Posts Tagged ‘capitalism’
“When morality comes up against profit, it is seldom that profit loses”*…
This month marks the anniversary of the U.S. Business Roundtable’s 2019 call for a shift from “shareholder capitalism” toward “stakeholder capitalism.”…
Business leaders asked us to imagine a transformed world, but a bat virus in Wuhan had its own ambitious plans — and has, for the time being, transformed the world in quite another way. It has thrust government to the center, pushing business, whatever its approach to capitalism, to the sidelines.
Nobody could reasonably expect business alone to fix the pandemic. Nonetheless, some investors under the banner of “impact investing” argue that business alone will be able to fix the other big problems ailing the global economy, such as climate change or global female literacy, without sacrificing commercial returns. This view has garnered interest from major banks, consultancies, business lobby groups, and even former prime ministers. One of impact investing’s leading champions, Sir Ronald Cohen, believes that it could be the “revolution” that will save capitalism and solve many of the world’s greatest problems.
It is an enticing vision of an enlightened post-pandemic economy, and, as an impact investor and economist, we support its ambitions. However, if we really want to reform capitalism, then impact investing as it is traditionally conceived will not be enough. The pandemic is not a mere anomaly; there are profound limits to what business can do profitably in normal times too. We need to reform the rules that govern how our economy works — and impact investors have a critical role to play [in changing those rules]…
From Harvard Business Review, “Impact Investing Won’t Save Capitalism.”
* Shirley Chisholm
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As we endeavor to ensure equitable equities, we might recall that it was on this date (Friday the 13th) in 2013 that Google suffered an outage: all of its services were unavailable for five minutes, including Google Search, YouTube, and Google Drive. During that brief window, internet traffic around the world dropped by 40 per cent.
“He got his fat dreams, he got his slaves / He got his profits, he owns our cage”*…
Plan, profile and layout of the slave ship The Séraphique Marie
For a generation, the relationship between slavery and capitalism has preoccupied historians. The publication of several major pieces of scholarship on the matter has won attention from the media. Scholars demonstrate that the Industrial Revolution, centred on the mass production of cotton textiles in the factories of England and New England, depended on raw cotton grown by slaves on plantations in the American South. Capitalists often touted the superiority of the industrial economies and their supposedly ‘free labour’. ‘Free labour’ means the system in which workers are not enslaved but free to contract with any manufacturer they chose, free to sell their labour. It means that there is a labour market, not a slave market.
But because ‘free labour’ was working with and dependent on raw materials produced by slaves, the simple distinction between an industrial economy of free labour on the one hand and a slave-based plantation system on the other falls apart. So too does the boundary between the southern ‘slave states’ and northern ‘free states’ in America. While the South grew rich from plantation agriculture that depended on slave labour, New England also grew rich off the slave trade, investing in the shipping and maritime insurance that made the transport of slaves from Africa to the United States possible and profitable. The sale of enslaved Africans brought together agriculture and industry, north and south, forming a global commercial network from which the modern world emerged.
It is only in the past few decades that scholars have come to grips with how slavery and capitalism intertwined. But for the 18th-century French thinkers who laid the foundations of laissez-faire capitalism, it made perfect sense to associate the slave trade with free enterprise. Their writings, which inspired the Scottish philosopher Adam Smith’s Wealth of Nations (1776), aimed to convince the French monarchy to deregulate key businesses such as the sale of grain and trade with Asia. Only a few specialists read them today. Yet these pamphlets, letters and manuscripts clearly proclaim a powerful message: the birth of modern capitalism depended not only on the labour of enslaved people and the profits of the slave trade, but also on the example of slavery as a deregulated global enterprise…
[Adam] Smith became far more influential than his teacher. As his own version of laissez-faire ideas came to seem like common sense in the following century, the pioneering Gournay Circle was largely forgotten. Their sense that the slave trade was a prime example of free trade in action disappeared. Yet the writings of Gournay and Morellet reveal that modern capitalism is entangled with slavery in multiple, profound ways. Slave labour supplied the cotton, sugar and other vital commodities. The profits from the sale of slaves created fortunes on both sides of the Atlantic. And, in a disturbing paradox, the founding fathers of laissez-faire saw the slave trade as a showcase of liberty.
The chilling tale of a “secret ingredient” in capitalism-as-we-know-it and of the 18th-century thinkers behind the laissez-faire economics that power it: “Slavery as Free Trade.”
* Richie Havens, “Fate”
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As we face history, we might recall that it was on this date in 1789 that partisans of the Third Estate, impatient for social and legal reforms (and economic relief) in France, attacked and took control of the Bastille. A fortress in Paris, the Bastille was a medieval armory and political prison; while it held only 8 inmates at the time, it resonated with the crowd as a symbol of the monarchy’s abuse of power. Its fall ignited the French Revolution. This date is now observed annually as France’s National Day.
