Is "sustainable capitalism" an oxymoron? Can a sustainable model for capitalism be found?
I guess I am getting to that to Old stage, but this is folly to me!
No not an oxymoron, WE, the US, "are a sustainable model" for it, have been for years despite social and communistic fringes. It has worked very well, and is still working now as best it can. It is Under attack right now by a President and Legislators who wish it changed!
But... Despite the wishes of China and the EU Lobby to destroy the US dollar! We are looking at 2012, and hopefully this "craponomics" will be gone on the Bus back to Chicago, I hope.
People are jealous of the Power we gain under the system, but it is what it is, and it works. Those same people complaining are doing it from home, a roof over their head, a car, and a computer at home! With the air conditioning and or heat on!
They take the good for granted thinking if they change it it will always be here anyway? and then wish to destroy the very system they live in? Makes no sense to enjoy the freedoms, take every advantage, then complain it does not work?
Its easy to bitch with your stomach full, but its harder I guess to go to work and be more sucessfull in a system thats free enough to allow that!
A lot of folks...sit at home addicted to the net and squak...at least the capitalist system you are in allows for that right? Thank god for welfare? Or mom and dads 401k to pay for your time! Get a life, go to work, start a business then, make something for yourself, you are free to do this!
So there is greed? Its like reading a fairy tale...There's Lions, Tigers and Bears...OH MY!
Look, all of us, myself included face the same. I am not rich either but I am doing as fine, as I can do in this system from the free personal life choices I have made. I was free to make the choices, foolish or good, and I am free enough to accept the results from that.
Greed? sure there is...Get over it!~
I am out of here, thanks for the space to comment, nothing personal is intended here, just an opinion for what it is worth. Its just that Sometimes I think we all sleep and forget what we do have.
So however it comes out in the wash wraps it up for you? No room for any change? We just bite the big one and watch our 401 K's go down the drain and our retirements disapate into nothing? At the time of retirement go out and start a business and make something of yourself?
I guess this does sound like blah, blah, blah to you.
The truth is that there are harder times coming and healthcare is at the core of it. Businesses are going to go under and downsizing will boost the unemployed as well as break the banks of those just making it with their set incomes.
There is no silver bullet and if we just say no and wait till some other date when the fictional congress will answer this issue, we are dillusional at best.
All great arguments, but one question. What are you doing in regards to 401K losses? The American people need to wake up on the 401K issue. Its a game the average Joe can't win! The lessons in Capitalism are often HARSH! The rewards of socialism are always mediocre.
Just to reiterate, this isn't about capitalism vs. another "ism". It's about whether capitalism as is, is actually sustainable. In other words, it's about the difference between wanting to change vs. having to change to avoid social and environmental melt down.
I can live with mediocre but HARSH is really getting to be a pain!
The truth is that harder times are comming and reckless spending is at the heart of it. Health Care Plans are not going to fix that.
I agree but I don't think there is one thing that can turn it around. As complex as the problem is I think the solution will be just as difficult.
The wars, the wall street flop, the unemployment, the enviornment, health care and similar issues are compounding a recovery. I think that we have to know that we can't spend our way out of it and concentrate on living the lower standard we have been headed for for some time. I have to admit that conserving what you have is at the forefront and something we all must face. In the meantime we have to stop the bleeding through corrupt politicians, big business lobbyist and unchecked government spending.
Yes. It is the ONLY working model of freedom, and would exist even if there was no government and no money!
Yes, it's called the free market. All of our economic problems today can be traced to interference in the economic life of this country. The Community Reinvestment Act and the subprime mess for example.
Do you believe a free market can address social problems?
The specific issues I had in mind that are either caused, maintained or worsened by the current capitalist model are consumerism, environmental damage, exhaustion of natural resources and extreme poverty.
That's great, but I can cite many instances of socialistic models that make environmental damage, exhaustion of natural resources and extreme poverty worse in collectivist countries than you will find in capitalistic ones. What do you mean specifically by social problems?
To reiterate, this thread is about whether a sustainable model of the current economic system (which happens to be capitalism) can be found and if so what it might look like. Whether that model takes from libertarianism, socialism or any other ism is not important to the discussion, which is not a defence of one ism or another.
In answer to the opening post asking if a sustainable model is possible, you said "Yes, it's called the free market". I asked how this form of capitalism addresses certain social problems, and you've asked for some definitions.
Social problems are problems that affect all or many members of a society. The specific social problem that's the subject of this thread is sustainable development.
By sustainable I refer to the concept defined by the United Nations World Commission on Environment and Development (the Brundtland Commission), in it's 1987 report: Our Common Future. The description of sustainable development is:
Given those definitions, can you explain how the free market model would meet "the needs of the present without compromising the ability of future generations to meet their own needs"?
Sustainable capitalism is only an oxymoron until the demand shifts. Consumers need to demand sustainable products, processes, and supply chains before sustainability will truly fit into a capitalist model.
This is why the chicken needs some help from the government to lay its egg.
Um, no. It's government interference that leads to market failure. Ever hear of the Community Reinvestment Act? That is the law that forced banks to lend to people who were bad credit risks in order to "eliminate redlining", whatever that is supposed to mean. That act caused the subprime mess and led to the inflation and bursting of the housing bubble.
I see your point. I don't know what 'redlining' is either.
The idea that the free market is perfect and forever self-correcting is a misnomer. I'm not arguing in favor of government intervention in all cases, but in the case of sustainability, I think the planet can use some additional help.
Our country has come too far and is far too capable to 'just let the market decide' in every case and especially in the case of our environment.
Redlining is the term Progressives use when non-creditworthy minorities are denied home loans. So the government steps in to chastise the racist banks by forcing them to loan money to people who cannot or will not pay it back. That is the genesis of the supbrime mess in this nation. Oh it gets better. Instead of making these bad loans, the banks can instead give money to organizations like ACORN, in return the government will "allow" them to run interstate branches and not shut those branches down. Sounds kind of like the Mafia doesn't it?
I used to think like you did, but as I studied history more and more I became aware that it was government intervention, not government non-intervention that caused problems.
