Archive for May 25, 2014

Capitalism: ‘Its Own Worst Enemy’ (And Yours, Too, But Who Cares?)

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We’ve got a live one!

A pair of corporate CEOs have decided capitalism is ailing. They start their Project Syndicate commentary off in a super original way that isn’t cliche’ed in the field at all, riffing off Churchill’s famous quote about democracy being the worst system “except for all the rest”. The writers opine that capitalism is the worst type of economy, except for all the others they’ve no doubt researched exhaustively.

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Paul Polman of Unilever and Lynn Forester de Rothschild of E.L. Rothschild are joining the ranks of liberal capitalists concerned that capitalism, after saving all the poor people from the very poverty it consigned them to, might at long last harm something that really matters: capitalism itself.

Capitalism has guided the world economy to unprecedented prosperity. Yet it has also proved dysfunctional in important ways. It often encourages shortsightedness, contributes to wide disparities between the rich and the poor, and tolerates the reckless treatment of environmental capital.

If these costs cannot be controlled, support for capitalism may disappear – and with it, humanity’s best hope for economic growth and prosperity.

Let’s break this down. First of all, Polman and de Rothschild think two of the most upsetting problems with capitalism are “shortsightedness” and its contribution to “wide disparities between rich and poor”.

The dominant economic system on Earth is apparently just one reason some people are rich and some are poor. The other reasons must be those invisible reallocation pixies that come in the night to transfer wealth to the haves, like reverse Robin Hoods.

Financial disparity is a problem in many ways that are getting lots of deserved attention lately, but I’d have to say the abject poverty that capitalism keeps much of the world in by depriving it of a sensible system for allocating basic goods and services to those most in need (instead sending them to those most able to pay), is a much bigger problem than the wealth gap. That is, a gap between super-rich and comfortable would be one thing; however, the actual canyon we’re saddled with is from a super rich elite to a massive underclass of billions who lack consistent access to basic necessities.

(Polman and de Rothschild do at the end of their article take a stand against extreme poverty in and of itself, but throughout the piece they maintain that capitalism is the savior from, not the cause of, such poverty.)

It’s not entirely obvious what is meant by “shortsightedness”, but in context of the piece, it seems to refer back to the main thesis: that capitalism will engender its own demise. They advise businesses to “look beyond profit and loss to maintain public support for a market economy”. Be less profit-driven in order to make sure the system that drives your profits remains intact.

Capitalism is of course also shortsighted in that the profit motive leads firms to eat their future lunch by eschewing long-term product and market planning to suit short-term returns. This seems to be another of the writers’ concerns, but it’s not inherent to capitalism, as Polman’s Unilever claims to demonstrate. (The other problems – inequality and environmental destruction – are indeed inherent to capitalism.)

And, yes, the writers really did cite “reckless treatment of environmental capital” – not devastation and unsustainability, and not the environment per se, but mere mistreatment of that portion of the natural world that is useful to capitalists – as the final of the three things capitalism does wrong.

Problems with markets and capitalism not cited by Polman and de Rothschild, most of them externalities not accounted for in the prices we pay for products and labor:

  • climate change
  • class antagonism
  • inhumane working conditions
  • alienated labor
  • animal exploitation
  • undermining democracy
  • absurd privatizations (schools, prisons, etc)
  • fiat currencies (and black markets)
  • debt
  • un(der)employment
  • intellectual property
  • limitless growth on a finite planet
  • crass consumerism
  • commodification of life

I’m probably missing some.

Anyway, what do Polman and de Rothschild say is the risk of not minding the problems that matter to them?

If these costs cannot be controlled, support for capitalism may disappear – and with it, humanity’s best hope for economic growth and prosperity. It is therefore time to consider new models for capitalism that are emerging around the world – specifically, conscious capitalism, moral capitalism, and inclusive capitalism.

