Unsustainability of Capitalism
Renowned Jewish scholar Hillel said that, “If I am not for myself, then who will be for me? In addition, if I am only for myself, then what am I? If not now, then when?” (Karp, 2012, 1). These questions were posed in 50 BC and are incredibly timely in the present global economy that threatens system’s capitalism. Presently, the US economy is piling trillion dollars annually as additional debt, the Euro zone is under siege as it awaits cohesive policy and political leadership. In China, leadership in transition is hoping to sustain adequate development for the needs of 1.3 billion people. The present world we live in is consuming 1.5 times earth’s sustainable level of natural resources can support annually. Financial burden on the young to care for the old is rapidly increasing due to the accelerating population aging. The level of income inequality is dramatically increasing with at least 50 billion people worldwide failing to obtain access to clean drinking water. All these illustrate that capitalism is unsustainable. The study argues that capitalism cannot be sustainable. The study seeks to answer question four on whether capitalism can be sustainable and argue in favor that capitalism cannot be sustainable.
Capitalism refers to an economic system whereby the means of production and distribution are privately owned and development is equal to the accumulation and reinvestment of profits within the free market (Musacchio & Lazzarini, 2014, 102). Capitalism is assumedly the only moral political system that is dedicated to the protection of rights as requirements for human existence and flourishing. Capitalism is defended on the basis of morality but not economic and utilitarian basis (Landauer & Rowlands, 2016, Para 1).
Capitalism can be traced back to the primeval forms of the merchant capitalism as was practiced in Western Europe in Middle Ages (Korstanje, 2015, 23). Capitalism commenced to develop to the present nature in the Early Modern period in countries such as Netherlands and England. Traders from Amsterdam and London came up with the first chartered joint-stock companies that defined commerce, trade, and banking institutions (Hallgrimsdottir & Benoit, 2007, 1397). Over the years, capitalism has been defined in a variety of approaches but concentrated on the economic power and wealth.
From the early 2000, capitalism assumed topics in insurance, banking, and in political dimension as an effect of the crisis that took place during the 14th century. In this period, conflicts arose over the land-owning aristocracy and agricultural producers that involved the establishment of the manorial arrangements (Alperovitz, 2011, 37). Landowners depended on the force as an assurance of provision of adequate food. Since the lords were not venturing in the production of the goods in the market, minimal competitive pressure existed for innovation. The lords had to expand their authority and riches by the assistance from military. Thus, much of the accumulated wealth was spent on military equipment for fostering alliance with other lords, since the same lords lacked the incentives to develop new productive technologies (Capital Institute, 2012, 7).
Several causes resulted to the 14th century crises. Among them included, attainment of the agricultural productivity to technological limitations, lack of progress, and poor weather that resulted to the great famine and black death (Hallgrimsdottir & Benoit, 2007, 1397). As a result, to poor harvest, the lords sort to expand their production through warfare and hence damaged their relationships with the serfs. Collapse often-manorial system resulted to class of tenant farmers with more freedom to market their goods and more incentive to invest in new technologies. Lords who were unwilling to rely in rent bought out tenants and hired free labor to work on the estates. The free workers neither formed the means of production nor the capital. As a result, feudalism laid the foundations of mercantilism, which was a precursor of capitalism. Modern capitalism emerged in the early modern period with the establishment of mercantilism (Hallgrimsdottir & Benoit, 2007, 1400).
Karps (2012, 1) believes that it is possible for capitalism to be sustainable. Karp believes that capitalism can be sustainable through more transparency in our institutions. Based on transparency, there is need for more systematic analysis of environmental, social, and governance (ESG) factors in the investment process that results to capitalism. Karp believes that the time is now to encourage capitalist, since sufficient asset management firms exists in thousands. These firms represent $30 trillion in assets and needs better comprehension of the business decision-making processes that is related to inevitable trade-offs inherent in operating prospective businesses. The firms are besides all signatories of the UN principles for responsible investing and are thus able to access more ESG data than ever before. The data presently available in the clouds can be better analyzed, better assured and disseminated through the social media by investors, and academic institutions that are in need of it. These pivotal data to financial investment data as risks and returns, are presently disclosed in more coherent and efficient matter. Karps (2012, 4) goes on to affirm that time has come in relation to collaboration. He affirms that complicated problems require parallel processes, initiatives, and perspectives and not sequential approaches. Leaders can encourage collaboration for steward financial, human, and natural capital markets for the long run. Collaboration can be improved by appreciating diverse perspectives.