That statement is misleading. It is in no way accepted as a fact that the Community Reinvestment Act caused or even contributed to the financial crisis. Indeed it is actively contested by many economists.
The Community Reinvestment Act is often quickly cited by institutions that have suffered in the financial crisis. Those institutions are not as quick to cite predatory lending practices as a major contributing factor to that crisis.
I suppose there is a reason, but what is it in your mind, Cagsil?
Some research has suggested that at least 50% of the troubled sub-prime loans came from institutions that weren't regulated under CRA. See page 5 (http://financialservices.house.gov/hear … 021308.pdf)
Anyway, back to the topic. Assuming that government intervention in sustainability measures will again create the perfect storm and another financial crisis like the housing market collapse is a fallacy and a trap. It's the same trap we face with health care reform. Just because free market is a supposed tradition here, does not mean it will lead us in a better direction. Just because one government program may have contributed, in part, to one economic storm does not mean the next program will as well.
For the record we have subsidized many industries and continue to do so--so the free market is a false tradition even at that. A better question for this thread might be, does any capitalist market truly exist and will sustainable goods, products, and services magically create one?
Yeah, there is plenty of evidence to suggest that the CRA was one of the main causes of the subprime mess. I wonder if you can find anything out there to refute any of these points.
Yes ledefensetech I believe you are conveniently forgetting about predatory lending practices.
The Libertarian model with Mises economics would make the matter worse.
There is no hope that laissez-faire unfettered capitalism would correct the problem.
The most advanced economist can never make capitalism work. It is a complicated system way to complicated to function for humans. It is not easy to understand why we have to grow or produce extra stuff we dont need in order to recieve valueless currency that limits our natural reproduction and family process.
It is simple to understand what needs to be grown prepared protected ect.
Capitalism is not a "healthy dose of aggression," as some suggest.
Notice the extermination of 80 million humans in 1 war some years back. Thats not healthy Very sickening indeed.
It happened dont forget it can happen again. Just because of that fear capitalism strives.
Humans are not sustainable by fear. Capitalism based on fear individualism and egotistic exploitation of our families will cease to breath by itself or with our race.
And please dont tell me about all the other systems and anarchy and all that crap. Thats all there just like the candidates for your presidents.
Logically, a sustainable model should be easy, but it seems beyond the capacity of our business leaders.
Our current sharemarket model demands constant growth. Constant growth in nature is cancer!
I will always remember when I knew the world was going to hell in a handbasket. I worked for a private insurance firm that went public. It had 45 branches, all of them making a comfortable profit.
Within a year of going public, it had closed half its branches - because although they were profitable, they had no growth potential. Making a reliable 10% profit every year wasn't enough any more - if a branch couldn't make 15% next year, and 20% after that, it wasn't worth having. Greed had become good.
If we could all go back to being happy with a consistent, reliable, sufficient profit then that would be sustainable. But I don't see that happening.
Everyone is talking about government interference and theory - no one is addressing the fundamental obstacle to sustainable capitalism, which is the culture of greed cited above.
If companies would be content with a steady, sustainable profit then capitalism would work.
That's a good question. The thing about is that as the capitalism model is put into place the wealth of the dollar creates more control and power for the one who succeeds. This power is then what comes into question. Can it buy influence or keep competition at bay? Are better ideas or processes kept out of the marketplace because of the control the capitalist enjoys?
On the inverse in a communist government the capitalist can enjoy the same priveledges but has a different host of felons to buy?
If either one is left to it's own devices the society is left with the result of some very great gains and some very deep pains.
I'm not trying to push any other "ism". Just interested in other's opinions on whether capitalism is or can be sustainable.
Personally I think capitalism operating on a laissez-faire basis is not sustainable. But like you I think there are problems with any socio-economic system operating on that basis. I also think a more sustainable model of capitalism is possible, but I don't know how sustainable such a model could ever be.
I am not pushing either myself but I guess the downfall comes with the human conundrum of greed or never knowing when is enough. The control of that is the next issue and who is to exucute the controls. I think that is where the socialism label comes into play and then you have it swing the other way with killing free enterprise. I really have a problem with letting it fly and having it self regulate through the market place.
Jon (hope it's okay to call you that) you really needed to vent, and you sure did
There's a few things there I don't agree with. I'll comment on just one. Natural resources are used up in order to produce goods to supply the demands of consumerism. With profit as sole driving force, environmental protection then becomes an obstacle to be overcome in the pursuit of said profit. Do you really think that can be sustained into the future? Do you think there's nothing that can (or should) be done to make capitalism more sustainable if that's possible?
No, Capitalism is not an oxymoron. It is cyclical in nature. The pendulum can swing violently at times. The lessons of Capitalism are often harsh. Many millionares have lost everything several times over and they would still choose this system. Personal responsibilty is paramount in capitalism. Bad things happen to good people, yes. Thats the exception, not the rule. John and Jane Q. Public were making equally bad financial Decisions over the last 10 years. Purchasing more house than they can afford. Basing their financial lifestyle on dual incomes while raising children. Living on credit. Investing in financial intities they do not understand. Now the bills are over due, the children are sick, the husband has been layed off, they are living with their mother in law and some how thats the governments fault. This is the case more than we would like to admit. The current state of economic affairs is and indictment on America's lack of personal responsibility not capitalism.
Is "sustainable capitalism" an oxymoron?
It would appear to be, but that is because of people's lack of knowledge or understanding about true capitalism.
Capitalism isn't sustainable unless the citizen living within that sort of structured society, knows how to use it to it's utmost, which isn't the case in America.
Many people are lead to believe that they are to work a job or a career(fancy word for job), which really isn't the utmost optimum way to make a living in America.
Sure, you bought in to it as a kid, but when you grew up, you were expected to go into business for yourself, with a purpose of building wealth.
How ever, since the most average person doesn't know or understand this key point- many other issues plague them and force them to run to government programs, such as "Employment" program, "Minimum Wage" program and additionally, the "Social Security" program.
When you take advantage of these programs, you are completely under control and/or at the whim of government powers.
Let's get real!
