Inherent System Collapse Under Capitalism?
Scholars like Schumpeter and Bowles et al. have suggested that a central tenet of capitalism is the “ceaseless accumulation of wealth,” or the “inexorable tendency…to expand.” Contrary to the 2011 report issued by the National Geographic, which gives a more optimistic evaluation of the state of our global environment, environmental scholars and analysts, including Daly, have argued that this type of expansion or economic growth require ever-increasing levels of consumption of natural resources, which in turn both strain already scarce resources and create levels of pollution that threaten the health of humans and natural ecosystems. Levels of consumption and pollution that, in a word, are unsustainable. This seems to suggest that we cannot achieve both a healthy economy and environmental sustainability under capitalism. Moreover, it seems to suggest that capitalism is inherently unstable—vulnerable to system collapse, given its inability to curb consumption or to appreciate ecological limits (considerations of carrying capacity).
Do you agree that environmental sustainability is not possible under contemporary capitalism? Why or why not? Your answer must discuss one real-world example that illustrates your conclusion.
15 responses to “Prompt 10 (Gov’t/Capitalism 2015)”
Will the Ingenuity of Capitalism Be Enough?
In order for the capitalist system to sustain itself much longer, it will have to continue to foster the sort of ingenuity which it has fostered in the past, at much higher levels.
Our current levels of production are unsustainable. Take, for example, our dependence on fossil fuels. We have very possibly already passed our oil peak, as this resource crucial to capitalist production has been steadily depleted over the years, and there is no clear substitution for fossil fuels in sight (McKibben 2007: 1). What’s more, although our current levels of consumption are exhausting resources quickly, capitalism is giving increasingly more societies the ability to consume at the same level as countries which industrialized earlier, such as the United States (McKibben 2007: 1). This means that our depletion of these resources is increasing at an exponential rate.
As ingenuity and creativity are primary tenants of successful capitalism, it is possible that emerging industries such as social enterprise will use capitalism to find solutions to solve humanity’s most pressing problems. As Mackey and Sisodia argue, “free-enterprise capitalism is an extraordinarily powerful system for eliciting, harnessing, and multiplying human ingenuity and industry to create values for others (Mackey and Sisodia 2014: 22). For example, the World Wildlife Fund has developed a corporate model by which following more sustainable energy practices actually increases a company’s profits by reducing expenditures (CDP and World Wildlife Fund-US 2013: 06). Although this model is barely the beginning of the processes we need to see, it provides an example of how capitalism and profit are not mutually exclusive with environmental sustainability.
However, as McKibben notes, even though our appliances are becoming more efficient, there are more and more of them in use than ever each passing day (McKibben 2007: 1). It is a possible counterargument, then, that creativity within capitalism may ultimately not be enough if it is not the most profitable aspect of the system; it may just be delaying the inevitable exhaustion of resources and collapse of the system.
In response to these argument, it is important to keep in mind that what will truly profit people the most will be the sustentation of not only the capitalist system but of the human species, as well. Capitalism has become so deeply entrenched in our society because it is effective at what it does. If we decide that what we want capitalism to do is provide a sustainable model of industry, then it will do that.
But this is a decision which we will have to make consciously and quickly. If we want the system to shift in this way, and if capitalism is to overcome its sometimes destructive nature, it will have to put the to use the good principles it does possess at even higher levels than its tenants which tend to exhaust natural resources and pollute. It is possible, but if things continue in the same framework as they have so far, we may not get there without arriving at global crisis first.
Mackey, John; and Sisodia, Rajendra. Conscious Capitalism: Liberating the Heroic Spirit of Business. Cambridge: Harvard Business School Publishing Corporation, 2014.
McKibben, Bill. “Money ≠ Happiness. QED.” Mother Jones, March/April 007 Issue. http://www.motherjones.com/politics/2007/03/reversal-fortune
The World Wildlife Fund-US and CDP: “The 3% Solution.” 2013. http://assets.worldwildlife.org/publications/575/files/original/The_3_Percent_Solution_-_June_10.pdf?1371151781
Capitalism Is The New Green Party
Response to Natalie
For a large part of history, big businesses and capitalist market techniques have not been friends to the environment. As America’s capital markets grew substantially in the late 19th century onward, financing railroads and industry, the environment took the brunt of the massive industrial explosion.
An inherent characteristic of capitalism is that competition breeds innovation. This is greatly important in today’s world where an important political hotbed for debate is the environment and how we are going to preserve it for generations to come. Thus, under capitalism, there are many incentives to hop aboard the “green train,” not only for moral reasons, but also because the money will follow. For example, Tesla Motors now enjoys a $30 billion market capitalization; during its initial public offering, it raised another $226 million in private money (Gross, 2014). There are benefits for businesses to operate and invest in environmentally friendly policies potentially increasing profits and decreasing carbon footprints and environmental harm at the same time.
