Can we save Capitalism or should we save the world?

Capitalism has a problem. This is rather universally believed, with the main dispute being what that problem is.

For many capitalists, the problem is an image problem or perhaps a more substantial problem to do with endless restructuring & staff reductions, outsourcing, commoditisation, price competition driving down wages, declining innovation and slow profit growth. Others think capitalism is under siege – with social problems de-legitimising business i.e. businesses have lost their ‘social contract to operate’ leading to social unrest and popular movements against capitalism.

However, capitalists tend to suggest a tweeking of capitalism is required rather than a wholesale system change: i.e. there is simply a need to re-invent capitalism. At least four of these “re-inventions” are currently blossoming in the NZ context:

Shared Value - which proposes to transform social problems relevant to the corporation into business opportunities, thereby contributing to the solving of critical societal challenges while simultaneously driving greater profitability. Lion Nathan are strong proponents of Shared Value, led by their parent company in Japan.

Conscious Capitalism - which proposes that the free market capitalism is a powerful system for social cooperation and human progress; and seeks to build on the core foundations of capitalism such as voluntary exchange, competition, freedom to trade and the rule of law, by adding elements like trust, compassion, collaboration and value creation. Starbucks and Patagonia are proponents of Conscious Capitalism.

Capitalism 3.0 – which proposes a revolution in management thinking focused on "delighting customers" and redefining managerial roles, coordination mechanisms, values and communications so that everyone and everything in the corporation is oriented towards accomplishing this goal. It proposes starting from what would delight the client and focusing the entire organization on that goal. Amazon and Salesforce are said to be leaders in Capitalism 3.0.

Eco-Capitalism / Green Capitalism – which proposes that capital exists in nature as "natural capital" and market-based government policy instruments can be used to resolve environmental problems. Basically, despite the global social and ecological crisis, the capitalist system can continue to expand by changing to a new ‘sustainable’ or ‘green capitalism’, bringing the efficiency of the market to bear on nature and its reproduction. Green Capitalism tends to put the onus of solving environmental problems on changing individual life styles. The Green Party is a proponent of Green Capitalism.

The appeal of all four systems is that they do not challenge the fundamental political and economic systems we have. They provide a nonthreatening re-invention of capitalism palatable to many political and business leaders, as well as the mainstream public.

However, re-invented capitalist ideologies have four main flaws in common:

They continue to assert that endless growth can occur in a finite ecological system i.e. that capitalism can find a way to profit from the problems created by capitalism. They assume that by profiting from addressing planetary destruction, inequality and social disfunction we can somehow solve these problems. By seeking to cherry pick profitable solutions they simply create a few islands of change within a sea of issues.

They tend to ignore the trade-offs that are required between social, environmental and economic goals unless a profit can be identified. In particular, social and environmental problems caused by the corporate are simply ignored. For example, in a recent forum discussing Shared Value, Lion Nathan was asked the question of how they could say they were following a Shared Value ideology when their product (alcohol) caused such harm. Their response was there was nothing they could do about that so they would ignore it and focus on areas they could find value.

They presume compliance with legislation and ethical standards, while ignoring substantial evidence of widespread non-compliance. Basically, if you pretend it’s not happening you don’t need to factor it into your ideology. Non-compliance and unethical business behaviour are ‘messy’ to try to account for. It’s simply easier to ignore this element than to ensure corporations pay their fair share of taxes, halt environmental harm caused by their activities and respect international labour standards.

They continue to incorrectly define the corporate role in society. A fundamental flaw in capitalism is that corporations are not responsible to society. Re-invented capitalism is still capitalism – with all the same focus on profit, corporate self-interest and the tensions between capital and labour; and between capital and the environment. Re-invented capitalism does not provide us with new insight into the systematic nature of many social and environmental problems; but instead ignores the basic understanding that what is needed to avoid environmental collapse and significant human tragedy is a contraction in global use of resources.

Re-inventing capitalism is truly the equivalent to shuffling the deck chairs on the Titanic. Maximizing profit and saving the planet are inherently in conflict and cannot be systematically aligned.

Proponents of re-invented capitalist ideologies point to the reduced ozone hole over Antarctica as an example of how capitalist measures have been successful in addressing an environmental issue. By incentivising the use of non-ozone depleting products, they claim, the ozone problem has been solved. However, this example conveniently forgets the solution required an unprecedented global regulatory intervention, against industry lobbying, and the environmental improvement has taken 20 years and counting.

Addressing the even more complex social and environmental problems we currently face will require a rapid, substantial and immediate global regulatory response in the hope that in 20-30 years we may again see an improvement in the situation. This despite substantive corporate opposition to such global regulatory change – corporate opposition which is considerably stronger than in the mid 1990’s when the ozone layer was addressed.

We no longer have the luxury of incremental change or tinkering around the edges. In order to address the scale and urgency of our social and environmental problems, we need to systematically subordinate the pursuit of profit. We need to abandon capitalism.

There is no capitalist solution to our ecological crisis.
Either we save capitalism or we save the humans. We can’t save both.

System Change not Climate Change
Lavinia SA


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