It's time to prove to society that what was once believed to be true, has to be revealed as a lie.
CHANGE America for the better......not for the worse.
Isn't that the issue with the current model Cagsil? The fact that the driving force, the purpose is "building wealth". Is that a purpose that will sustain society and the environment going in to the future?
What if damaging the environment fulfils the purpose of building wealth? What if exploiting people fulfils the purpose of building wealth? Can we afford to damage the environment further? Do we want to exploit? The answer to the former is no. For me the answer to the latter is also no. I hope it is for you too. But both those things are driven by the said purpose of "building wealth". To be sustainable the purpose needs to change.
Don't get me wrong I don' think building wealth is a bad thing. But having that as the main purpose, the driving force of society, has some negative implications in terms of sustainability for both the environment and for society. I can't see that changing by applying libertarian economic principles of a free market. I think the problem is more fundamental than that.
Always interested to hear the views of others, so thanks for your comments.
Laissez-faire unfettered capitalism is not sustainable, so if that is what you are talking about then yes "sustainable capitalism" is an oxymoron.
We have just witnessed this in the past year with the world financial meltdown starting from the US.
Since then leaders from all the developed countries have been trying to tell the US that they need to regulate their banks.
That said capitalism is sustainable if it is regulated and more middle of the road.
Also if a country tries to sustain it's own economy with monopolistic corporations and trading blocks there just may be a backlash from the other countries in those trading blocks. Forcing trade or "development" or ideologies on other countries outside of trading blocks will cause a backlash too.
I'd like to add here that Afghanistan is a known "empire killer", from Alexander the Great to the British Empire to the USSR to ...
In reference to Health Care Plans; they would actually make our capitalist model more stable seeing as it would put American industry on even keel with Europe and Asia. Nations with a public health care system can afford to pay workers more take home pay and still reduce over all compensation which allows the wage earners to spend more money in the economy there by supporting more thriving industry. The only reason not to support health care is being a callous recalcitrant ghoul that relishes in the idea of the working man starving and dying to support the decadence of wealth.
Yes I carry plans for a working Guillotine in my backpack at all times. What of it?
Um no they don't. Because government takes more in taxes, the overall wages of people are reduced. Even if employers were able to give raises to their workers, this would more than be offset by the increase in taxes.
Also you don't create a stable economy by encouraging spending instead of saving. You think our current economic woes would have made that clear.
There is no such thing as a free market at the moment.
Like the European's, the USA still support's it's
uneconomical industry, thru government subsidies.
There can only be, free trade when it truly does become
fair trade, thru out the whole world. Australia is one
example of a profitable capitalist country that has
gone down the, no government subsidised industry road
and is a stronger and more wealthier country, as a
Capitalism in and of itself is self sustaining. What
isn't is the economic structure that capitalism use's.
I don't think there is a free market anywhere in the world and a free market wouldn't help in the areas mentioned above anyway. Capitalism as it stands is fundamentally problematic.
The problem is with its core axiom: the common good is best served by the unrestricted pursuit of self interest. The underlying assumptions are 1) economic growth equate to human well-being and 2) an infinite possibility for growth. The former assumption has problems that are a whole other discussion. The latter clashes with the 21st century reality of finite natural resources.
Capitalism is not being restricted by government. It is being restricted by the limited resources of the planet. The fishing industry for example is not limited by legislation, but by the dwindling numbers of fish in the sea prompting such protective legislation. Likewise the timber industry is not limited by legislation, but by the dwindling number of trees prompting that environmental legislation.
Would unrestricted capitalism prevent the extinction of certain species of fish? Would it reduce the burning of fossil fuels, reducing the amount of carbon dioxide in the atmosphere? Would it protect human beings from exploitation? If so, by what mechanism?
Sure, capitalism can be sustained. But nobody's actually tried it yet. Adam Smith's utopia was totally destroyed by the big banks in the early 19th century. The big banks still rule today and therefore ensure that capitalism cannot exist. When the wealthiest institutions in the world live off of national tax systems (and they have for longer than any of us have been alive), then the system you have in place is called feudalism. Thus, ensuring that we still live in medieval times.
There is evidence that refutes those points, but whether the CRA was a main cause of the financial crisis or not is a lengthy sidetrack, not the central point. To cut to the chase: in your opinion a free market addresses the issues of sustainability as defined in the above post. The central question is how, in your opinion, does a free market address those issues?
A free market meets the demand of people in that market by increasing the supply of the good or service demanded. Sustainability is achieved through price. Look at housing. By artificially lowering interest rates and forcing banks to loan money to people they knew couldn't pay it back, it signaled to home builders that the market for housing was heating up.
They then began to build homes, apartment buildings and condominiums to meet this artificial demand. At some point, you're going to run out of people who can afford new homes, especially when people have to finance homes through debt.
Now in a real free market, as the supply of a good, in this case, houses, increases the price falls. Yet in the housing boom, this did not happen. Why? Well people knew that the government was standing behind these loans, so there was no real reason to stop speculating. Normally, interest rates would have risen because so many loans were being originated. This means that risk of default was getting higher so the cost of originating loans was increasing. When price increases, demand falls. By artificially holding down interest rates, the governments altered the signal that markets would have given to banks. Namely that too many loans were being made and that the market was getting too risky.
So now we have banks failing because they have too many bad loans on their books, homes being bulldozed because nobody can afford them, and an unemployment rate of probably 20% even though the government has massaged those numbers down to about 10%.
It was government intervention in the market, not free market capitalism that caused our problems.
By the way you haven't shown any of your sources.
In that case, how do you explain that Australia's banks have avoided all the problems experienced in other countries because of the government regulations that obliged them to follow safe lending practices?
Yeah same here in Canada with our regulated banks. Canada has been said to have the strongest banking system in the world today.
Probably because the Australian central bank hasn't fooled around with interest rates too much. Did your interest rates go down to less than 1%?
@MM, same thing. Did the Canadian central bank cut your prime rate to less than 1%. If not that's why you're not having these problems. Your two governments interfere much less than the US or UK in their economies.