“Executing a strategy for sustainability is critical for business’s survival in today’s rapidly changing world: one in which there are more hurricanes, fewer wetlands, more limits on resources, and less credit to go around” (Helm, Seattle Business). Helm emphasizes the argument that for example, if Microsoft produces computers that save energy and use less-abrasive materials, they will sell more products and in turn reduce the carbon footprint around the globe. This trend is gaining popularity across many markets and is starting to improve economic and environmental conditions.
Your point is very valid in the fact that although the materials we purchase might be more efficient, they are merely prolonging the seemingly inevitable exhaustion of resources and a possible collapse of the system. This is a considerable counter argument to capitalism and its inability to provide for a sustainable economy and a thriving environment. Also, due to the fact that capitalism is so unstable, the “green revolution” phase that we are seeing in products today could be just that; a phase that will soon pass and not have any lasting effects on the environment.
Contrarily, I would like to suggest that because capitalism is inherently profit driven and competitive in nature, there is no option for companies but to start producing goods that are more environmentally friendly. The nature of competition implies that the weakest links, being companies that continue on an environmentally destructive path, will be eradicated and no longer in the market. With an impressive increase in green focused companies across industry, but most notably in the automotive industry, the basic fundamentals of the capitalist system will allow for greater environmental sustainability and improved business practice and responsibility across the board (Forbes, 2009).
Although capitalism has the ability to foster environmental sustainability, it is something that is not going to happen immediately. By allowing for companies to operate freely and innovate in an economically sound way, we can see long-term changes that will be globally beneficial as well as allow for increasing profit margins that will fuel more future innovation.
Forbes, Steve. “How Capitalism Will Save Us.” Forbes. Forbes Magazine, 3 Nov. 2009. Web. 30 Apr. 2015.
Gross, Daniel. “Capitalism Is Saving the Planet.” The Daily Beast. Newsweek/Daily Beast, 24 Sept. 2014. Web. 30 Apr. 2015.
Helm, Leslie. “Can Capitalism Help Save Our Planet?” Seattle Business Magazine. Seattle Business Magazine, n.d. Web. 30 Apr. 2015.
Capitalism Provides the Tools, How Will We Use Them?
Response to Natalie
The environment is suffering at the hand of modern society, that much is clear. Why this is happening, however, is not as clear-cut. Many point to capitalism as supporting this degradation, but I would argue that capitalism is merely a function–not a cause. What’s more, I think that capitalism gives us the strongest chance of changing this status quo and reaching a more sustainable state.
As Natalie states, capitalism will do what we want it to do. No one wants the environment to suffer, so our actions must be based on ignorance or indifference. Critics will say that this indifference (stemming from greed) is encouraged by capitalism, but looking at the environmental abuse that occurred in communist eastern Europe makes me question the correlation (Grabow).
That said, environmental pollution in capitalism is a collective action problem because no one owns the resources at stake, and no one person’s actions will have any appreciable impact. This means we must provide incentive to make more environmentally-conscious decisions. This takes effort and planning, but is not unreasonable. While population, industry, and energy consumption have all continued to increase, we’ve seen a sharp decline in pollutant emissions since 1990 (EPA).
We’ve become accustomed to the ease that unbridled industrialization has brought us, unaware that we’ve contributed to this problem too. Natalie hints at another danger: efficiency makes us feel like we’re helping. There’s evidence to suggest that increasing energy efficiency doesn’t decrease overall energy use (Walsh). Greater efficiency is certainly a good thing, but if it assuages guilt and isn’t accompanied by further lifestyle changes then it likely will not be enough.
It’s not always intuitive that buying a manufactured good can contribute to climate change, but ultimately in capitalism you are always voting with your dollar. If this connection were more visible, perhaps people would make more sustainable choices. With profit as the main motivator though, knowledge alone won’t cut it. “Few improvements have ever resulted from making people understand anything. Try instead to make people feel.” (Dan Ariely)
To see real change, we have to really want it as a culture. The more we support sustainable initiatives instead of indifferent ones, the more the market will shift toward that focus. While government initiatives like the Clean Air Act have been enormously helpful, they should not be relied on as solutions to the problem. Rather, they should be seen as a kick-start to the social movement that reshapes the way we consume and impact our environment.
EPA. “2011 Air Trends Report.” EPA. 2011. Web. 30 Apr 2015.
Grabow, Colin. “If You Think Communism Is Bad For People, Check Out What It Did To The Environment.” The Federalist. 13 Jan 2014. Web. 30 Apr 2015.
Walsh, Bryan. “Energy: Will Efficiency Lead to More Consumption?” Time. 30 Sep 2010. Web. 30 Apr 2015.
