We like to think of capitalism as an economic system
different in kind, and not just degree. It
does seem to be the most efficient system to exploit its environment ever
designed. And we can conclude this
because capitalism has driven its less efficient competitors out of business.
But what is capitalism’s environment? Capitalism’s environment is two fold: First is the physical environment. Capitalism’s original reason was to more
efficiently, and at greater scale, harvest and exploit the resources society
needed from the physical environment, and provide them to society, and in a
greater abundance and at a lower cost than ever before. And this it did.
But the rest of capitalism’s environment is that same
society and economy for which it provided, and still provides, and processes,
resources. However, it is becoming more
difficult to extract resources from nature, and produce real goods for society.
The costs are higher. The increase in costs is greater than the
increase in society’s ability to pay, with its current infrastructure. This means it is increasingly more difficult
to extract profits.
But clearly, the capitalist will seek to go to where the profit
is greatest. When the profit is greatest
exploiting the environment, by providing things society needs or wants, that is
where the capitalist will go
.
But if the capitalist can gain a greater profit, the
capitalist can be expected to do what is necessary to do so, if society is not
effective in preventing him from doing this. For instance, if the capitalist
can effectively reduce his costs by damaging the rest of society, he must be
expected to do so. Under these
circumstances, we must expect him to damage society, because the sole duty of
the capitalist is to enhance and maximize his own profits. (We address Milton Freidman’s discussion of
this for corporations at: http://anamecon.blogspot.com/2012/06/milton-friedman-social-responsibility.html
The human motivating
force for capitalism is not so often discussed:
It is acting according to a narrowly defined self-interest, one that
excludes the interests of any larger society.)
The first is by externalizing
some of the cost of producing real benefits, real goods or services, to
society. For instance, one way is by discharging pollution from the production
of goods or services into the environment, and not cleaning up this pollution
for society, or compensating society for the damage this pollution inflicts
upon it. Also, the capitalist may
manipulate government to subsidize his production, so more is produced at greater
cost and at greater profit to him than is beneficial to society. The
capitalist, should either opportunity arise, must also be expected to enhance
his profits through monopoly or monopsony, at the expense of the larger
society.
When, however, the profit is greatest exploiting society
directly, that is what the capitalist can be expected to do. Since in the process of exploiting society
directly, nothing is actually produced, these methods are all aimed at
manipulating demand, with the goal of maximizing one’s own share of demand, and
minimizing the share of others.
Obviously the activity of thieves does not benefit
society. They transfer demand from
others, others who are often productive individuals, to themselves, who are not
productive individuals, and often to the extent of damaging the productivity of
the individuals they steal from. Where
theft is made legal, as through allowing and even encouraging manipulative
finance, it must be expected to proceed and grow apace. Consider the selling of
credit default swaps, capital appreciation bonds to municipalities, leveraged
buy-outs, and other malfeasances of Wall Street and the banking sector.
Resources are expended in this process, and indeed
destroyed. This is a consequence of the
nature of debt, which can only, in real terms, be repaid by productive
individuals and companies. It is thus,
in the net, the laying of debt on the productive sectors of an economy. This hampers them, reduces their
profitability, and discourages investment in them, and in consequence
encouraging ‘investment,’ that is the transferring of demand, to the
non-productive sectors of the economy.
Clearly, this process is destructive of the economy. As real production is increasingly replaced by
fictitious ‘production,’ we should expect the economy to be less and less
capable of maintaining itself. This
would first be compensated for by importing increasing quantities of goods and
material factors of production. However,
we should expect increasing poverty, decreasing investment in the real economy
and infrastructure, decreasing market for real production, and eventual economic
collapse.