Governments around the world reduced interest rates AFTER the global crisis had happened. You can argue that made it worse, if you wish, but it can't have caused it, because it was after the event.
Our banks dropped the interest rate to 1%, but because our economy is recovering so well, it's going up again.
The definition of sustainable development was given and the source cited.
The CRA, the housing market and the financial crisis is an interesting topic in itself, but misses the theme of the thread. Of course you’re free to pursue that topic with anyone who wants to discuss it, but I’d like to stick with the main theme, which I’ll highlight again:
If every country on earth reached the same level of development as the United States, for example, it would take the natural resources of a planet four times the size of the earth to sustain them. (Source: UN World Commission on Environment and Development).
The crux of sustainable development is the question: how can everyone have a reasonable standard of living without jeopardising the ability of future generations to have same, i.e. without stripping the planet bare and doing irrevocable damage to the eco system?
With a free market system the answer would be to wait until natural resources become so scarce that the reduced supply drives the price up, making alternatives economically desirable. Simple supply and demand. But that isn’t a sustainable model because by the time that happens irrevocable and catastrophic damage would have already been done.
The principles of a free market model prevent intervention. So if waiting for market forces is not an option, and intervention is not an option, how would a free market model address the issue?
Moreover, lack of intervention would lead to catastrophic failure but intervening defeats the object of a free market model. So isn't such a model is ultimately self defeating?
That's a load of crap. Economically the prices of raw materials would increase as demand for them increased. We saw this with oil a couple of years ago. What happened? American drivers for the first time since the end of World War II actually drove less miles than the previous year. So your assertion that it would take four earths to bring everyone up to the level of the US is not really arguable.
What you'll find happening is alternatives being used or new technologies coming on line. Let's say, for the sake of argument, that oil prices skyrocket to $200 dollars a barrel. Will people continue to drive SUV's or live so far away from their workplace? No. Things will adjust.
Let me give you an example. I try to live as close as possible to where I work. Because if something happens to my car and I can't drive it to work, I'll need some way to get there, even if it is my own two feet. A actually spent a couple of years walking after my engine blew up on me. One of the other things I look for when choosing a place to live is proximity to grocery stores. With my workplace and groceries within walking distance I can limit the problems I have if my vehicle goes bust.
That is exactly that people do when things become too expensive for them. They adjust their habits and they way they do things.
Another feature of the free market is that people who figure out how to do more with less or keep costs down or an entirely new way of doing things is amply rewarded. Who knew in 1970 that the personal computer would revolutionize the way we do work, how much more an individual could accomplish in a day compared to what came before. Those savings were passed along the business chain and helped keeps costs down in the 1990's. That's why we were in a boom phase then. Well that and Clinton's loose money policies, but as you say, that's another topic.
The people who write those reports for the UN are at best economic ignoramuses or at worst, would be dictators. To get ideas on how we can advance this standard of living and ensure our children can do the same I'd suggest you read a bit of what Ray Kurzweil blogs about. I'm curious to see if you can figure out where he and I disagree and where we agree on things.
One of the more recent articles he posted had to do with an artificial black hole created using metamaterials. All it does is trap light and emit heat. Depending on how much light is transferred as heat, this could be a way to create solar panels that convert much more light into energy. Right now we only get about 15-20% conversion and those numbers degrade over the years, at least outside a lab. That's why we still burn oil and coal. The person who finds the replacement for oil and coal will be richer than Bill Gates.
For a contrast look at the biofuel fiasco. The government paid billions for a scheme that ended with not one biofuel plant opening. No "green jobs" or help for the struggling economy. What did we get? A tripling of corn prices and an across the board increase in food prices. If the government can't figure out something as simple as the effect of biofuel on the food market, what makes you think they can figure out how to run anything else? Sorry off topic. What makes you think that a centralized socialist economy can figure this stuff out better than a decentralized capitalist one?
Very good. I wonder if you've ever heard of Frederich Bastait. He was a French economist in the early 19th century most famous for his "broken window analogy". He used it to illustrate the difference between "that which is seen and that which is unseen". According to him, it's the economists job to not only look at what is seen but what is unseen.
In short his broken window story goes something like this: A crowd stands in front of a baker's shop with a broken window. Suddenly one man starts to harangue the crowd telling them that this is a good thing for now the glaziers will have more custom. Bastait continues this faulty line of thinking by asking, if it's so good, why not break every window in every shop in Paris?
Then he gets to the meat of the problem. The baker, by having to pay to repair the vandalism, loses. The glazier may make money, but instead of paying for that new window, the baker instead might have bought a new suit. So not only is the baker out the money for the window, the tailor is out the money a new suit would have brought him.
Instead of making things better, the vandal has only succeeded in redistributing wealth from the baker and tailor to the glazier. That's why redistributive schemes don't work. That's all government does, take from one group and give to another. This analogy was so good and so timeless, Henry Hazlitt used it in his great economics primer Economics in One Lesson.
Your analysis of the visibility of intervention in the market is pretty good. Most interventions as a free market moves from a free to controlled are "unseen" and thus not remarked upon. That's why the actions of the current government in the US are taking so many people by surprise. For those of us in the know, so to speak, what they are doing is no surprise, it's just a continuation of policies begun during the first years of the 20th century.
But now we have a much less free and much more controlled economy than we did back then and people are waking up to the fact, I think, that it is the very intervention of government that is the problem, rather than the solution.
Your account of the free market model doesn't address the inherent danger in relying on market forces to address social issues such as sustainable development. That danger is the fact that the market is essentially blind to issues that do not impact on the supply/demand dynamic.
For example, the fluctuation in oil price in the 2000’s was largely due to geo political events and concerns over short term supply.
http://edition.cnn.com/2006/BUSINESS/07 … index.html
As you know the result was that in July 2008 the price rose to $147 a barrel. This served as a sharp reminder about the problems of over dependence on oil. It may even have affected some people’s behaviour. But as political tension (and the threat to supply) eased, the price fell. By November 2008 it was down to $50 a barrel. That’s cheaper than it was in 2006. http://www.guardian.co.uk/business/inte … 8/oilprice
So even though the environmental issues facing the world were the same, oil was actually cheaper that it had been since 2006. When the threat to short term supply was removed, market forces lowered the price. Demand did drop slightly in the U.S which is good, but this is a global issue and global oil consumption is increasing.
