Is there an alternative to Capitalism?

With the fall of the Berlin Wall in the 1990s, capitalism was seen as the ultimate model of success. A quick look however, at the environmental crisis facing the world today and the social inequalities that continue to persist, reveals that as an economic model, it has failed to secure planetary and human well-being.

We’re beyond the safe limit of CO2 in the atmosphere of 350ppm, thanks to an efficient and extensive fossil fuel based industrial and agricultural machinery that relentlessly spews out green house gases into the atmosphere. Wealth is concentrated in the hands of the few. According to the UNU-WIDER report, “the richest 10 percent of adults in the world own 85 percent of global household wealth. Of these individuals, almost half live in the US and Japan.”

On the other extreme, half of the 6 billion people of our planet live on less than two dollars a day. 2.5 billion people have little access to basic sanitation.

buildingsCapitalism is based on private ownership of the means of production, for the purpose of manufacturing and distributing commodities. The primary objective of course, is to maximise profit. The very nature of the system therefore, demands more and more consumption – something that entails using extensive exploitation of raw materials with increasingly cheap labour. Globalisation of markets for raw material, labour and consumers means that no corner of the planet is spared in the relentless pursuit of profit. Much of this has led to tremendous pollution and damage to ecosytems ranging from rivers, oceans, forests and soils beyond their capacity to regenerate themselves.

Why has capitalism or the markets failed?

1. Tragedy of the commons (a term coined by Garrett Hardin in 1968) means that a common, open access resource such as the oceans or forestry or rivers or air is bound to be over-exploited by individuals. Take fisheries, for example. Each trawler will act in its own self interest and harvest as much from the oceans as possible, because it’s  trying to maximise its own profit. The degradation caused by one trawler may be small, but the collective unbridled harvesting will lead to overfishing, and the eventual collapse of the ecosystem.

2. Environmental and social costs are externalised. Someone or something else, outside of the person or company who earns the profit,  bears the true impact and costs of production and consumption, and these costs are not properly priced in the market.  The bananas that appear on supermarket shelves are cheap, because the true costs of pesticide use are borne by workers in the plantations, by the soil which gets degraded which in turn affects future productivity for local populations,  by rivers which get contaminated by pesticide run-off, which again impacts fish-protein supply.

Can we solve these problems outside of capitalism?

Is socialism the alternative? With the collapse of the Soviet Union and Eastern European bloc we’ve already seen that the socialist economic model is not a viable one. A centrally planned economy in which the government controls all means of production and has to make trillions of economic decisions on behalf of consumers is bound to be inefficient. Take just one example, how many shoes of what size should be made available for which town?  As a vehicle for resource allocation, socialism is cumbersome.  However the intent of creating an equitable society is what we can take away.

Can we and should we improve the Capitalist system?

Many, including environmentalists like Jonathon Porritt as in “Capitalism as if Earth Matters” admit, even if grudgingly, that capitalism is here to stay. If we have to live with it, we might as well make it better, and here are the main thoughts put forward by free market thinkers and environmentalists alike.

1. Regulation  is one way of making sure capitalist forces do not destroy natural resouces and ecosytems in a reckless manner. We’ve seen since the 1970s, a slew of environmental acts and regulations, which have no doubt been useful in checking the excess, but have by no means been adequate.

2. Tragedy of the commons- perhaps not a tragedy? Not many noticed that Elinor Ostrom was the first woman to win the Nobel Prize in Economics this year, and her theory is of significant importance to environmentalists. Elinor Ostrom says that common resources don’t have to necessarily face a ‘tragic” downward spiral of destruction, if we have some kind of community participation and ownership of land.  So it’s not always necessary for governments to intervene, provided the community rules of governance are clearly laid out.  In a sense, Elinor rules against either extremes- complete privatisation of natural resources, or at the other end total state control.

3. Green capitalism is seen as a way to achieve “sustainable development” or economic growth which does not destroy the regenerative capacities of different ecosystems.  This involves changing the way we create change, by creating a vision of a sustainable world, by laying emphasis on human “well-being” rather than narrow definitions of GDP of a nation.  Green capitalism involves renewable technologies, closing the loop in waste management, carbon credits and so on. However, there is still a danger that “going green” may only address some aspects of environmental destruction, while broader problems remain e.g., an electric car may be a greener option, but it does not address the fundamental issues of development such as loss of habitat, urban sprawl, increased water and energy use in power plants, or resource use in the car production. It does not ensure issues such as wealth disparity or social inequalities are addressed.

4. Market pricing for ecological and social costs. Markets need to be developed for ecosystem services so that these externalities are accounted for. This will bring about fundamental, systemic change, but is easier said in theory than in practice. Distortions such as subsidies on fossil fuel or large scale industrial agriculture or livestock farming need to be removed. If this is done, organic food for instance, will actually cost less than conventional food when the latter includes the carbon emission impact, cost of unsubsidised fossil fuel inputs for fertiliser and pesticides, fair wages for workers, and costs for effluent treatment before it reaches rivers.

Can society think out of the box?

If we were living in a feudal society, we’d probably be asking, “How can we make feudalism better?” It’s always easier to say in hindsight, “Replace it something better like parliamentary democracy.” 

We as a society are now asking, “How can we make capitalism better?”  Whether we like it or not, that’s where we are. To think out of the box is not easy, but sure enough one day, a new paradigm, a new model will emerge that is more just and sustainable.

Even if we were to live with the existing model, we should be cheering that all the solutions are there. We only have to go as far as Lester Brown’sPlan B 4.0 Mobilising to Save Civilisation“  or Al Gore’s new book “Choices” where they outline the various pragmatic possibilities within existing frameworks. Solutions also lie within communities, whether they are in rural India or in the Amazon rainforest to solve local issues and manage local livelihoods sustainably.

Where there is a will, there’s a way

The more important question for society at this crucial juncture is “How do we get the political will to implement these solutions, and achieve social and environmental justice?”

As Bill McKibben said, what we are probably seeing for the very first time is a grassroots movement arising to actually push forth the political will needed, as we saw on October 24th, 2009 - the International Day of Climate ActionPaul Hawken too in his book, “Blessed Unrest” sees a worldwide grassroots movement building up to bring about change in a benign, non-violent manner.

Economic systems have come and gone and there is no reason to believe that capitalism will not be replaced by a model which is sustainable and equitable. Whether that transition comes as a result of a sudden shock to the existing system, or a result of intelligent choices that society makes is the moot question.


You may also be interested in these:

George Monbiot in the Guardian: After this 60-year feeding frenzy, Earth itself has become disposable

Elinor Ostrom featured in the Guardian : Elinor Ostrom breaks the Nobel mould

Measuring Human Well Being: Happy Planet Index


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Posted by on Nov 23 2009. Filed under Carbon Footprint, Climate Change, Climate Change, Green Activism. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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