Again, I would love to see the array of noncapitalist alternatives Polman and de Rothschild have familiarized themselves with in order to support their claim that (modified) capitalism is our best hope. It surely is a very dismal hope as it stands, but sure enough, these glass-half-fullers hold out that capitalist elites can save us from the certain disaster that would result from us shedding the yokes of concentrated capital, exploitative markets, and dehumanizing hierarchy.

These preferred “models” all

share the assumption that companies must be mindful of their role in society and work to ensure that the benefits of growth are broadly shared and do not impose unacceptable environmental and social costs.

Polman and de Rothschild don’t go into specifics, but these are basically mindset protocols, not actual economic structures or institutions; they’re not systemic models, just enterprise models. That is, business leaders are supposed to just do the right thing out of the goodness of their heart, with faith that in the long run, their bottom line will reflect the sensibility of prudent past decisions. Nothing to structurally incentivize or enforce changes, aside from a belief that doing the right thing will pay off.

Addressing the failures of modern capitalism will require strong leadership and extensive cooperation between businesses, governments, and NGOs. To begin creating a path forward, we are convening key global leaders in London on May 27 for a conference on inclusive capitalism. Top executives from institutions representing more than $30 trillion in investable assets – one-third of the world’s total – will be in attendance. Their aim will be to establish tangible steps that firms can take to begin changing the way business is done – and rebuilding public confidence in capitalism.

So after noting that the effort will have to involve governments and NGOs, though not necessarily any grassroots representation of civil society or apparently even organized labor, the authors brag that their conference will involve a staggeringly disproportionate representation of wealth. Advocates of “inclusive capitalism” will have the ears of elites representing a massive amount of capital, and presumably those representatives will have the ears of the government and civil-society do-gooders, as well. What could possibly go wrong?

The list of speakers at the conference includes representatives of such humanitarian institutions as the IMF, GlaxoSmithKline, UBS, and Dow Chemical, plus elites like Bill Clinton, Larry Summers, and fellow Titanic deck-chair rearranger, Jeremy Grantham. Apparently just one person from organized labor will be given a microphone, along with nobody from an environmental group or a consumer advocacy organization. The only identifiable progressive on the roster is Chrystia Freeland. But somehow, this meeting is expected to yield progress, without even having key stakeholders represented.

In any case, the argument here is that microeconomic adjustments by concerned CEOs and boards at major corporations, usually fighting the wishes of greedy shareholders every step of the way, will save capitalism from the litany of contradictions and abuses that threaten humanity, the environment, and yes capitalism itself. This notion is quite simply absurd.

But don’t take my word for it – read the Project Syndicate piece, and this one by de Rothschild, and this one on “moral capitalism”, and this one on “conscious capitalism”. Then decide for yourself if they (a) address the full host of problems with capitalism; (b) take the problems they do address seriously enough for the right reasons; and (c) even remotely meet a burden of proof required of a solution to be considered realistic.

Banner reads: "Capitalism isn't working - another world is possible"

 

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Linkage: Soylent, Euro-Fascism, Sharing, ‘Disruption’

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Dr diagnoses earth with capitalism

“A terrifying diagnosis”, from Ian Angus’s Ecosocialist Notebook.

It’s made out of… powder?

SoylentGreenisPeopleIf you’re like me, you are instinctively creeped out by this new fad “food” with the dystopian name: Soylent. But I have to admit Adam Ozimek’s assessment of it in Forbes is pretty sober. This bizarre product is certainly not ushering in 1984. But I’m at the same time sad for Ozimek, who doesn’t seem to understand what it’s like to appreciate the quality of every meal. Throw out your microwave and slow the hell down; it will change your life.

Fascism returns to Europe?