Oil consumption in China has grown 8% every year since 2002. http://www.eia.doe.gov/emeu/internation … ption.html
India’s oil consumption is expected to triple by 2020, which equates to 5 million barrels per day.
http://www.businessweek.com/bwdaily/dnf … tm?chan=gb
This will not be offset by a few people in the U.S. deciding to give up their SUVs. And therein lies the problem.
Oil is still relatively cheap and easily available. For alternatives to oil to be economically viable, the price need to be high. So right now investment in alternative fuel research simply isn’t economically viable.
The free market model exists on the principle of pursuing self interest and that is exactly the problem. It is not in the interest of individuals to invest in alternative energy sources right now, and it won’t be until demand for oil outstrips supply, and prices soar accordingly which depending on which estimate you believe could happen some years from now.
It will definitely happen and we know it will. And when it does, market forces will kick in as you say and the price of oil will soar. But do we really want to wait until then to take mitigating action? If so we are planning to accept, in the words of Michael Meacher former UK energy minister, "the sharpest and perhaps the most violent dislocation [of society] in recent history." http://www.oilcrisis.com/UK/planNow.htm
Let’s be clear, the possibility of a global economic collapse is very real. The prospect of such a collapse reverberating through economic feedback mechanisms, resulting in the collapse of global industrial civilisation is also very real. The outcome: large population decline. That’s a nicely rationalised way of saying many, many people will die. Let’s not be shy about stating that.
Now basically it comes down to this choice: spend our time trying to undo decades of legislative regulation, making fundamental changes to the economic system and society and force a truly free market into existence. Then (if we ever get through making all the changes necessary) passively wait for oil prices to soar, sit back and hope our shiny new free market saves the day.
Or work with the system we already have, tweak the model slightly and start taking pro-active action now to mitigate the effects of oil depletion and soaring oil price by lowering consumption, investing in research, energy conservation, fuel efficiency etc.
The latter suggestion isn’t based on ideology. It isn’t based on a school of thought. It isn’t republican or democratic, it isn’t a centralised socialist or decentralised capitalist model. It doesn’t have a famous intellectual to name itself after. It’s just pragmatic. It’s based on getting us through the problems to come.
In order to lessen the impact of the inevitable depletion of natural resources we need to be proactive not reactive. Market forces by their nature are reactive. I’m not prepared to gamble the lives of you, me and future generations on the back of an economic model that has never actually existed in any practical form. Are you?
The stakes are too high for mental masturbation, ideological dogmatism and intellectual territorialism. The stakes are also too high for people to sit back and contribute nothing to a practical solution, because the powers at be won’t play with their ball. To those people I say, if one day, somehow it’s decided that you were right all along, then we’ll all pat you on the back and buy you a beer. Until then, roll your sleeves up with everyone else and start bailing. Don’t let the ship sink just because you want to say “I told you so”. I think everyone at the Von Mises institute should say "you know what, the economic model we all think is the best solution isn't going to happen. Let's not be all academic in a passive agressive kind of way. Let's instead contribute as much as we can to help the current model get through the crisis ahead."
There is no time for NOT contributing something practical and useful. There is no time for theoretical suggestions that can’t and won’t become reality. That’s not in the interest of the common good, and it certainly not in the interests of those for whom “population decline” will have a very real and ghastly meaning.
To you as a person I say without sarcasm thanks for your opinions, it's really fascinating. About the model you propose and to the Von Mises institute I say thanks, but no thanks.
Disclaimer: I was not in the best of moods when writing this.
You obviously don't get how markets work. They're not static by any means. Oil consumption by the West, China and India increased over the last decade, that combined with increasing amounts of oil in the hands of socialists like Chavez all put pressure on the supply of oil. Less of a supply and increased demand = higher prices. You miss the import of American's changing their habits due to high gas prices. Price is the arbiter of people's decisions.
Once prices get too high, people change their habits, drive less, what have you. The same thing will happen in China and India once price becomes an issue. The reason it hasn't become an issue is because their production is expanding, or at least was expanding, wealth is increasing and they're better able to afford the rise in price, as opposed to debt ridden Americans.
If price goes up too high, China and India too will alter their habits and look for alternatives. What that is I don't know. It took almost $5 a gallon gas for Americans to change their habits, most "experts" predicted that $3 a gallon gas would have that effect. That's the thing about human action, you can tell what direction it will go in, but you can't nail down the when.
But then again you're a proponent of the junk science of anthropocentric global warming, so just about anything I say, you'll ignore because it goes against your dogmatic pseudo-religion.
That's exactly the problem with the eco-freaks. They drum up all sorts of fear that the planet is going down a path to becoming Venus or something and demand change right now. Might I remind you of the consequences of the biofuel fiasco? How much money did we fritter away on that abortion?
Alternative energy will not become mainstream until and unless alternative energy sources can give the same amount or greater amounts of energy than current energy sources at a lower price. Have you thought about what the effect of the poor would be if their energy prices increased? Are they better able than the wealthy to absorb energy price increases when many live paycheck to paycheck, or more likely from payday loan day to payday loan day? I'd spend less time worrying about a phantom menace to the planet and more time concerned for your fellow human being.
Sorry for being sharp, but I find most Progressives to be remarkably unconcerned about the plight of the weakest of us.
@ my own post above. For me that's practically an outburst.
I do stand by what I said, but I could have worded it in a less antagonistic way. It's not my intention to move the tone away from a reasonable discussion. If it's taken that turn, I consider myself the instigator and I'll play my part in steering it back on to a more congenial footing.
So on with the discussion. You asked "Have you thought about what the effect of the poor would be if their energy prices increased?". I have and that's kind of my point. Without mitigating actions now to reduce dependency, when the inevitable price rise happens, there'll be more dislocation than there needs to be.