Capitalism is Inherently Unsustainable
Based off of recent evidence about how the capitalistic structure takes the environment into account, it is difficult to say that there is an achievable balance between capitalism and sustainability. Since at its center, the basic tenet of capitalism is to acquire as much wealth as possible, often times, considerations for anything other than maximizing profits are undesirable and can thusly have very negative impacts on the environment. The biggest examples of this that we see are through large corporations. The over-whelming majority of corporations are so involved in their pursuits of self-gain, that the externalities involved with their actions are not considered unless required by law. However, this is not the fault of the company itself, rather, it is a product of the capitalistic system. I argue that the basic principles on which capitalism is founded directly result in mistreatment of the environment, and thus sustainability cannot be achieved under contemporary capitalism.
At the Slow Life Symposium in 2014, a Dutch banking manager commented on how “negative externalities are basically the public costs that come from the pursuit of private profit.” (Juniper 2014) This attitude that arises from capitalism is unfortunate for society in general, but has major impacts to the environment. A real world example of this happening is demonstrated through policies embraced by major corporations. “Companies like General Electric are designing products to enable their clients to compete in a carbon-constrained world… the business response is about making money for shareholders, not altruism.” (Thoma 2006) It is evident that these corporations hold self-interest above environmental sustainability.
A counterargument that might be brought up at this point could address the notion that certain measures are already being taken to counteract externalities such as pollution. One might say that these are steps in the right direction for sustainability. While I would agree that these countermeasures are certainly valuable and should continue, the problem is that these are all government regulations being forced upon unwilling companies. Without these government regulations, these corporations would only be increasing their output of emissions so as to fit their own purposes. This comes back around to the idea that this way of operation coming from these corporations is inherent to capitalism. The whole idea behind capitalism is flawed in that it seeks only to maximize private profits without regard to others. This being said, I believe that sustainability is unachievable through modern capitalism. For capitalism and sustainability to be possible together, some major reforms will be necessary to the capitalistic structure.
Juniper, Tony. “Capitalism v Environment: Can Greed Ever Be Green?” The Guardian. 26 Nov. 2014. Web. 28 Apr. 2015.
Thoma, Mark. “Capitalism and Sustainability.” Cromulent Economics. 28 Mar. 2006. Web. 28 Apr. 2015.
Capitalism has the prescription for sustainability
Response to Dustin
I disagree with Dustin’s point that a balance between capitalism and sustainability is unachievable, and instead say that this balance is inevitable. Capitalism is a constantly evolving entity that works by a system of competitive markets that translate into the self-interested actions of individuals and into results for the benefit of society. Some would push back and say this ignores the inherent force, power and coercions that significant factors in most economic systems. This flaw lies not in the capitalist system in itself but the flaw that we see today in the existence of monopolies and the political influence corporations have on policy decisions. The view that corporations are so involved in the pursuit of self-gain, that they ignore externalities seems flawed. I think it has less to do with corporations being unaware of the negative externalities that they produce and more with the influence they hold in the formation of policies. In addition these policies create greater barriers to entry and even when a company is able to surpass these barriers they will continue to abuse power to limits their expansion.
Monopolizations, a flaw that seems inherent in the capitalism system is one of the many reasons that technological innovations are seemingly impossible. We live in a flawed form of capitalism where large industries instead of promoting innovation are capable of stopping it before it even gets off the ground. Even if a company is able to make it off the ground initially like in the case of Uber or Tesla, large corporations continue to try and halt these types of innovation for purely self-interested reasons. Tesla, a success story for future dreamers of breaking into industries with high barriers to entry continues to struggle against large corporations trying to impede its growth. New Jersey, Texas and Arizona have all outlawed Tesla dealerships because of restrictive dealership laws exiting in those states. Elon Musk, Tesla’s founder wrote “Auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none,” (Mouwad, NYT: 1). These represent the actions of a politically connected industry unwilling to allow new ways of doing business.
As Dustin states, corporations do hold self-interest above environmental sustainability but this is not an efficient long-term plan. As seen, new innovation will continue to win out over outdated technology and contribute to the environmental health of the globe. It can even be done without new start-ups leading the drive. McDonalds, one of the largest and most well know corporations has been making efforts to reduce some of its environmental externalities. Changes in the last year include; committing to source white fish from sustainable fisheries, only sourcing chicken raised without the use of antibiotics and committing to a target for purchases of verifies sustainable beef (Kiernan, Huffingtonpost: 1.) This process will take more time but we will eventually corporations will be forced into innovating because as resources disappear we will be forced into innovating.
Kiernan, Matthew J. “Why Innovation Is Key to McDonald’s Future.” The Huffington Post. TheHuffingtonPost.com, 29 Apr. 2015. Web. 30 Apr. 2015.
Mouawad, Jad. “Tesla Fights for a Place to Park.” The New York Times. The New York Times, 17 Mar. 2014. Web. 30 Apr. 2015.
Innovation and New Technology Counter Capitalist Unsustainability
Response to Dustin
Capitalism does encourage constant investment and growth in a competitive market, which is what leads many to believe that environmental sustainability is not possible under this economic system. However capitalism further encourages innovation, and this innovation has brought about massive changes in efficiency of production.
