Neo-liberalism is accelerating the death of global capitalism. Its demise was inevitable. Capitalism is simply unsustainable – even if the world’s population wasn’t growing at a nearly exponential rate.
Things become clearer when one distills the issues to their basics. Call this the Six Cs of Economics as we compare and contrast two opposing economic ideals – that of Capitalism and Communism.
First, to get something out of the way, it has long been a habit of those in charge (likely an intentional distortion) to confuse what can be called political systems – how laws are created and carried out in society – with that of economic systems – or how wealth is distributed in society. Of course, a good example of this is setting “democracy” against “communism”. Democracy is a political system and not an economic system. Communism is an economic system and not a political system. It is awfully convenient for the proponents of capitalism to lump capitalism (an economic system) into democracy and tout its relationship with freedom while associating communism with totalitarian regimes like the Soviet Union or Red China.
What we are addressing here, for the time being, are economic systems – specifically two: Capitalism and Communism.
So let’s look at these opposing systems of wealth distribution. Capitalism is a Consumption-based system that relies on the consumption of goods and services to work and to work well. The more people are consuming, the better the system is working. The consumers, who are the workers, are employed making goods and providing services and have enough capital to keep the system going by using their capital to consume goods and services. Capitalism needs brisk business and this means a high level of consumption. The consumption of goods naturally involves the consumption of resources as well.
If consumption levels are down, then the system is suffering and people are doing less well. One of the long-time challenges of consumption is that it increases costs over time and this is something that economists have termed the “inflationary spiral”. A consumption-based system will steadily decrease the earth’s supply of precious resources as they are consumed, so the system increases the scarcity of goods which increases their costs. The costs of services follow the ever increasing rates of inflation.
Here we can get into some basic supply and demand – decreasing supplies increases the cost consumers are willing to pay, so demand increases as goods become scarcer. An important and related side note, though, is that increasing supplies is a crappy way to create demand – demand is what fundamentally drives supply or it is market forces that create real opportunity in a capitalistic system (something “supply-siders” want you to completely miss).
Another important point here is that Capitalism succeeds as demand is created. The more demand, the more consumption, the more business is booming, so if one can make something that people didn’t know they needed and make it so they can’t live without it and you’ve successfully tapped a new market. That’s consumption at its best as it feeds into the Consumption based system and keeps the economy going strong.
A Consumption system erodes the planet earth. It has brought us to the brink of ecological disaster, so if the success of neo-liberalism hadn’t brought capitalism to its early demise, the ecology probably would have taken care of this first. A Consumption-based system is systematically contradictory to a Conservation approach to an economy and to the environment.
Communism is indeed a system calling for real Conservation. There are no forces driving consumption, but human needs create demand and supply meets that demand and can regulate supply based on this relatively modest demand. So Communism keeps consumption and the cost of consumption (inflation and ecological destruction/deterioration) in check. The primary driver of Communism is Conservation – the less that is consumed, the less cost to society, to the economy and to the environment creating a healthier overall society.
Simplified – one system winds itself down and is utterly unstainable on every level including on the economic level and the other system is the only model that is ultimately sustainable.
So that leaves us with two more Cs to cover and again these are forces in opposition. With Communism there is Cooperation. The system relies on the Cooperation of its citizenry to efficiently meet needs’ demand and create supplies that meet those demands while optimizing Conservation. This is a highly efficient and, in the macro-scheme of things, very cost-effective. Everyone works together as one unit to meet the needs of the globe’s citizenry.
With Capitalism, you guessed it, we have the 6th C: the much lauded Competition. This is where numerous (the more the better) organizations vie against each other to meet demand. Unlike a system based on Cooperation, this is highly inefficient and further drives up costs, waste, consumption and, in the end, this works to damage the environment in its inefficient consumption and production. Product, service and brand marketing itself all become a source of consumption and add to the system’s overall inefficiency.
As social Darwinists argue, Capitalism is aligned with the “state of nature” or the “natural condition of mankind” – like the “natural” competition one finds in Hobbesian nature. World markets, in turn, are “free market” economies of competition as no one nation can establish its own set of rules governing trade otherwise. This feeds into the status of nation-states and the various issues that competition manifests – poverty, winners and losers, wealth inequities, war, terror and many of our worst global woes.
Capitalists argue that competition is necessary to drive innovation, but this seems to be another empty argument of those wanting to maintain the current hierarchies of power. Most of us have come to realize that the best progress and innovation actually comes from collaboration – which is a much less cynical argument about modern humankind, of course.
It seems very apparent that humanity would do well to alter its present course and use a system that embraces collaboration and Cooperation over Competition. On this planet with booming population growth – something mostly attributed to global Capitalism with its wealth disparity resulting in vast swathes of poverty and under-development – and dwindling natural resources, we can either compete or cooperate. One path is most certainly leading us to doom – nuclear annihilation or ecological disaster, while the other path appears to be our only hope for salvation.
This post originally appeared on the Reveille website on August 7, 2017 and is slightly revised here.