You said price is "the arbiter of people's decisions". I agree (although I think price is an arbiter not the arbiter), but price can and is manipulated in various ways to suit various commercial entities. If you place too much faith in "the market", then you're simply placing faith in those who would manipulate the markets. Some argue that the price of oil is no longer linked even with supply and demand, but instead an elaborate system of manipulative financial practices.
http://www.engdahl.oilgeopolitics.net/F … lation.HTM
Whether that's the case or not I can't say, but there is a case for it. Even if it's not the case "the market" has and is vulnerable to manipulation. If price is "the arbiter of people's decisions", and price can be manipulated, then peoples actions are vulnerable to manipulation also. There are many ways to manipulate the market.
I'm not anti-market, not at all. But I do not share the fundamental belief that "the free market" is the holy grail that will solve all world problems. To believe one political ideology, or one financial methodology, or one particular "ism", has all the answers, is unwise. A free market model has benefits. It has drawbacks too. A socialist model has benefits, it has drawbacks. So on and so forth. Surely drawing from the best of each is the way forward. The best of each might change depending on what the issues is, but hasn't history shown us time and again that becoming entrenched in one particular ideology, simply doesn't work.
As for the Bio fuel situation. "'Eventually facts count,' says USC chemist George Olah". Absolutely. Which is why what's needed is for people of all disciplines, of all political persuasions, from all areas of the scientific, academic and political communities to contribute to solutions. Pointing the finger after something has been tried and has failed isn't going to help solve problems. Contributing to the solutions, helping to foresee and prevent the problems would surely be more useful.
Begin digression. Don't worry about it, I do it myself from time to time. Strong people have strong convictions. Strong intelligent people know when to stand by their convictions and when to listen. Actually, I don't believe we're too far apart on what we believe, most of our disagreement is on the mechanism. I like antagonistic discussion. As long as people aren't dogmatic about it, you can learn a lot about different points of view. End digression.
I'll continue to disagree with you on the price being an arbiter instead of being the arbiter. We can both see, I think, that people who have the means have more options at their disposal and you'd like to see that option extended to everyone. I'd like to see that too, but I'd like to see it done in such a way that preserves people's ability to accumulate wealth, because that's where true freedom resides.
As to oil futures, too many people make too much about futures trading. Futures trading occupies an important niche in the free market. Futures traders spend all of their time attempting to forecast where the market is going in the future. While an individual may be wrong, overall the traders tend to show where things are going. Regular traders use this information to decide how to protect their investments and their customer's wealth. It's an arcane field and even "professionals" get it wrong from time to time, so it's easy to see why charges of "price manipulation" are used here. Ever wonder why it is the "losers" in the market level charges against the futures traders, rather than their own stupid actions that got them there?
The market is only vulnerable to manipulation when the government steps in. For the sake of brevity, I'll let that statement stand, if you'd like my reasoning, I'd be happy to share it. I could point out so many occurrences of government manipulation making things worse, I could write a book about it.
The reason I don't believe in socialism is because there is no method by which a socialist setup can estimate cost. Because they can't do that, they can't pick the least costly alternative like an entrepreneur or businessperson can. Because they can't do that, or only do that by luck, you cannot control costs in a socialistic system, which is why they fail so often. Why else do you think Social Security and Medicare are going bankrupt? There is no correlation between use of the system and price of the system. No way to control costs, in other words.
But you don't believe price is the final arbiter in a market. I can only give you examples of why price really is the final arbiter. Look at the success of Wal-Mart. They didn't start out as big as they did, sprung whole from the mind of Sam Walton. It took work, hard work and thought, hard thought to outsmart his competitors. He did things nobody else in the field did and consistently drove prices down for his customers. Even today, Wal-Mart consistently has the lowest prices and is doing pretty good for itself, relatively speaking, in this kind of an economy.
Your statement on ideology is a good one, but not relevant, I think, to our discussion. History has shown that the more economically liberal a people are, the wealthier they are. I can cite examples from British sources, American sources, Roman sources, heck even Chinese sources. I like China as a stellar example of how unfettered markets can raise that standard of living and how centralized control of markets make a people weak. Why else would China be the inventor of things like the printing press and gunpowder, yet it was the Europeans who developed both fields to a high art?
As for biofuel, I've never said that there will never be an alternative to oil. I've said the problem with what these people have done is tried to force the market. It's done, not in the name of "saving the planet", but done in the name of special interests and political favors. Party doesn't matter, the Republicans have their pet projects, just like the Democrats do. Government interference is the problem, not the solution.
Well I think there are common goals we both agree on, but as you say we disagree on how best to achieve those goals. Economic growth, better living standards, help for vulnerable members of the community are goals I think we share, and I don't disagree with the sentiments you express above. Clearly any solution needs to be realistic in terms of cost. Now it’s not beyond the realms of possibility that a solution in which profit is not the sole driver can exist without spiralling cost. But you're straying back in to the socialism vs. capitalism argument. This isn't a discussion about socialism vs. capitalism, it’s about sustainable development. Sustainable doesn’t mean socialist.
Which is fine if the goal is just economic growth, but it isn't. Economic growth is essential because it raises living standards and we both agree that's a good thing. But the goal is to balance economic growth with sustainability. Economic growth achieved in a way that jeopardises the ability of future generations to meet their own needs is not sustainable development.
For example, companies can make profit in the short term by logging and burning trees in forests to create charcoal and timber. But the result is deforestation and all the problems associated with it, which affect future development. I’m not going to list all those problems, you can check that out for yourself with some of the links.
http://www.nasa.gov/centers/goddard/new … ondry.html
http://www.sciencedaily.com/releases/20 … 100918.htm
Suffice it to say deforestation has a major knock on effect for the rest of the biosphere. Here’s a quote from Greenpeace:
“trees like the Samauma, also known as the "Queen of the Forest", are being exploited to make cheap plywood for construction industries in the US, Japan and Europe” http://www.greenpeace.org/international … the-amazon
Is cheap furniture a bad thing? No. Is making profit from selling cheap furniture a bad thing? No. Is making profit from selling cheap furniture without regard to sustainability a bad thing? Yes. Why? 1) it makes it harder for future generations to meet their own needs, so it isn't sustainable, 2)Ignoring sustainable practices for short term profit, instead of employing sustainable practices for modest profit over a longer period of time makes no business sense.