Many corporations in the United States and throughout the world continue to produce their goods at an increasing pace in order to raise their profits. When something is produced it generally has an output as well, and this usually comes in the form of pollution as a negative externality. Air pollution comes from electricity generation and fuel consumption while manufacturing plants often dump waste into the land and water sources. As you say, many companies do not care for environmental degradation as a result of their activities, but many other companies do take efforts to invest in and use more environmentally sustainable technologies.
Google, for example, takes an environmentally friendly approach when it comes to designing their data centers to use as little energy as possible, and they invest in clean energy technology (Helft 2008). IBM is another company which takes part in sustainability efforts, and their reasoning is to implement overall efficiency (Balta 2013). These companies and others actually take advantage of emerging technology in order to make their business practices better, rather than giving in to quick cash by allowing their pollution to continue unchecked.
As you discuss, business practices derive from the potential to make money which is why companies sometimes choose not to adhere to environmentally-centered goals. But contrary to what companies want us to believe when they describe their practices as being focused on the environment there are profit incentives to reap from establishing green technology as well. It is in the long-term interest of companies to be efficient, because choosing not to invest in these technologies could potentially alienate customers if they disagree with the company’s choices and also simply for the physical survival of their customers. It is likely that large corporations would not go as far as they do with implementing efficient practices if there were no money to be made.
I note that there are companies that are willing to forego environmentally poor decisions. It is completely likely that corporations’ actions are not driven by altruistic concerns but by the other green product. However their willingness to invest in these new technologies feeds into the market that produces green energy products and better waste management, thereby fueling the innovation required to continue promoting innovation within the green industry. This cycle of innovation and implementation will eventually lead to environmental sustainability, contrary to your argument as well as many others’.
Balta, Wayne. Going Green Leads to Business Success. The Washington Post. 18 December 2013. Web. 30 April 2015. http://www.washingtonpost.com/sf/brand-connect/wp/2013/12/18/going-green-leads-to-business-success/
Helft, Michael. Google’s Green Agenda Could Pay Off. The New York Times. 27 October 2008. Web. 30 April 2015. http://www.nytimes.com/2008/10/28/technology/internet/28google.html?ref=business
The Possibility of Environmental Sustainability
Response to Dustin
I understand your thoughts on how capitalism drives companies and businesses to maximize profit through whatever means then can I believe that sometimes this idea could eventually help create a sustainable environment. In today’s world, the ecosystem is a largely debated topic, from huge problems like global warming to smaller city environments. Because companies know that a sustainable environment is what is becoming important to a lot of people, they may be motivated to make progress on environmentally friendly technology. Yes, they may still be motivated by making a higher profit, but they would appeal to a huge audience by looking into eco-friendly products. Take the car industry, for example. Vehicle manufacturers have looked into the idea that people would want to buy cars that are better for the environment. Therefore, they take the time to research better engines and lighter cars, believing that people would spend the extra money simply to help save the environment. I understand that many of these cars are still drawing just as much power from another source, such as electricity, but the point is that becoming more environmentaly friendly may actually help companies maximize their profits.
Your second argument regarding externalities is a valid one, because externalities are an inherent part of capitalism. However, other economic systems would not do much better at reducing these externalities, for almost every action we take affects more than we know. When the Dutch banking manager made this comment, it seems that he failed to realize that the pursuit of profit could also drive producers to become more environmentally friendly. One example of this in the real world is the GMO movement. For companies, it is cheaper to produce Genetically modified organisms, however some places realize in order to increase their profit, they must first make the change to not producing GMOs. The Chipotle franchise has just recently switched to non-GMOs. Although the cost of their production has gone up, they have brought in a lot of new customers who support this idea of an environmentally friendly establishment.
It seems that under the right circumstances, a sustainable environment is possible under capitalism. However, one counter argument to this is that an inherent part of maximizing profit for company is to minimize the cost of production. Even though some businesses are making environmentally friendly decisions, the vast majority will continue to produce as cheaply and efficiently as possible. Under capitalism, it seems that monopolies can sometimes rise to power, and people are forced to buy from them, even if they never give a thought about a sustainable environment.
Juniper, Tony. “Capitalism v the environment:can greed ever be green?” theguardian. November 26, 2014. Web.
Thoma, Mark. “Capitalism and Sustainability.” Cromulent Economics. 28 Mar. 2006. Web. 28 Apr. 2015.
Haab, Tim. “Capitalism and Sustainability.” Environmental Economics. March 28, 2006. Web.
