Capitalism is conventionally defined in economic terms such as the following:
An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.
Implicit in this definition is the idea of property rights. In fact, without individual and corporate property rights, capitalism, as defined above, could not exist.
Our nation is based on private property rights and capitalism. Few would argue that it has not been an enormously successful system, powering us to undisputed world leadership in the size of our economy, our living standards, and (arguably) even our cultural and political preeminence in the world.
One of the products of our capitalistic system is the establishment of stock and bond markets. These have led to broad public ownership of businesses. But a hundred years ago, some of the problems with this scheme began to emerge with the “Robber Barons,” who manipulated markets to their advantage…and to the disadvantage of many smaller investors. That was followed by the Panic of 1929, when most investors, large and small, lost their life savings. Capitalism, it seemed could be a blessing or a curse.
But the system survived and eventually prospered again. New businesses emerged and thrived. Investors bought low and sold high, and our economy grew…and grew…and grew. Standards of living rose dramatically, as business and technology combined to use the resources of the earth to make our lives easier. It wasn’t until the 1970’s that cracks started to appear again. Air and water pollution were rampant. Our domestic oil supplies were showing signs of depletion and our dependence on foreign oil was growing rapidly. The environmental movement was started, and a few politicians started talking about an “era of limits,” but they were shouted down by the capitalists. Profits were the only important thing. Money solved all problems. Instead of a “chicken in every pot,” the new mantra was “a car in every garage.” Even though cars were improved to reduce emissions, the huge and growing numbers of them, both here and abroad, increased the release of oxides of sulfur and nitrogen…but most importantly, carbon dioxide, a gas that creates “greenhouse” conditions, trapping heat from the sun in the earth’s atmosphere and preventing its re-radiation into space. On top of that was the plethora of energy-demanding appliances…refrigerators, ranges, dishwashers, washers, dryers, hair dryers…the list went on and on. They all required electrical energy, which had to be generated and that meant more burning of fossil fuel, more emissions, more greenhouse gases, and more depletion of those dwindling and irreplaceable fossil fuels.
Meanwhile the human population of the earth swelled from 1.6B in 1900 to 2.5B in 1950, and then more than doubled to almost 6B by 1999. US population increased over the same period from 76M in 1900 to 161M in 1950 to 291M in 2000. These trends have continued to the present day. World population is now estimated at about 6.8B, while the US total is around 305M. The growth in population exacerbated the problems…more people consuming more energy per person. Consumption of the earth’s resources was going up at an exponential rate (and still is).
Anyone who has studied nature knows that exponential growth rates do not last forever, and when they end, the final phase is often a spectacular crash. And yet, our capitalistic society is built on the expectancy of growth! Listen to any corporate CEO, and his main pitch will be the anticipated growth of his company…limitless, unending growth. Economists, wring their hands if growth in the US Gross Domestic Product (GDP) falls below 3% or so. At some point, growth in our GDP will halt permanently. The earth, and its once-seemingly-infinite riches, will reach its limit to provide for us. And that is true for every nation and every person on the earth.
It is easy to point fingers at those wretched, greedy capitalists. It’s their fault! But…hold on a minute. We are the ones who own all that stock, and we want to see our portfolios grow and grow, to provide us with a comfortable retirement. We have saved for it, invested to reach it, and we deserve it! Those corporate CEO’s are struggling to meet our expectations! If the next quarterly earnings report is disappointing, we will sell, driving the stock price down. Growth! Gotta have growth!
In the words of Walt Kelley’s Pogo, “We have seen the enemy, and he is us.”
So the question arises: Is Capitalism, with its emphasis on private ownership, profits and growth, growth, growth, still the correct model for an earth that is filling up with people, depleting the precious, irreplaceable resources of the planet? Or do we need a different system that looks at the planet as a whole and makes decisions that protect the earth from over-exploitation and destructive practices? A system that recognizes that what every person does on this planet affects every other person. A system that will allow all of earth’s inhabitants to live decent lives.
I know that these ideas will not please many people. “Big Brother!” they will howl. “Loss of individual freedom.” And they are absolutely right. The problem is human nature. The human species is a competitive, selfish, lot. Never before in human history has the current generation had so much control over the prospects for the future habitability of the planet. If we leave our destiny in the hands of Capitalism, I fear for future generations.
I am a beneficiary of Capitalism. I saved and invested in my working years, and it is likely that I will live out the remainder of my life comfortably. So why am I worried about this? I want my children and theirs to have the same opportunity.
If we stay on the current path, that seems unlikely.
You can find a continuation of this article here.