The two problems of capitalism and technological growth

Capitalism is basically a system based on a combination of property rights, private ownership, and various legal mechanisms that allow people to exchange goods and services for other goods and services and money.

Capitalism has two large problems. The first is that a capitalistic and market-based system does not take into account the commons, and the destruction of the commons to grease the wheels of the markets is referred to as the “tragedy of the commons”.

Tragedy of the commons

The tragedy of the commons happens when individuals take advantage of the free resources provided by the earth, such as water, and sell it later. Since nobody owns it, it gets used up very quickly for a profit and then the resource is destroyed. However, plants and animals that used the water for free no longer can use it, and hence it is a tragedy.

The tragedy of the commons can be partially solved through regulation, but regulation is typically very slow and so everywhere, even now, we are experiencing a massive tragedy of the commons: the decimation of the global ecosystem.

Capitalism’s second major problem

Capitalism has a second major problem in modern society that explains the tragedy of the commons and works in conjunction with it: trade happens according to short-term gains, and it ignores the long-term consequences. For example, consider a city in which there is a beautiful park with many native trees and wild animals.

Suddenly, a business comes along and offers to destroy the park and place their headquarters there. In return, everyone in the town gets a job and gets paid a lot more than they did before. They readily accept, because now that they have more money, they can drive 50km away to another park. They still get to experience green space, but they can no longer walk to it. At first, this seems like a good trade.

This does exemplify the tragedy of the commons, because the commons has been destroyed to create more wealth. However, there is another serious problem here. At first, the people may be happy to drive to the farther park. But then they realize that the driving isn’t all it’s cracked up to be. Moreover, the city starts to smell worse. The citizens get older, they want to drive less, and now they’re longing for the park that they could once walk to.

Free, unregulated trade in this case has created wealth, but has made the world worse because the people of the city didn’t really know what was best for them. Of course, the new wealth also benefitted some people more disproportionately than others, like the CEO of the new company. That CEO can now retire close to the farther park and enjoy the good life, while the citizens of the city have to suffer. Their children, who many not have made the trade at all given that they know the long-term consequences, suffer even more.

In this case, the basic features of capitalism created wealth due to the short-term instincts of the people, but in exchange for making the world worse in the long term. Capitalism does this, especially when it operates on a global scale where the participates are highly anonymous. It is directed specifically by short-term instincts, which are often wrong.

Unfortunately, a good proportion of the time, the trades within our modern capitalistic world only take into account the short-term, and the cost must be shouldered by future generations, who do not have a say in the trade: using cheap plastics, fossil fuels, rapid economic growth creating e-waste, overfishing for cheap food, and hundreds of other examples.

One might say the answer is regulation as well. However, regulation is simply too weak to change our planet around. Regulation today happens within a legal and economic framework that fundamentally glorifies economic growth. Regulations must be made as long as they don’t stifle growth too much.

A new form of regulation

Instead, we need a new form of regulation, in the form of global policies that explicitly look at economic and technological growth as a bad thing, and instead focus on various variables of sustainability. The mechanisms for this must be multifaceted, and they must trascend the traditional legal and economic frameworks of the world.

In order to do so, there are a few strategies that we must use. I will just talk about one: the formation of new coalitions of individuals that follow a code of ethics and principles devoted to sustainability. Such a coalition must grow to sizable numbers, say on the order of millions of people.

If such a coalition existed, its priciples would be based on countering economic growth. How would they do this? By creating a sustainable economy within themselves so that newer technologies are not needed. If the rules are continuously developed and evolved so that the coalition grows, then the current economic system would slow down and die.

The fundamental principle of such a coalition would be a very cautious approach towards new technological development. Since we now have a lot of experience with how advanced technology changes the world, we could use it to be more accurate in our long-term assessments of such technology.

In situations where advanced technology brings short-term gains but has a high chance of bringing long-term problems, then that technology would not be developed.

Of course, we are wired for growth, but that does not mean we will be deprived in this new world order. Heather Heying and Bret Weinsten make a good case for this in their book “A Hunter-Gatherer’s Guide to the 21st Century”: if regulation is done right, then it can actually be freeing. For example, a lack of technological growth means being less overloaded with new information and new ways of doing things, and having more time to develop more genuine ways of connecting with other people.

Conclusion

Although once adaptive, our instincts for growth and improvement have now become maladaptive due to our increased power via technology. The traditional and relatively decent idea of trade has exploded into the global, capitalistic phenomenon of endless growth that now largely propels itself without being highly directed by individuals.

This phenomenon is now driving us to the precipice of destruction, and we must find a new way to dismantle our current economic and technological system in order to survive. By creating new coalitions and harsher regulation, as well as a society less dependent on technology, we have a chance of avoiding the worst of the catastrophes, though of course suffering is now inevitable due to the negative karma we have created by killing so much of our biosphere.


All my posts are written without AI. Feel free to download and copy this image to support the fight against AI!

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