Capitalists Don’t Care About the Environment
Response to Dustin
I agree with Dustin’s argument. Capitalism itself is founded on the necessity for growth. If the economy is not expanding, it is deteriorating. As author Valenti Rull says, “our social and economic systems are too recalcitrant to even acknowledge, let alone abandon or reduce their destructive practices.” As we have discussed all semester capitalism is all about efficiency. Efficiency is about managing energy, and energy used to try to improve destructive practices is energy wasted, profit lost. As another article says, “programs and policies can be sustainable and socially just but, unfortunately, they can also be sustainable and unjust” (Marcuse). Sustainable in the sense he uses it means able to continue. Society has found itself in many practices today that are able to continue for the foreseeable future. The push toward environmental awareness is early in its development. Political and economic thought always takes into account driving forces of self-interest, and thus far the self-interest for environment consciousness within capitalism is not there. As Dustin says, large corporations are solely focused on profiting and expanding and the current methods, no matter how environmentally destructive, are the best means to this end.
A great counterargument to the lack of environmental care or awareness shown by capitalists is the fact that resources will run out if they continue to be used up at this rate. The future generations of mankind will face terrible environmental issues and lack of resources if the capitalists of today continue these destructive methods of production and business. However people don’t care enough yet. It is not the correct setting to try to make a qualitative claim but I am going to do so anyways, it is going to take a change in heart for the change to come about. The system of capitalism says grow or die, consume or perish. It will take a collective change in the attitude and mentality of people to bring about environmental consciousness, but this is so very unlikely in the present system. The only way corporations will make changes that benefit the environment are if they are forced to, either by the government or by catastrophe.
Marcuse, Peter. “Sustainability is not enough.” Environment and Urbanization, Vol. 10, No. 2, October 1998. Print.
Rull, Valenti. “Sustainability, capitalism, and evolution.” EMBO Reports, Vol. 12, p. 103-106, 2011. Print.
Tesla’s plan to save the world, one battery at a time
Response to Dustin
While I agree that most of the time companies only follow a sustainability rule because a governmental body suggests they do so, I would also venture to argue that there is a much larger consumer demand for eco friendly or “green” products. Furthermore, I think it is important to look beyond the benefits of such eco friendly products. For example, when looking at eco friendly bamboo plateware, it would seem as though this idea promotes sustainability however is there a behind the scenes factor that is more detrimental to the environment? For a lot of companies, yes. The image of sustainability is far more a façade than reality.
With this in mind, companies like Tesla Energies (Motors up until this morning), have designed products to counteract the before claims about the dangers of hybrid cars and electric vehicles. The claims were that while the battery powered vehicles were beneficial when in use, the trashed or unwanted ones contained materials far worse to the environment than carbon emissions (NCPA). This idea is one that has largely been up for debate. Research can go either way, as it typically does when looking at emerging environmental damage, especially coming from a large Multinational Corporation such as Toyota. There is a silver lining though. The present day Tony Stark of Tesla, Elon Musk, has devoted the company to efficient battery recycling and disposal. In a New York Times article about electric cars and their hurdles in recyclability, Ghislain Van Damme, a manager for a large energy and precious metals recycling company said, “There’s no green car without green recycling (Kanter).” Which is exactly what has motivated the Tesla company to develop higher efficiency in their battery recyclability by eliminating certain dangerous precious metals (Paquette).
All this to say simply that the demand for energy innovation is clearly present, but without consistent eco friendly production from start to finish, the emerging technologies wont remain competitive. The market for energy efficient and eco friendly products will only continue to drive for safer components and products yielding cheaper for the producer and more profitable. Like Dustin said, often times the push for product change is in the interest of the shareholder, when more companies like Tesla emerge with shareholding power, technology has to follow the demand in order to benefit the share holders as well.
Granted, Tesla produces recyclable batteries because of strict regulations on dangerous precious metals. Perhaps the idea of start to finish eco friendly materials would be different if the regulations weren’t put in place but I have to ask, why would a company like Tesla even exist if it weren’t to provide a certain alternative to environmentally destructive companies?
Kanter, James. “Fancy Batteries in Electric Cars Pose Recycling Challenges.”The New York Times. N.p., 30 Aug. 2011. Web. 1 May 2015.
Paquette, Sean. “Are Tesla Electric Cars Environmental Green.” Rensselaer Polytechnic Institute (2014): n. pag. Web. 1 May 2015.
“Prius Outdoes Hummer in Enviornmental Damage.” National Center for Policy Analysis. N.p., n.d. Web. 1 May 2015.
Response to Dustin
I disagree with the conclusion that capitalism is inherently unstable. While capitalism may be characterized by acquiring enormous amounts wealth and possibly disregarding negative externalities, this does not mean sustainability is unachievable under capitalism as we see it today. Through a mixture of government intervention and changing consumer preferences capitalism could eventually become sustainable.
As climate change and other environmental issues have been studied more and brought into public view consumer preferences have shifted towards more environmentally products and practices. More often now than ever people are willing to accept higher initial costs in exchange for a more environmentally product. For example according to the Department of Transportation the number of hybrid cars sold increased form 17 in 1999 to 507,272 in 2015, the number of electric vehicles sold also has increased in recent years. As consumer preferences are shifting companies such as Tesla are appearing to fill the demand for greener products. Tesla, an electric car manufacturer, has seen large scale success in recent years with vehicle sales and stock prices rising rapidly despite only having one all-electric vehicle for sale with limited options. Companies such as Tesla are not engaging in environmentally friendly practices because of government intervention but rather because of a growing market for sustainable business practices.
