Wednesday, July 12, 2017

Poll: 51% Millennials in US don't support capitalism

Do you know what an "undiscussable" is? It's a topic that so threatens the prevailing view that you bring it up at your own social risk. At least that's my definition. But if we can't examine the assumptions on which our society is based, then aren't we denying the brain and vocal cords evolution gave us?

So here's a doozie: Is capitalism consistent with a sustainable society?

According to this article, just over half US Millennials don't think so.  In the U.K. 2/3 of young adults don't think so.

This question was the basis of a think tank Marsha Willard and I hosted in 1997 when we pivoted to do this work in sustainability. Back then, the prevailing view was that doing right by the environment was bad for business. Thankfully after 25 years of research, early adopters and corporate fiascos, we know that's not the case (although not all CEOs have gotten the memo.)

The decision we made then was not to challenge capitalism but instead to show businesses and governments how sustainability (social and environmental) was in their self-interest. Together they are responsible for most of the material throughputs in our society and employ most of our citizens. That effort has largely been successful, with virtually all major corporations producing sustainability or corporate responsibility reports. (That means it's on their radar; not that the work is complete.) Research proves that sustainability even improves stock prices.

It feels like we applied the breaks to the train hurtling toward the abyss, but we haven't questioned where the tracks are leading.

The challenge with raising questions like this is it can result in a defensive reaction. In the US we mush concepts like capitalism, competition and democracy into The American Way. Suddenly you may be viewed as a 'commie' if you even start to ask the questions.

I think it may be helpful to unpack the assumptions of capitalism to see if there are elements we want to preserve.

Is the root problem...

CONSUMERISM: Amazon Prime Day is in the news, retailers' attempt to expand the Christmas season buying compulsion into summer. Certainly we know that filling our lives with stuff instead of joy doesn't make us happier. But if we develop a Circular Economy, will it matter? If everything comes from a sustainable source and goes back safely to nature, can we keep consuming? Or as we hurtle toward 8-9 billion people on the planet, will this still be unsustainable?

WALL STREET: It seems unfair that the people who spend the least amount of effort to make a company successful are at the top of the financial totem pole. With computerized trading, some investors don't even care what the company does. But investors are increasingly rewarding companies that pursue sustainability. And most growth in employment is in small businesses anyway. Some communities have been developing ways for local people to invest in local companies. And don't forget, worker owned cooperatives can change the focus from maintaining profit margins to maintaining employment, sharing most of the wealth created with those who work 40+ hours a week there. And the growing list of certified B-Corporations vow to take into account the needs of their community and the environment, not just shareholders. The idea that corporations have to maximize shareholder value is a myth.

"FREE" MARKETS & PERVERSE SUBSIDIES: Part of the problem is that all the social costs associated with products are not included in the price of those products. Economists call these externalities. Agribusiness chopping down the rain forest for palm oil doesn't have to pay the fishermen whose stocks are depleted by erosion, the indigenous people who were displaced or the cost to relocate species to a spiffy new location.

I'm going to use fishing as an example but there are many more. Fishermen don't have to pay for the fish; only the cost to get them. And in a society of extreme haves and have-nots, typical supply and demand forces don't work. When the Japanese are willing to pay $600,000 for a single blue fin tuna, the economics are in place to destroy that resource. Maybe we just need to account for the true cost (or some semblance of true cost.). Robert F Kennedy, Jr. said,
"What is the best thing we could have? True free market capitalism. Free markets are a very good thing, we should try it sometime. What we have in this country is crony capitalism. There is nothing more important than innovation. The other forces are ignorance and greed. If you release innovation with true free market we would be able to address these issues. Nature is the infrastructure of our communities. Start by protecting our environmental infrastructure. All the public trust assets, by their nature are not owned by anyone person but by everyone. What you hear from the big polluters is you have to choose between protecting the environment and economic prosperity, and that is a lie. The polluters treat our world as if it is on sale, then we can make some money but our children are going to pay for it."
Former World Bank economist Herman Daly might disagree. Free markets are great at distributing resources to the highest use (or highest bidder) efficiently. But they do not ensure the protection of stocks of those resources or the equitable distribution of them in service of social justice.

To make matters worse, governments often subsidize actions that undermine society in the long-run. These are called perverse subsidies. In a paper by Norman Mayer on this topic, he says,

One might suppose that the fisheries decline would send a clear message to governments that they should reduce their excessive fishing. But on the contrary, they tend to put off the day of reckoning by stepping up their subsidies to the fishing industry. Once fishermen's livelihoods are in danger, governments provide plentiful incentives for them to catch more rather than fewer fish – thus exacerbating the problem from top to bottom. The solution is a severe reduction if not eventual phasing out of subsidies, paralleled by a collective decision to protect remaining fish stocks through collective action, properly enforced.  
Meantime, governments have been inclined to engage in ever-heavier subsidies. State supports help to pay for more and larger boats, longer nets and more sophisticated equipment all round, even extending to radar and remote-sensing devices. Given the advanced technology of the 1990s fishing industry, just one fifth of the world's fishing fleet could catch the maximum sustainable yield of fish.

GROWTH: Economic growth is embedded in our psyche. Businesses must grow, our communities must grow. Underlying this is both population growth (which creates increasing demand) and our system of credit (which requires growth to pay the interest.) In Believing Cassandra, Alan AtKisson said, 
“Growth must cease. If human beings do not stop their growth willingly, Nature will stop it forcefully. Paradoxically, however, for Growth to cease, Development must accelerate.” 

Can we have more urban farmers, teachers, artists and massage therapists? Maybe we can grow light-on-the-earth industries. 

My view is that we have to work all angles. We need to hone capitalism in the near term to make it work better while exploring better models for the long-term. Fortunately there are people working at all these levels. Unfortunately vested interests still slow the transformation.

What do you think? 


Want to learn more? Read my 2010 article, Homo Economicus Interruptus.

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