See the estimable Robert Darnton’s “What Was Revolutionary about the French Revolution?”
Storming of The Bastile, Jean-Pierre Houël
“Crises and deadlocks when they occur have at least this advantage, that they force us to think”*…
In the spirit of Nehru’s sage injunction…
The COVID19 pandemic has exposed a strange anomaly in the global economy. If it doesn’t keep growing endlessly, it just breaks. Grow, or die.
But there’s a deeper problem. New scientific research confirms that capitalism’s structural obsession with endless growth is destroying the very conditions for human survival on planet Earth.
A landmark study in the journal Nature Communications, “Scientists’ warning on affluence” — by scientists in Australia, Switzerland and the UK — concludes that the most fundamental driver of environmental destruction is the overconsumption of the super-rich.
This factor lies over and above other factors like fossil fuel consumption, industrial agriculture and deforestation: because it is overconsumption by the super-rich which is the chief driver of these other factors breaching key planetary boundaries.
The paper notes that the richest 10 percent of people are responsible for up to 43 percent of destructive global environmental impacts.
In contrast, the poorest 10 percent in the world are responsible just around 5 percent of these environmental impacts…
It confirms that global structural inequalities in the distribution of wealth are intimately related to an escalating environmental crisis threatening the very existence of human societies.
Synthesising knowledge from across the scientific community, the paper identifies capitalism as the main cause behind “alarming trends of environmental degradation” which now pose “existential threats to natural systems, economies and societies.”…
The research provides an important scientific context for how we can understand many earlier scientific studies revealing that industrial expansion has hugely increased the risks of new disease outbreaks.
Just last April, a paper in Landscape Ecology found that deforestation driven by increased demand for consumption of agricultural commodities or beef have increased the probability of ‘zoonotic’ diseases (exotic diseases circulating amongst animals) jumping to humans. This is because industrial expansion, driven by capitalist pressures, has intensified the encroachment of human activities on wildlife and natural ecosystems.
Two years ago, another study in Frontiers of Microbiology concluded presciently that accelerating deforestation due to “demographic growth” and the associated expansion of “farming, logging, and hunting”, is dangerously transforming rural environments. More bat species carrying exotic viruses have ended up next to human dwellings, the study said. This is increasing “the risk of transmission of viruses through direct contact, domestic animal infection, or contamination by urine or faeces.”
It is difficult to avoid the conclusion that the COVID19 pandemic thus emerged directly from these rapidly growing impacts of human activities. As the new paper in Nature Communications confirms, these impacts have accelerated in the context of the fundamental operations of industrial capitalism.
The result is that capitalism is causing human societies to increasingly breach key planetary boundaries, such as land-use change, biosphere integrity and climate change.
Remaining within these boundaries is essential to maintain what scientists describe as a “safe operating space” for human civilization. If those key ecosystems are disrupted, that “safe operating space” will begin to erode. The global impacts of the COVID19 pandemic are yet another clear indication that this process of erosion has already begun…
Humanity’s “own goal”? “Capitalism is destroying ‘safe operating space’ for humanity, warn scientists.”
Pair with “A New Land Contract“…
Weirdly enough, the land system that we have today has its origins in a problem specific to medieval kings, which is ‘how do I fund military campaigns and defence, without paying to keep a standing army?’
And it was William the Conqueror who perfected the answer. It was a piece of paper. And on that piece of paper was basically an agreement between the Crown and a noble, saying ‘if you provide men for military campaigns when I ask, in exchange I will grant you a monopoly over your own private fiefdom, where you can levy as high taxes as people can bear to pay’.
So effectively — rent is the original tax, paid via lords to the King.
In fact the word ‘feudal’ derives from the latin word feudalis — for ‘fee’. In other words, rent. So the whole system of government by which the Normans ruled over the Anglo Saxons was based on rent…
So what you’re left with is a set of power relations in society: an enforced system of servitude and control. As the economist Henry George pointed out, it is essentially a diluted version of slavery.
“Ownership of land always gives ownership of people… Place one hundred people on an island from which there is no escape. Make one of them the absolute owner of the others — or the absolute owner of the soil. It will make no difference — either to owner or to the others — which one you choose. Either way, one individual will be the absolute master of the other ninety-nine.”
And “Basic income isn’t just a nice idea. It’s a birthright“…
A basic income might defeat the scarcity mindset that has seeped so deep into our culture, freeing us from the imperatives of competition and allowing us to be more open and generous people. If extended universally, across borders, it might help instil a sense of solidarity – that we’re all in this together, and all have an equal right to the planet. It might ease the anxieties that gave us Brexit and Trump, and take the wind out of the fascist tendencies rising elsewhere in nativism that is spreading across much of the world.