Although some companies such as Tesla choose to be environmentally friendly others do need help in the form of government intervention to perform sustainable practices. Currently it is still more profitable for many companies to continue to pollute than to alter their practices to reduce pollution. In this case it is important for the government to intervene and curtail the practices to an acceptable limit. While it can be argued that regulations simply force businesses to do something they otherwise wouldn’t do this almost no different than a business being forced to change practices because of demand and consumer preferences. In fact it can be argued that regulations are a tool consumers have to show their preferences. For example a congressmen will likely only go out of his way to sponsor a bill if there is support among their constituency for that bill. In this way government regulations are often a reflection of consumer preferences.
Over the past decade the mixture of changing consumer preferences and government regulations have brought environmentally friendly practices into the main stream with no slowing down. While businesses may cause negative externalities in order to maximize profits this does not mean capitalism is inherently unsustainable. As environmentally friendly practices have become more common costs have decreased to the point where many businesses can actually profit by switching willingly to sustainable practices. Eventually as resources become scarcer the prices for unsustainable practices will rise to the point where companies will innovate and find ways to have more sustainable practices.
Winton, Neil. “Tesla Success Forces Long-Term Skeptics To Relent, A Bit.” Forbes. March 17, 2014. Accessed May 1, 2015. http://www.forbes.com/sites/neilwinton/2014/03/17/tesla-success-forces-long-term-sceptics-to-relent-a-bit/.
“Sales of Hybrid Vehicles in the United States.” United States Department of Transportation: Bureau of Transportation Statistics. January 1, 2015. Accessed May 1, 2015. http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_01_19.html.
Environmental Sustainability: An Unrealistic Idea
Environmental sustainability is a very hard subject to tackle, especially when put next to an economic system such as capitalism. It is hard to deny the fact that while people are competing for wealth, the environment suffers because people are consuming more and more. I do agree with Daly and the others in that capitalism directly affects our environmental sustainability, and will continue to do so as long as humans exist in the era we do today. It is also true that capitalism is inherently unstable, for even in America we see the rich dominating the poor, causing the economy to shift under the stress of inequality. Keynes speaks of externalities, or costs that are created by industry yet paid for by society. These are also unavoidable, for even some of the smallest actions can affect those around you.
Unless the entirety of the human population switches to a zero waste lifestyle, there will always be externalities and pollution harming nature and other humans themselves. Capitalism intrinsically creates monetary inequalities between the rich and the poor, meaning that the economy is always shifting. Even the people who are left homeless could be considered an externality of capitalism. It may affect the lives of those around them in a negative way, while also making it difficult for those people to find a job. Through this idea, it seems unlikely to find either a healthy economy OR environmental sustainability under contemporary capitalism. It is true that a capitalist economy is always striving for innovation, creating the need for more natural resources. These resources, which are already scarce, are used to create competition which will only fuel the use of even more scarce resources.
There are many real world examples of our lack of environmental sustainability, such as global warming and air pollution in large cities. One specific example is the oil spill in the Gulf of Mexico just five years ago. Although an extreme case, it shows how America was desperate for resources (in order to make money) and consequently destroyed the lives of billions of animals and ruining the habitat for years to come. Not all externalities are of this scale, but the point is to illustrate that with people competing for so many natural resources, it is impossible to assure that nothing will go wrong. Sometimes the consequence is the lives of millions of innocent creatures.
One counter-argument is that only under a competitive economy can we begin to strive to help the environment. Car companies are competing to produce efficient cars, which consumers will buy in order to help save what’s left of our ecosystem. As technology advances under capitalism, we will find new ways to efficiently produce. Under this theory, the competition that capitalism creates would benefit our environment in the long run.
Haab, Tim. “Capitalism and Sustainability.” Environmental Economics. March 28, 2006. Web.
Juniper, Tony. “Capitalism v the environment:can greed ever be green?” theguardian. November 26, 2014. Web.
Response to Cody
Although I agree it is difficult to conceptualize capitalism and environmental sustainability as compatible, I disagree that it is unrealistic. In fact, there is a great deal of evidence that capitalism is already leading in the direction of encouraging environmental sustainability and inherently will.
First, as Bowles et al. suggested, homo economicus is a myth. People, even in a capitalistic system, are not driven purely by self-interested motives. People weigh a large set of variables while making decisions, and increasingly include environmental effects as a variable. As more consumers make decisions based on the environment, companies alter their practices.
