Why We Think Capitalism Works (And Why It May Not)

             Many people regard capitalism as a necessary evil, and all but the most Darwinian will admit that it is a flawed system. It is a great system for maximizing productivity as it efficiently balances supply and demand. It is a terrible system for fairness. Yes, it rewards those who are enterprising and productive – but it fails to recognize that nobody starts on an equal footing and fails to recognize that the free market, when unmitigated by society, encourages exploitation of the weak. It is also very poor at giving value to things we have common ownership of, such as air (free-market capitalism is not going to end pollution) and fish (over-fishing has caused fish populations to crash in many parts of the ocean). A major reason we continue to accept it is we don’t seem to have good alternatives. If nothing else, capitalism is functional because it factors in human greed and harnesses it. Economic systems based on selflessness (i.e. communism) have not lasted in our historical experience.

                There are many arguments that can be made against capitalism on moral and humanistic grounds. These should be sufficient to cause us to rethink the validity of our economic system and, at the very least, take efforts to mitigate its negative aspects. Still, these arguments have not sufficed to get us to abandon the status quo. What if, however, capitalism is fundamentally flawed from a technical/scientific/economic point of view?

                The core assumption that lies behind our economic systems is that productivity is good and should be rewarded. On the micro scale, that is hard to argue with. The farmer who works harder and smarter to produce more crops deserves to be rewarded for his labors because he feeds more people. When we take a look at a larger scale, we find that productivity is a double-edged sword. Producing more raises our standards of living, but for productivity to be sustained there needs to be a culture of consumerism. If too many farmers produce too much food, we either all become gluttons or we waste a lot of what we produce. Capitalism’s answer is diversification of products – create new types of jobs and turn the excess famers into carpenters and potters. However, on an even larger scale, we run into the final problem – at some point, the world is going to run out of resources for us to produce stuff with.

                Far-fetched, you say? We have actually faced this at least once before. Before WWII, there were predictions in the scientific community that the world was going to face widespread famine because there simply wasn’t enough farmland to feed the rapidly growing population. There would be a population crash based on the lack of food alone, not to mention war and social unrest. Then, we invented fertilizer, which greatly increased crop yields, averting disaster. Or perhaps merely postponing it? The problem of human consumption is a moral problem that does not have a final technical answer. In science fiction, we often think of expanding to the stars as the answer to the limits of Earth’s finite resources. This assumes two things:

1.       That faster-than-light travel is possible (if we are to have realistic hope of transferring a significant fraction of Earth’s population out of the solar system).

2.       That we will discover the solution on time.

And, at the end of the day, do we plan on ravaging planet after planet to satisfy our material desires?

Because we are so disconnected today from the resources we use, we don’t realize the finitude of what we have available to us. We are not running out of metals or lumber anytime soon. We even have enough fossil fuels to last a few generations (even though it is going to get a lot more expensive to extract – we have plucked much of the “low-hanging fruit;” also, we’ll be burning a lot more coal, which has significant health effects). Water shortages are largely localized events, though occurring on a more and more common basis (a very small fraction of your water consumption is reflected in your water bill; the jeans you are wearing took 5,700 L of water to make). We are, however, putting a large strain on the Earth’s ecology, and we break that at our own risk. The risks of exposing ourselves to new diseases, the risk of affecting climates – local and global, and the risks of causing various species populations to crash (which affects us a lot more than we think – but it would take me too long to articulate how).

I don’t have a doomsday scenario (though that doesn’t mean one cannot exist – the world is too complicated to determine a “tipping point” that would wipe us out with accuracy). More of a pot of slowly heating water, and we are the frogs. Living in a city near congestion reduces your lifespan by a year-and-a-half due to respiratory issues. Most cancers are caused by environmental factors – we have genetic predispositions, but cancer has environmental triggers. I could go on and on.

We live in a closed system (yes, we get energy from the sun, but bear with me) with finite resources and a finite capability for taking care of our waste. Our economics – our consumption behavior needs to take that into account, or it is fundamentally flawed. The idea of everlasting economic growth, that growth is necessary and good, is a fallacy (there are many parts of the world that need higher standards of living; those of us who are already well-off, and if you are reading this you are well-off enough to consider downward-mobility). Science is only going to come to our rescue so many times. Shifting our economies to be more service reliant rather than product-driven can help, but doesn’t deal with the root problems. We are greedy and are removed from the effects of our greed: exploitation of people and our world. The problem is not a scientific one. And does not have a technical solution.

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