Karp, 2012 (2) establishes that the power of capitalism can only be sustainable by rebuilding confidence and conviction, which can only be restored through collaboration and transparency. Transparency and collaboration can in turn result to heightened creativity, innovation, productivity, and development. These things are said easily than done. To execute the said promises, it is necessary that the public attack the complexity with simplicity just as Hillel did. The simple principle is by asking questions as a starting point. Of necessity in asking questions is to ensure that the questions are answered constructively and consistently severally until answers are found. In addition, it is necessary to ask for accountability for elevated consciousness around environmental, and social factors. Other than asking relevant questions, Karps suggests that robust answers must be realized for the future of capitalism.
Other studies confident of the ability within technological advancement as a sure approach of sustaining the present escalating population (Ikerd, 2015, 2). These studies support that there is no economic system that can create much research and development as much as capitalism. Other than growth in sustainability through technological development, capitalism is an absolute necessity for the existence of humanity.
On the other hand, Kothari, Demaria, & Acosta among numerous authors believe that capitalism cannot be sustainable mainly due to the experienced worsening ecological and economic difficulties in the presence of emerging trends on sustainability, equality, and justice. The authors base their arguments in light of the post 2015 sustainable development goals (SDG) which has led to the emergence of the green economy. According to Guerin (2003, 19), environmental law and policy as a market-based policy has been stipulated to ensure growth and development in the economic sector. on the contrary, these policies lead in increasing environmental externalizes such as pollution. Environmental policy instruments should apply markets, price, and other variables to offer incentives for reducing negative market externalities. These economic instruments were created in form of laws and incentives to reduce pollution such as green house emissions. Increase in these environmental laws have resulted to minimum effects as the findings document increase of green house pollution, especially in the member states. To implement these laws requires some regulations in a systematic manner. Since policymaking in still an open-ended experiment on the successful executoin of the long-term transition in the private sector, pollution preventions and economic execution of the instruments has become rhetoric in development.
According to York and Rosa (2003, 273), ecological modernization refers to the optimistic school of thought that argues that the economic benefits are derived from moves towards environmentalism. Ecological modernization as been on focus in the recent past as an analytical approach as well as a policy strategy and environmental discourse. Thus, strategy is based on the assumption that environmental readapt ion is based on the economic and industrial development (Mander, 2012, 12). Radical innovations nevertheless result to reduction of quantities of resources emissions and quality of the industrial metabolism. Ecological modernization offers an active role in the conservation of nature and innovative structural change (Robert, 2013, 102). Recent studies prove that ecological modernization has filed to protect the environment but alters the impulses in capitalism economic mode of production (Sosyalismo, 2012, 1) hence leading to environmental degradation. Ecological modernization is therefore perceived more as a green washing rather than an environmental sustenance approach. The applied technological advances in this approach has further failed to achieve resource conservation and enhanced environmental protection, specifically when left to regulate the business practices (York & Rosa, 2003, 297). This has been experienced in instances when technological advancements are feasible and not widely applied. For instance, biofuel has been perceived as an environmental friendly fuel that can assist in the conservation of natural fuels and maintained of natural gases. However, its production produces one of the gross environmental injustices within the capitalisms system. Moreover, this prediction has resulted to environmental racism where the people of color and the low-income earners bear the disproportioned burden of harm such as pollution. The same people lack access to its related benefits and face social injustice such as unemployment.
Questions posed by Hillel are indeed timely in light with the present position of the world, economically, environmentally, and even politically. The world has embraced the perception that if I am not for myself, then there would be no one for me and spread the concept of capitalism in all aspects. The effects of capitalism are beyond human perception. Presently in U.S. alone, at least 50 million people are living below the poverty level while almost half the world populating is without adequate clean drinking water. All pieces have been rightly placed to overcome the power of capitalism worldwide. Humans perceive they are well equipped with all the necessities to overcome capitalism. These come in form of science, technology, academia, government, economics, and finance (Panitchn & Gindin, 2012, 5). There is the opportunity to patch up economic system that is the greatest vehicle for creating wealth and prosperity. It is however, an uphill task to counter boldly capitalism since the force of will to follow through is still lacking.