Furthermore, market forces actually encourage moving towards environmental sustainability. As resources are scarce, they are thus expensive. Supply and demand forces encourage companies to find cheaper, more efficient ways to produce and thus seek to use resources that are more abundant. As Julian Simon suggests, it’s possible that resources will never run out because we will switch to new and more efficient ones. (Simon) Fully recyclable goods are the most abundant (ie. they can be used forever), capitalism encourages companies to move towards capitalizing on this. Indeed, many companies, across a wide array of industries, are already doing so. As companies internalize negative externalities, they become more efficient, cutting costs, and increasing market share and profits. (Lovins et al.)
Along these lines, capitalism encourages technological innovation. Already, companies are making all sorts of advancements including creating viable transparent solar panels, low-to-zero emission transportation means, more environmentally efficient factories, and GMOs that don’t require pesticides. Future advancements are even more promising. Private companies like Spacex are preparing to mine off-earth while others develop viable geoengineering techniques. The list of innovations that reduce environmental pollution and externalities is growing quickly.
Evidence suggests that population growth will plateau within the next century as poverty is reduced in developing countries. While poverty is reduced, pollution caused by countries attempting to industrialize quickly will slow as well. It is not necessary to achieve zero-waste. Our planet is well-equipped to deal with some level of pollution, provided it is not too much. All animals pollute to some extent. Indeed, dinosaurs emitted higher levels of carbon-dioxide than we are currently producing. Instead of attaining zero-waste, we need to attain a stable level and sustainability. This will come through innovation, reduction of poverty, and population plateaus.
Finally, many of the current environmental problems are not a result of capitalism. Instead, they are a result of government cronyism, preventing capitalism from naturally occurring. For example, the oil and automobile countries in the United States have prevented environmentally friendly cars from becoming mainstream through litigious means, not capitalism. Our current patent system allows for companies to squash competition through the use of bad property laws, preventing innovation. Government subsidies in the agriculture industry make a substantive switch to more environmentally friendly production means difficult. Likewise, subsidies in other industries like the automobile industry cause the same problem. In order to truly solve the fundamental problems and achieve environmental sustainability, a proper competitive container, including correct environmental regulations, needs to be established.
Lovins, Amory. Lovins, L. Hawken, Paul. “A Road Map for Natural Capitalism” Harvard Business Review. 1999
Simon, Julian. “Can the supply of natural resources- especially energy really be infinite? Yes!” The Ultimate Resource. 1981
Sustainability is Possible
Response to Cody
Your thesis maintains that Daly is correct in his position, which holds that capitalism requires the ever increasing consumption of natural resources, and also that capitalism affects our environmental sustainability and “will continue to do so as long as humans exist in the era we do today.” Furthermore, you argue that capitalism is inherently unstable, given the economic strain created by the inequality produced under capitalism; and you agree with Keynes’ theory of externalities as an inevitable consequence of capitalist-driven production. The thesis in which you defend is solid, and I agree with the important distinction that the unsustainable era of Capitalism we live in today will produce “externalities and pollution harming nature and other humans themselves.” Additionally you state “it seems unlikely to find either a healthy economy OR environmental sustainability under contemporary capitalism.” While the current system of Capitalism is unsustainable, I argue that this era of Capitalism has the ability to evolve into a sustainable and more equal economy. Forging from era of capitalism we live in today as the starting point, it is possible to lead the way towards a more sustainable economy, however as you stated, it will not be exactly the same era which characterizes our current system of capitalism. Michael Townsend, in the article, “From the Sparks of Hope and Frustration: Towards a New Sustainable Economy,” writes that there are possible solutions already available, which although radical, will lead towards a more sustainable system. Townsend terms this new sustainable system “Sustainable Economy” as opposed to Capitalism. He argues that the seeds of innovation which will lead to this new economy are already planted, and eventually modern capitalism will reach the tipping point that shifts into the inevitable new sustainable economy. A real-world example of economies that are thriving and expanding in a socially and environmentally responsible way can be found in Scandinavia. In the article “Time to tread sustainable development path,” Jeffery Sachs argues that development should follow a holistic approach that satisfies the principles of economic growth, social fairness and environmental sustainability. His contention is that economic gains “should be based on true value added, not on the destruction of natural capital, whether through deforestation, climate change, or pollution of air, land, and water”—a departure from our current era of capitalism. As he writes, “the ongoing revolution of information and communications technology (ICT) is an incredibly powerful enabler of new sustainable technologies” (Sachs). He cites that “Denmark, Norway, and Sweden… are closest on the planet to achieving this Trifecta of prosperity, fairness, and sustainability” (Sachs). Critics could argue that the current system of capitalism will never give-way to a more sustainable system, for the pursuit of profits will override any other pursuits, and given the influence of money in politics. In response, one should consider the sheer unsustainability of the current Capitalist system. Eventually, humans will have no choice but to change our wasteful ways given the ecological limits of our planet, regardless of any motivations to act to the contrary.
Sachs, Jeffery. “Sustainable Development Offers New Path – CNN.com.” CNN. Cable News Network, 18 Apr. 2015. Web.