A free market model encourages actions that create greatest short term profit. Currently greatest short term profit can be made by ignoring sustainable practices. So as with oil, the issue of sustainability would be addressed but only when the supply/demand dynamic is affected making alternatives economically viable. Thankfully, sustainable practices are being encouraged now.
The International Tropical Timber Organisation (ITTO) is an intergovernmental organisation that helps mitigate the effects of deforestation. http://www.itto.int/
This organisation is not an environmental organisation, but a trade organisation. However, it gives sustainability equal status as trade. The ITTO doesn’t prevent use of trees as a natural resource, but helps companies harvest logs in a sustainable way and promotes the sale and use of legally harvested timber from licensed, managed forests. Forest management is defined as:
“the process of managing forest to achieve one or more clearly specified objectives of management with regard to the production of a continuous flow of desired forest products and services without undue reduction of its inherent values and future productivity and without undue undesirable effects on the physical and social environment.”
The organizations economic development work is described as:
“... designed to assist member countries to develop efficient and value-adding forest-based industries with the aim of increasing employment and export earnings. It includes work on value adding, efficiency in processing and utilization, reduced impact logging, and marketing.”
You can clearly see both sustainability and development aspects working together. The goal is to sustain the natural resource not strip it and wait for market forces to make alternatives economically viable.
This organisation is not perfect, it has all the short comings of any large international organisation, but the work they are doing is allowing economic growth while mitigating the effects of deforestation. This kind of effort would not be possible if we restricted ourselves to rigidly maintaining a free market model, as opposed to a mixed market model.
Making the right decisions is difficult. That’s the truth of the matter. Ensuring useful mitigating action is taken, but not allowing those in government to simply promote pet projects is very important. Indeed it's a wider issue for governments and how politics is conducted in democracies worldwide. But if we shy away from doing something because it's difficult, then we aren't doing ourselves or future generations justice.
Now I believe it's possible for governments to take useful, sensible mitigating action on things like deforestation, climate change, peak oil etc. I believe that governments, with advice, can encourage sustainable development through various means. But you’re right in the respect that mitigating action must have a robust argument supporting it and must be clearly demonstrated to be of benefit and the means employed to encourage sustainable development carefully decided.
Sustainability is a real issue that needs to be addressed, of that there is no doubt. Again that's something we agree on. You believe encouraging sustainable development through government actions will hinder economic growth. I believe if an argument for mitigating action is there, and it can be robustly shown that the action is of benefit, then if action is not taken because we are trying to rigidly stick to a free market model (or any model), then we are doing ourselves and future generations a disservice.
If the worst thing about a mixed economy is that it reduces the rate of economic growth, then better to find solutions to that problem than leave future generations having to find solutions to the environmental problems a laissez-faire market would lead to.
OK, you don't seem understand the idea of scarcity and how it impacts capitalism. Scarcity simply means that factors of production: land, labor, raw materials and capital are finite. Because they are not infinite, choices have to be made and priorities established on what to make and how much to make.
In a free market, this is determined by...well...the market. People who are in the market for homes, lets say, will decide how much they are willing to spend and what kind of home they want to buy. Builders attempt to meet this demand by maximizing their factors of production to build a home at the least amount of expense possible.
Because this is a capitalist system, in which the factors of production are privately owned, the profit realized by the builder shows how successful he was at meeting their customers' needs and minimizing the expenditure of land, labor, raw materials and capital. This is the mechanism that makes capitalism sustainable.
If a capitalist is unable to control his costs, then he goes out of business because [i]costs devour his profit. This keeps wasteful firms out of the field and leaves only those firms which are able to use a minimum of raw materials in their business.
That, in a nutshell, is why capitalists are always looking to for newer, less wasteful, ways of doing things. The more they succeed at it, the greater their profit.
Now your concern seems to be a capitalist using up all of their raw materials in pursuit of profit. In a free market a capitalist can never use up all of their raw material. Why? Because of price. As an item becomes more scarce, the price of each succeeding unit goes up. At some point the cost of another unit of raw material exceeds the price of the good. At that point, use of that raw material becomes unprofitable and alternatives will be sought.
Actually alternatives will be sought long before a raw material becomes too scarce because of the competition inherent in a free market. If the firm doesn't keep costs down, a competitor will and put them out of business.
Your deforestation example is not really a good example. Most deforestation occurs not because of logging, but because of land clearance for farming. Industrial methods of farming can help that situation by lowering the number of acres needed to farm, thus limiting or eliminating the need for deforestation. This opens up a new can of worms, however, but solutions will be found for those issues in due course.
If you look at history you see some interesting things. 1) We live in such abundance that our grandfathers would be shocked at how decadent we are. 2) Our wealth, health, life span all the physical things we have are a blessing. 3) Humans by there very nature can't stand prosperity and will soon ruin it. 4) We are witnessing the fall of America right now. 5) Every person who lived in the past always assumed that their culture was the height of civilization. They never thought that there culture could fall until the end. 6) Because people can't stand prosperity we will run it into the ground with pointless discussions about is capitalism an oxymoron.
I disagree, I think our grandparents would be proud of where we are today. They sacrificed so their children and grandchildren could have a better life than they did. Our current generation are the ones who think you can get something for nothing and are spending our future. That, I'm sure, they'd be disappointed in.
The question you posted here was "Is sustainable capitalism an oxymoron?" I think someone on this thread has pointed it out already, but the fact is that "pure" capitalism has never actually been tried in the real world. So we don't actually know what such a system would look like. But we can speculate. My feeling is that it would be more "sustainable" than what we have now, but only by virtue of its self-limiting nature. Why "self-limiting"? Because there would presumably be no central banking system and no State-sanctioned fractional reserve currency. It's only because the system is awash with ersatz money that a lot of economic activity takes place at all. (The apparent "digression" of this thread into a discussion of banks' lending practices wasn't really a digression at all IMO, because the structure of the banking system plays a crucial part in determining the kind of world we live in. It's one of those "hidden" factors you mention, which people just aren't aware of. I wasn't aware of it myself until comparatively recently.)
