and familiar to workers in every part of the world, who are forced to choose between their livelihood and their safety. Socialism identifies the source of such dehumanization — private ownership and exploitation — and rejects it.
Capitalism does not merely oppress workers on the factory floor. It creates an entire culture in which the logic of oppression and competition become common sense. It turns people against each other and their own humanity. Like Franz Kafka’s character in The Metamorphosis, Gregor Samsa, people are alienated from their human selves, isolated from their fellow beings, and tortured by the loss of all that could be possible."-Nivedita Majumdar
Capitalism is an antiquated term. The focus now is markets. Mostly, to the extent the word capitalism is used it is just another way to say markets. Per neoliberal doctrine, which is the current consensus that arose from the original economics of the 1870's, with much tortured logic, markets are super information processing mechanisms that know more than any person or group of persons.
Markets, capital M, encompass all things not just goods and services. Everything is a market; markets of ideas, political markets, etc. etc. All market outcome are good according to the consensus.
All the flurry of interest in inequality that arose with Piketty's Capital in the 21's Century was rejected by neoliberals as besides the point. The markets have determined such inequality and so that is correct.
There is a false impression that capitalists, now neoliberals, are opposed to government and that their ideal is laissez-faire but that is incorrect. Their ideal is that governments are meant to promote markets. If you wonder why 'free market' advocates have been the biggest supporters of interventionist central bank policies look no further. Trade 'deals', regime chance in Russia, same same.
Not to denigrate DO's point here but thinking in antiquated terms which I think capitalism is may be a path off into the weeds.
Sorry, for the interruption (I can't multitask like my wife, get derailed when I try.)
Also, I've oversimplified what Michael Hudson has to say about the economic system & its relation to the political situation; but this lays all that out pretty well: http://www.counterpunch.org/2016/04/01/the-lies-of-neoliberal-economics-or-how-america-became-a-nation-of-sharecroppers/
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That system of compound interest eventually leads to either the economy breaking down as the debts get unpayable, or to so much fictious 'wealth' in the system that it dwarfs any possible production and renders its owners too powerful to regulate; they can always hire smarter people to invent justifications for their depredations, infiltrate and undermine the bureaucracies intended to control them, dominate the public's sources of information.
A tame, housebroken capitalism of small (& I mean _tiny_) businesses would have much to recommend it -- but I don't see how that could be stabilized.
The disconnect by academics on capitalism (and these excellent comments) is what is astounding. There's a book on 'effective altruism' by Peter Singer (The Most Good You Can Do) which talks about this, and for me, kinda misses this very big point. In his eyes, it is OK to work for a Wall Street hedge fund, if you give your money away (efficiently, of course), neverminding that the system you are supporting may be causing those very problems you are trying to solve.
It is an interesting book, and there are some good points in it, but I wonder why his sharp mind didn't see these issues.
https://peakfuture.wordpress.com/2016/04/04/the-most-good-you-can-do-sorta/
(a)My understanding is that capitalism isn't Joe's Shoe Repair, it's when you have things elaborate enough that you have stock offerings, and people who simply invest in stock and basically don't give a damn how the stock's profitable, just as long as it is.
(b) Hence, at least in theory, things could be changed so that corporations were no longer people, huge money donations to politicians are no longer free speech, and my boss, instead of being a "consultant" would be a part of a co-op that the company he works for would become.
(c) You're an engineer, as is my boss. My boss said recently, "Ultimately it really doesn't matter what political system you have, the wealth is going to get concentrated at the top, so what's essential is some sort of negative feedback loop" by which he means, some way to put money back into the pockets of the wide base of workers.
That would be, "The disconnect by academics on capitalism (and as readily noted by the excellent comments here) is what is astounding."
I hear a million ways it being said that this just ain't working.
Why, why, why? Let me try. It's cuz this, I say.
And they all say, this, this, this, and that.
Ugh!
It's just a teenage boy in a rig with too much horsepower.
Everything will make sense again when his tank runs dry.
No need to drone on about the state of the world - it is what it is
and it is what it will always be until the little critter is defused naturally.
There is nothing more to be done than to ask for
a bit of compassion or dispensation from evil here and there
and to walk away when they are not in the offing.
~toktomi~
A response to Professor Diabolical and others.
The thrust of the post is that outcomes are linked to incentives, and how you define capitalism does not alter this.
Put simply:
Profit increases when consumption increases and costs decrease
Sustainability increases when consumption decreases and costs increase
It is a relationship that is mathematical in nature, and as the profit motive underpins capitalism it is a non-trivial point.
In the book an alternative incentive structure is discussed that is innate and already operating. It may not be a solution to the problems of the capitalism, but, as one of the other commenters put it: "the tank is running dry" on our current system, and new ways of doing things will become emergent.
Also, capitalism is more than just simple trade. It must coexist with a legal system which attributes rights to those who make the profits, which becomes their capital. This introduces a different dynamic to Joe exchanging his eggs for Julie's bread.
I would also like to say a public thank you for all the work that Dmitry put in to editing the book.
To go along with what the Professor said, perhaps one of the fundamental problems with the current incarnation of capitalism is that too small a percentage of the population are actually capitalists. Maybe if 90+% of the population owned businesses or stocks, we wouldn't have some of the worst abuses.