Townsend, Michael. “From the Sparks of Hope and Frustration: Towards a New Sustainable Economy.” The Huffington Post. TheHuffingtonPost.com, 29 Apr. 2015. Web.
Can Capitalism Achieve Environmental Sustainability?
While it is at baseline true that capitalism entails an ever growing economy and increasing resource consumption, I feel that it is possible for a capitalist economy to achieve a sustainable state. Capitalism as we know it sort of requires growth, if the size of the economy remains the same we consider it to be a recession. But I feel that this is mostly our perception. If we changed how we viewed a capitalist economy from a vehicle to acquire wealth to a way to maintain our livelihood, we could stop feeling like we need constant growth. This would entail an amount of stagnation and stratification, but to be honest I feel like the American economy is already stagnant and stratified so this wouldn’t be so much of a loss. Michel Townsend on Enviromentalleader.com points out that to curb the dependence on constant growth we would have to change some core principals of Capitalism, most specifically taking focus away from investment and speculation and instead focusing on meaningful work.1 Environmental concerns aside I feel that this needs to happen anyway. I also must add that I feel an absolute necessity for maintaining the American standard of living without constant economic growth is solving the labor surplus problem that is keeping wages at near unlivable levels. Quick fixes like raising the minimum wage are band aids at best. The core problem is that workers are replaceable and therefore lack bargaining power. Solve that and markets could settle into a stable pattern without total growth.
An easy first step in the right direction however would be increasing efficiency in production and reducing the use of non-renewable resources. Erica Gies on Forbes Business page claims that there are many easy steps that could be taken to do just that, and that they would increase profits for corporations taking them.2 The problem is that they would only increase profits by a small amount and modern corporations always have their eye on the biggest returns so they are unwilling to take simple environmentally friendly steps. Unfortunate I think this is wishful thinking. The fact of the matter is that non-renewable resources are cheap and that’s why they are used so frequently. Sustainable initiatives will hurt a corporation’s bottom line. Unfortunately the American consumer has proved that he is not willing to pay extra for environmental protection or even for fair labor practices. Such sustainability reforms would have to be imposed from above by the government. Also unfortunately, the government will not impose limiting regulations on business unless the voters wish it to happen en mass. So that means that for reforms to happen, public action is needed and can only happen if the public becomes more educated and aware of the problem.
Townsend, Michel. Is Capitalism 2.0 the Answer to a Sustainable Economy? Environmentaleader.com, Oct, 2013. http://www.environmentalleader.com/2013/10/24/is-capitalism-2-0-the-answer-to-a-sustainable-economy/
Gies, Erica. How to Achieve Sustainable Capitalism. Forbes.com, Business page, Feb, 2012. http://www.forbes.com/sites/ericagies/2012/02/21/five-ways-to-rein-in-rogue-capitalism/
Pigouvian taxes and the opening of recycling markets
Response to Kai
While Kai argues that sustainable growth will hurt a companies bottom line, and assumes that the costs of making environmentally responsible companies is dictated by consumer choice of paying more, I argue that his view is short sided and that it is the government’s responsibility as an institution to try to make companies internalize the costs of negative externalities. Milton Friedman himself would say that dealing with major social externalities is one of the major roles of government. A way to make companies internalize externalities was developed by economist A.C. Pigou. Pigouvian taxes, as they were termed, pose that the negative externalities produced by a company should make them liable to taxation, internalizing corporate externalities and reimbursing society, while incentivizing production methods that reduce or even eliminate negative externalities. Steven Hackett poses that lax environmental rules that allow firms to avoid cleanup costs are synonymous to industry subsidies that lower production costs for companies. Which means that their production is inefficient due to the subsidies provided and that the cost of production and cost of a good are artificially lower than what the would be in a truly competitive market.
When substantial negative externalities are present, the good whose production leads to these externalities is overprovided by the market process, and a pollution tax of some sort is called for (Hackett). Examples include the tax on chlorofluorocarbons.
I personally think that there is a way that the capitalist system can provide sustainable development and growth. Firstly through Pigouvian taxes so that we don’t have artificially lowered costs of production. Another main definitional problem is that there are key differences in the way I define growth than that of the average person. Growth means an amassing of capital or money, it does not mean an amassing of goods and physical property. Recycling processes of all sorts of materials can spur growth by opening a un-ventured market and producing both goods while depleting the amount of goods that go to landfills. Essentially full recycling capabilities would produce monetary growth and raise employment, making it so that the amount of externalities produced by our current system is lessened. An example would be a company that recycles electronic goods, they would lessen the strain of electronics in landfills(New Zealand).
Hackett, Steven C. Environmental And Natural Resources Economics : Theory, Policy, And The Sustainable Society. Armonk, N.Y.: ME Sharpe, Inc, 1998. eBook Collection (EBSCOhost). Web. 1 May 2015.
New Zealand Herald: http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=11435127