Ukrainian ultra-nationalist protestersA lot is being made on the Left of the influence of supposed neo-Nazis operating within the new interim Ukrainian government, as well as on the ground, inside the newly formed National Guard security units. Even after reading innumerable articles on the matter, I honestly cannot verify the extent to which these claims are true, and I suspect opinionmakers on the Left are once again spinning reality somewhat to fit their preferred narrative, just as Russia very obviously is doing. Honestly, I care less about the minutia of Ukrainian politics than the big picture, and I think this New Replublic portrayal of Russia’s fascistic policies and ties to ultra-Right in Western Europe should be eye-opening. It relates to my thesis from last month’s commentary here about Russia’s economy looking an awful lot like 20th Century fascism.

Cities: made for sharing

sharingI haven’t looked very far into the particular notion of the commons offered by On the Commons, which calls itself a “commons movement strategy center”, but this very short excerpt from The Sharing Revolution by Jay Walljasper is pretty cool. It offers a brief history of the atomized suburban dwelling, as well as hopeful remarks about returning to a reduced-consumption state of affairs offered by new technologies and intentional human proximity. I’m adding On the Commons to my resource links list to make sure I investigate further soon.

Disrupt This!

Having one foot firmly planted in the technology startup world, I read/hear the words “disrupt” and “disruptive” used in a fairly asinine way several times daily. It honestly drives me nuts, driveled as it is by greed-addled “serial entrepreneurs” out to “change the world” while getting rich. Someday I’ll write about it myself, but I’m pleased to be able to point you to this thrashing of the fetish concept/term as employed by thoroughly system-reinforcing, for-profit, status-quo enterprise founders and fans today.

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Linkage: Oligarchy USA, BitCoin Revolution?, Climate Change, Piketty Illustrated

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Just some recommended reading; my favorite recent posts from around the Web looking forward, or giving context to understanding the future of our economic lives.

Is the US an Oligarchy?

A new paper (PDF) by economists from Princeton and Northwestern strongly suggests that the US federal government is effectively controlled by its wealthiest class. This isn’t startling news to you, or probably anyone who isn’t a political scientist or an economist. But it is news that, at long last, a couple of serious economists have taken the time to lay out just how serious elites’ manipulation of the polity, and thereby society, truly is.

Better than slogging through their paper, check out Joe Firestone’s post that’s a little less reserved than the original report, out-and-out calling the United States an oligarchy. The argument is a little bit semantics (never hurt anyone) and a lotta bit damning.

An Overview of Libertarian Socialist Options

anarcho-communist flagWayne Price has put together a survey article touching on most of the prominent contemporary ideas for alternatives to capitalism and authoritarian socialism. Unfortunately, the piece doesn’t live up to the promise of its title (“Worker Self-Directed Enterprises: A Revolutionary Program”), as there’s no strategy or program in sight.

Can Alternative Currency Be Revolutionary?

bitcoin-revolutionJeremy Roos has done a tremendous service in diligently reporting on, and providing insightful, radical observations of, the MoneyLab: Coining Alternatives conference that took place last month in Amsterdam, covering digital currencies and electronic economic platforms. Roos’s review is extensive, but it concisely analyzes numerous topics such as the limitations of BitCoin and the downside of KickStarter. Each commentary is more interesting than the last. Do yourself the favor.

We Just Can’t Win on Climate Change

The hot fledgling news and analysis site Vox has been churning out some decent content. So far, it’s a very refreshing change to the perverse brevity of the clickbait and listicle sites permeating the progressive Web. A piece called “Two Degrees” by Brad Plumer had me shaking my head in disgust — not at the writing, but at what it suggests about humanity. It’s a great primer on climate change, its prospects and implications. If you don’t really know the bad news, start here. It’s time to wake up.

Modeling Piketty’s Immiseration Thesis

piketty-capital-21st-centuryFinally, I’d be remiss at this time if I didn’t make some mention of the most talked about economics book of our time: Thomas Piketty’s Capital in the Twenty-First Century. Unfortunately, I haven’t even opened it yet. Fortunately, Matthew Martin has laid out a really neat hypothetical that illustrates Piketty’s main thesis. I really enjoyed reading the post; it should whet your appetite for the main course.

 

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