What do you think about capitalism?
Simply put, classical capitalism is no longer workable or sustainable in the modern world. That is not an opinion. It is a fact.
Classical capitalism, also sometimes called Laissez-faire capitalism, is beautiful in its simplicity and understanding of one basic aspect of human nature. The theory argues that people are fundamentally greedy and their greed will ultimately produce public good. Because I am greedy for your money, I will produce a product or service for which you will pay me. I get your money, you get a product or service that makes you happy. Everyone wins.
There is another aspect to capitalism though. Economics is the study of how a world of limited resources deals with unlimited demand. No matter how much I give you in goods and services, you will always want more. Consumerism is at the heart of capitalism. Although every capitalist nation has outlawed the Ponzi scheme, in some ways capitalism itself is a great Ponzi scheme. The system is dependent on more consumers demanding more goods and services, buying more, and consuming more. Demand is unlimited.
However, there is the other part of that equation, that the supply of resources is limited. As long as we had a few capitalist (and wealthy) nations, such as the North American countries, Western Europe, and Japan consuming the resources and making use of the labor of the rest of the (poor) world, everything worked fine.
However, what happens when the 1.4 billion people of China and the 1.3 billion people of India and the combined 1 billion + people of Indonesia, Brazil, Pakistan, Nigeria, and Bangladesh want the same good life that folks in New York, Paris, and Tokyo have?
Is capitalism ready and able to provide them all the gadgets, do-dads, luxuries, or even basic necessities of the current industrialized world?
No, because the planet is a giant shopping mall with shelves that are increasingly becoming bare. We just don’t have the resources to give everyone the life of those who live in the industrialized wealthy nations. If everyone in the world lived like the French we would need 2.5 earths to give them everything they wanted. If the entire planet lived like Americans we would need 4.1 earths to supply their consumer demands.
Anyone who wants to argue for a hands-off, profit driven, capitalist system of the kind that did indeed work well for the U.S. and industrialized West for the 20th century, must explain how will will meet the demands of a growing, modern, industrialized world population. Since it is apparent that we cannot create anymore earths, the inevitable result of such a system is a world of a tiny number of halves and a huge population of have-nots.
As a citizen of a country of haves you might be willing to accept the immorality of that system, but I guarantee you that such an imbalance won’t end well for anyone.
Just ask these two.
There is another problem created by the success of 20th century capitalism. This striving to get your dollars/pounds/euros/yen means that producers are always looking for ways to make their goods and services better and cheaper. That is why the first mobile phone, the Motorola DynaTAC 8000…
…cost $3,995, weighed 1134 grams, and was only good for talking, but this (Samsung Galaxy S9)…
…cost less than $600, weighs 163 grams, and can perform open heart surgery, while composing a symphony and separating your colors and whites.
So, what is the problem? Better products at a lower cost. What’s not to like?
The problem is that the quest for better, faster, smarter, cheaper is leading to ever increasing automation and the use of robots to do the work once done by people. One study found half of all U.S. jobs are in danger of automation in the next two decades.
Capitalism is fundamentally dependent upon consumers, well…consuming. This presupposes a living wage. No job = no money = no consumption =no capitalism. Some people argue the answer is a guaranteed minimum income.
It is hard to imagine that idea seriously catching on.
So, with jobs uncertain and resources unavailable for everyone to enjoy the consumer lifestyle, it is obvious that 19th century or even 20th century capitalism is an impossible economic system for the people of the 21st century.
What kind of economic system the world can sustain and will serve humanity best in the 21st century, with a population expected to exceed 11 billion by the end of the century? It is obvious that the 18th/19th century system of capitalism is unsustainable in the modern world. The other 19th century idea of Marxist socialism (which is not the only kind of socialism), has proven to be not only a failure in every country where it has been implemented, it has also result in totalitarian, repressive regimes that have killed between 65–93 million people.
I think our discussion of an economic system for the 21st century must begin with two basic questions: 1) How do we guarantee that all people of the world are allowed the same opportunities for life, liberty, and happiness that Americans so value, and, 2) in a world of limited resources, how do we fairly divide those resources, while living sustainable lives that will ensure future generations also have the same opportunities we have?