We’ll never know until we try. And try we must, or brace ourselves for a 21st century of almost certain misery…
As Paul Romer (and so many others) have observed, a crisis is a terrible thing to waste”…
[TotH to Patrick Tanguay (@inevernu)]
* Jawaharlal Nehru
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As we ruminate on remedies, we might recall that it was on this date in 1864 that President Abraham Lincoln signed the Yosemite Valley Grant Act (Senate Bill 203), giving California the Yosemite Valley and the nearby Mariposa Big Tree Grove “upon the express conditions that the premises shall be held for public use, resort, and recreation.”
Mirror Lake, Yosemite
Carleton E. Watkins, photographer, circa 1860.
source: Library of Congress
“What goes up must come down”*…
For most of human history, the world’s population grew so slowly that for most people alive, it would have felt static. Between the year 1 and 1700, the human population went from about 200 million to about 600 million; by 1800, it had barely hit one billion. Then, the population exploded, first in the United Kingdom and the United States, next in much of the rest of Europe, and eventually in Asia. By the late 1920s, it had hit two billion. It reached three billion around 1960 and then four billion around 1975. It has nearly doubled since then. There are now some 7.6 billion people living on the planet.
Just as much of the world has come to see rapid population growth as normal and expected, the trends are shifting again, this time into reverse. Most parts of the world are witnessing sharp and sudden contractions in either birthrates or absolute population. The only thing preventing the population in many countries from shrinking more quickly is that death rates are also falling, because people everywhere are living longer. These oscillations are not easy for any society to manage…
Demographic decline– the end of capitalism as we know it? “The Population Bust.”
See also: “UN world population report predicts slowing growth rate, 10.9 billion peak by 2100” (source of the image above) and The Rise and Fall of Nations: Forces of Change in a Post-Crisis World, by Ruchir Sharma.
* Isaac Newton
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As we ponder population, we might recall that it was on this date in 1845 that the first issue of Scientific American was published. Founded as a weekly by painter and inventor Rufus M. Porter, as a four-page weekly newspaper, its early emphasis was on a broad range of inventions ranging from perpetual motion machines, through an 1860 device for buoying vessels (created by Abraham Lincoln), to the universal joint which now can be found in nearly every automobile manufactured. It became the somewhat more substantial monthly publication that we know and love when,in 1948, three partners (publisher Gerard Piel, editor Dennis Flanagan, and general manager Donald H. Miller, Jr) who were planning on starting a new popular science magazine, to be called The Sciences, purchased the assets of the then century-old Scientific American instead and put its name on the designs they had created for their new magazine.
The first issue of Scientific American
“Thus did a handful of rapacious citizens come to control all that was worth controlling in America”*…
The evolution of capitalism (“the capital AI machine”) as a series of levels that were unlocked by new “learning” APIs to humans
Consider capitalism as a highly efficient objective function (or “AI”) with its parameters optimized for the satisfaction of our short term desires rather than our long term interests.
Paranoia about runaway feedback loops – in consumer capitalism, artificial intelligence, mass media, ‘Wrestlemania politics,’ etc – ultimately stems from the inscrutability of the emergent behavior of these complex systems to the individual actors and observers operating within them.
Rather than responding with Luddite / anarchist nihilism, we should remember that technological and social systems like these have dramatically reduced our exposure to the unpredictability of the natural world and greatly improved living conditions on a number of dimensions over the past few centuries.
At the same time, we should not ignore warning signs of a dystopian future, nor should we hope that a ‘personnel change’ of institutional leaders will solve our problems.
Because the problems at hand are complex systems problems – where the root causes are not the actors themselves, but the ill-designed structures and incentives that dictate their actions – we should think about redesigning the rules and incentives of social, political, and economic systems as the path forward…
Andrew Kortina explains modern capitalism as a system– one that, for all of its all-too-manifest faults, should be saved; then he starts the conversation about how to do that salvaging: “History of the Capital AI & Market Failures in the Attention Economy.” Mildly geeky, but richly provocative– which is to say, useful, whether one buys his suggested solutions or not– it’s eminently worthy of a read.
* “Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun. – Kurt Vonnegut, God Bless You, Mr. Rosewater
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As we wonder about the water in which we swim, we might recall that it was on this date in 1933 that the Agricultural Adjustment Act came into force. A central piece of New Deal legislation, the AAA aimed to aid farmers devastated by reduced demand for their crops by creating price supports via a series of government purchases (of crops and livestock) and subsidies (essentially payments not to plant/grow).
The program was controversial in its time– it made previously independent farmers dependent on the government– but it worked; average farm income rose 50% from 1932 to 1935. It’s elements– government purchase and subsidy– survive to this day, evolved into (many of) the provisions of the Farm Bill, passed by Congress every five years or so… even though the constituency of small farmers the Act was intended to serve has largely given way to an agricultural landscape dominated by a handful of gigantic corporate players.
A Roosevelt County New Mexico farmer and a County Agricultural Conservation Committee representative review the provisions of the Agricultural Adjustment Act (AAA) farm program to determine how it can best be applied on that particular acreage