As to the question of price being the only arbiter of people's decisions: it's the main arbiter for most of us, certainly. But you've left out another arbiter: the herd instinct. In Britain in recent years we've recently had a huge housing "bubble" which was a decade in the making. At its height, people were prepared to pay silly money just to live in a rabbit hutch in the "right" part of town. I don't think you can lay the blame for this entirely at the feet of government, or the banks.
I'm not up on why the bubble happened the way it did in the UK, but my instinct tells me it was due to a loose monetary policy. That coupled with "social legislation" like the CRA and "lenders of last resort" like Fannie and Freddie made US lenders heedless of the dangers involved in giving loans to people who could not afford houses. Sure, they were forced to in the beginning, but belief was strong that the government wouldn't let banks fail because they were too important to the economy, looks like they were (somewhat) correct in that assumption.
Unless you have a free money, you cannot have a free society. The sad part is Great Britain that was began the whole free money thing with the gold standard almost two centuries ago. It's what gave you an empire and gave us the high standard of living we (used to) enjoy.
I know that UK banks were lending people six times their salary in mortgages, but to be honest I don't know whether there was any "social legislation" in the background compelling them to do so (I've read a bit about your Community Reinvestment Act - it sounds like yet another case of anti-discrimination legislation that cocks things up further down the line in hitherto undreamt-of ways LOL).
I think a lot of what happened in the UK was due to things outside the sphere of legislation, namely the herd instinct I mentioned. People in Britain let themselves be brainwashed into thinking that renting one's home as opposed to buying is somehow a sign of failure. It started in the Margaret Thatcher era and has gone on from there, all fuelled by TV programmes like Property Ladder which encourage people to believe that they can become millionaires simply by speculating on the property market. And now our dear government is giving £millions to the banks. Guess who's going to be clobbered by unbelievably high taxes to pay for it all?
Oh herd mentality, or as I like to call it, the madness of crowds, certainly played a role. I had an epiphany when my old boss, a Progressive's Progressive told everyone in the office that housing prices always went up and they were the "perfect investment". My mind flashed back to the story I heard about Joe Kennedy getting a stock tip form a shoeshine boy. He got out of the market forthwith and saved his bootlegging fortune.
So I guess it was excess liquidity in the system that caused your bubble.
Quik recap. By sustainability we're talking about mitigating the effects of depleting natural resources and the issues surrounding that. Mitigating actions broadly fall in to three areas: renewing a resource, using less of a resource, using an alternative resource. You've suggested the last two can and will happen through the mechanics of a free market. I suggest development based solely on a free market model is not sustainable development.
No, this is the mechanism that makes short term profit, not sustainable development. The fact that one of the actions that helps maximise short term profit, also happens to be one of the mitigating actions of sustainable development is accidental. Practicing that activity is driven only by short term profit.
The problem this causes becomes apparent when looking at other effective mitigating actions such as reforestation. This action does not maximise short term profit. In fact it increases cost, reducing profit. As you say "If a capitalist is unable to control his costs, then he goes out of business because costs devour his profit." If one business uses sustainable practices, e.g. planting two trees for every one felled, its costs will be more than a company that fells trees without replanting. The business would lose its competitiveness.
However if all companies where required to reforest, then all companies would have to factor that in to their overall costs. It's also in other people's interest to share that cost, e.g. the country containing a natural resource which benefits directly from the economic growth the resource creates, and the world community which benefits from maintaining a stable biosphere.
Just as you describe, the business that is able to minimise cost further would still be more competitive, the only difference is that natural resource management would be included as a necessary cost of the raw material. With a free market model, resource management would be deemed and unnecessary cost, an obstacle to optimal profit. It would not encourage renewing a resource. It would actively discourage it. The long term value of such a sustainable practice is outside the scope of an economic model driven by short term profit.
So sustainability is not a natural bi-product of capitalism as you seem to imply, and certainly not a free market capitalist model. Any actions that correspond to sustainability in the free market model would only occur because they also increase short term profit which is the overriding factor.
This relates to another mitigating action, using an alternative resource. I agree, the scarcity of a raw material does increase its cost. That may lead to an alternative (cheaper) material being sought, although seeking an alternative and actually having one available are two different things. Regardless, it doesn't follow that because an alternative is sought or available, use of a scarce material will stop.
Have you ever seen a live sea mink? You haven't and you never will. The animal was hunted to extinction as a result of the European fur trade. Faux fur, a cheaper alternative, didn't become available until 1929. Too late to save the sea mink. And there's no certainty it would have anyway. The scarcity of the animal increased its price because "As an item becomes more scarce, the price of each succeeding unit goes up." But use of its fur did not stop. Instead, coats made from its fur became "luxury goods" and were given a price tag that reflected the cost along with exclusive status, which ultimately led to the animal's demise. Sadly market forces alone did not lead to an alternative becoming available (in time to make a difference), market forces alone was not able to sustain this natural resource, market forces alone did not prevent this animal being made extinct. Market forces discouraged sustainable development in this case in favour of short term profit.
Since then legislation forbidding hunting has prevented many species with any kind of monetary value from becoming extinct. killer whales, blue fin tuna, seals, the list goes on. It's this and other forms of natural resource management that have kept these animals alive. Left to market forces, many of these creatures would no longer exist. Indeed some of them are on the brink of extinction now.
Capitalism encourages and creates economic growth. That's a good thing. It raises living standards. Entrepreneurs are key agents in that system. It's the goal of a traditional entrepreneur to meet demand in the cheapest most efficient way possible. That dynamic has led to mass produced goods within the price range of many ordinary people. Unfortunately that dynamic has also led to deforestation, overfishing, climate change etc. Sustainable development is about the mechanism of capitalism (persuit of self interest) being tempered by our desire not to adversely affect the biosphere (collective interest). In a nutshell it's the balance of self interest and collective interest. That can be achieved with sensible intervention. It can't be achieved by market forces alone.
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