I'm afraid it wouldn't help that much in terms of resource depletion or degradation of nature, though.
It's important to keep in mind that the "incompatibility" between the profit and sustainability motives is entirely the function of voodoo accounting that allows for the externalization of certain costs - not only environmental, but also social (which is really just a sub-class of environmental). Such is the contrivance of the system we live under, and the reason why all "wealth" under capitalism is not only gamed, but illusory. The "profit equation" doesn't really hold water. Given the fact that we live in a finite world, and that everything is ultimately interconnected, a gain in one place is unavoidably a loss somewhere else. The water you pollute with your toxic industry today, is the water you'll need to drink maybe not tomorrow, but eventually. It's the proverbial Zero Sum Game. You can cook the books only so much. Nature will reconcile them eventually. Or the general level of dissatisfaction among the human masses will reach a tipping point, and the social order will break down. It's all a catastrophe, of one variety or another, waiting to happen. Even the Koch's won't be able to wall themselves in from it (ya gotta wonder). This is how meaningful change will come, and it won't be pretty. I don't believe we have the wherewithal to self-correct. Contrary to what the Professor says, the essence of capitalism is not free trade. It's predation. And that's the problem. For all our supposed "intelligence", humans overall still operate out of their reptilian brains - even, apparently, the ones who are smart enough to game the system in the short run.
Mr. Wheeler, if 90% of the people "owned businesses" (unlikely, since 90% of working-age adults are not actually capable of full-time employment, much less being the CEO of anything), would there be anyone left to be employees of these businesses? Or customers? We're talking a zero-sum game here (actually a negative-sum game, thermodynamically-speaking).
It's like the "no true Scotsman" deal w/r/t to Capitalism. People want to believe in Capitalism no matter how badly it betrays them.. no matter how badly it distorts their purported values. They'll posit "kinder, gentler" versions of the thing, but ignore the fact that—by its intrinsic mathematical nature—capitalism is inarguably a winner-take-all system.
There is no getting around its systemic tendency to monopoly, along with the diminishing returns on capital accurately described by Marx. One does not need to be a political Marx-IST 'revolutionary' in that baleful political sense to recognize these logical, mechanical, apolitical, verities.
Capitalism is a deep fraud and an irredeemable Ponzi scheme, requiring material increase from outside its boundaries to pass off as gains from within.
Capitalism = piratism = rent-seeking, tribute, or loot from outside one's political and monetary boundaries, in order to pass them off as the rightful gains of a fictitiously-wholesome domestic arrangement. It is further from any sort of natural arrangement than can be imagined (except that it *is* natural, seeing as we humans, who are part of nature, did come up with it).
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Anyway, this inside/outside sleight-of-hand is ongoing today, and would continue apace if it hadn't hit the brick wall of stagnant gains in underlying energy. A lack of energy expansion obviates any notional "capitalist" system and betrays any notion of "growing the pie higher".
It utterly breaks the concept of interest and of money, because—in a context of ever-declining material resources—interest can only ever coherently be negative from here on out, *forever*... reflecting the fact that greater inputs of capital (as with fracking, or the tar sands) will naturally yield less and less.
We've never been in such a situation before, globally speaking: previously there have always been new "worlds" to conquer and drag in to The System (whether one is talking about 16th c. South America or 20th c. China), the pretense being that gains of external conquest or extraction are chastely and naturally engendered from within the system itself.
The laws of physics will make their exigencies known, brushing aside the superficial modern concept of "capital", and the pseudo-sophisticated, deluded, modern concept of "economies". Today there are no new horizons for globalists to pillage, nothing new upon which to perform their recent depths of asset-stripping. Except war. An acquaintance who has worked with the government says: "This level of war planning is not really about one gvt against the other. At some point things are going to get so “hot’ a global war will be more profitable than maintaining the consumer economy."
Let that sink in.
Lidia17, you have NAILED IT with that comment. Thank you very much!
Headsails, likewise. Regulation, the imagined "savior" of capitalism, can only ever be a temporary measure at best. What we are seeing now, deregulated winner-take-all capitalism, was always inevitable, with FDR's New Deal and assorted regulatory band-aides being mere speed bumps along the way. And it's not NEARLY as bad as it's going to be yet!
There is no "good" capitalism because capitalism itself is fundamentally flawed.
Any attempts to make capitalism humane are unstable and quite qickly become perverted and finally exterminated. It's because capitalism is not about "free market". Capitalism as a social-political system is about wealth and power. Fundamental basis of capitalism is a free conversion between money and power. Power can become money and money can become power. It's a fundamental basis of capitalism. So, capitalist cycle is different from a classical free market cycle. Free market cycle is "goods-money-goods". Capitalism cycle is "power-money-power". Money converted into power, then power converted into more money and this cycle of money and power is endless. It's why capitalism is fundamentally flawed. At its core capitalism is about absolute power and absolute wealth.
We're seeing two extreme outcomes of note. First, some players have discovered the quickest profit comes from directly taking the assets of another under cover of government (civil forfeiture, emminent domain, bail-ins, Corzine). Second, connected organizations receive freshly printed currency directly. The game has become one of connections and not efficient production. The enabling factor is currency, the federal reserve note, a promise to pay... nothing.
Our first day of freedom will be the day people refuse to accept notes for the real energy of their labors.
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