According to Kothari, Demaria, & Acosta (2015, 1), the last two decades has seen worsening ecological and economic difficulties even as the emerging trends on sustainability, equality, and justice has been on the rise. There was the emergence of the green economy and sustainable development that dominated the Paris Climate Summit and 2015 sustainable development goals (SDG). These measures have however failed in offer harmonized economic development, social welfare, and environmental protection. Conversely, political ecology demands for more primary changes that challenges the predominance development of fossil fuels, and neoliberal capitalism (Mayfield, 2013, 52).
Analyzing the international environmental policy in the last four decades depicts disappearance of the former 1970s radicalism. The final report of the 2012 Rio +20 Summit fails to identify historical and structural basis of poverty, hunger, Unsustainability, and inequality (Mayfield, 2013, 54), which are majorly capitalist monopolies, colonialism, centralization of the state power, and racism. Without determining the causes of these effects, it is inevitable to derive any transformative solution (Mayfield, 2013, 73). In addition, the report failed to highlight that immeasurable development is unachievable in this finite world and instead conceptualized natural capital as critical economic asset and thus opened opportunity for green capitalism without challenging the unbridled consumerism. Lots of emphasis is laid on the market consumerism, enhanced management, and technology while undermining fundamental political and social changes that the world is in need of.
Conversely, diverse movements of environmental justice and emerging global perceptions have arisen to enhance fundamental transformations. However, unlike sustainable growth that is assumedly globally applicable, these alternatives cannot emerge to a single model.
It is possible to have capitalism in the future in the presence of a morally strong government that can introduce necessary regulations against natural human greed that dooms the economy and the environment. However, this is an uphill task for any government since most of them are guided by personal greed as seen in the several governments. For instance, in the western world, the present version of capitalism allows private corporations to exercise more power over politicians and have no qualms over abusing the said power for personal profit. Separation between the church and the state was to guarantee balanced decisions made from the separation of money and state. The separation was to foresee that politicians served the people who elected them in to offices rather than service their personal quests and donors that fund them. capitalism is based on the assumption that there are limited resources on earth. If capitalism can be applied in a vacuum and through realistic lens, flaws in the practice would become conspicuous. In addition, capitalism is dependent on growth, whereas in practice, a limited growth would be experienced before utter decline, unless a point of inevitable economic decline is attained.
It is obviously uncertain that economic systems based on free markets and private enterprises are superior systems. Any model that is based on the assumption that infinite growth in a planet with countable resources is doomed.
Capitalism is assumedly the only moral political system that can protect rights for human existence and prosperity. For this definition to hold true in the present period, Karps affirms that the public can attack the complexity with simplicity just as Hillel did. This simple principle is by asking questions to ensure that the questions are answered constructively until answers are found. In addition, it is necessary to ask for accountability for elevated consciousness around environmental, and social factors (Kothri, Demaria, & Acosta, 2015, Para 8). Other than asking relevant questions, Karps suggests that robust answers must be realized for the future of capitalism.
For sustainable capitalism, UN processes must be willing to appreciate the primary flaws of the present dominating economic and political system, and envision a transformative agenda for sustainable an equitable system. The UN must be willing to envision and promote significantly alternative visions and pathways for success in the post 2015 SDGs agenda (Kothri, Demaria, & Acosta, 2015, Para 12). In addition to this approach, in the presence of justified crisis of confidence of capitalism, there is the necessity to rebuild trust and faith within the system. To accomplish this, it is necessary to acknowledge the weaknesses in our capabilities and face complicated global problems. There is need to pose to the right structure and answer difficult questions as raised by Hillel. To ask sufficiently the questions, the public requires two things that are presently in deficit. There is need for greater transparency to the mission, strategies, objectives, and priorities of the private sector organizations together with the control infrastructure that encourages transparency. In addition to this, it is necessary that a generation of business leaders with better facilitating collaboration come to power.
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