What is Wrong With Capitalism?

(from "Greenspan's Anguish -- Thoreau As Economic Prophet and other Essays"; by James Eggert; copyright 2013; Green Dragon Books; ISBN (paperback) 978-1-62386-000-4)

Despite its materialistic virtues, something's amiss in the Land of Capitalism. In addition to equity and justice issues, there is also a destructive quality in capitalism that often violates the ecological laws that can and should ensure life's beauty, balance, its health and long-term continuity.

To search for that undermining quality, let us pretend for a moment that you could literally pick up market capitalism as if it were a flawed gemstone. Now place that stone in the palm of your hand and, turning it over and over, inspect the gem for defects, fissures and possible flaws. First, what would be the economist's perspective? Now angle it slightly differently. What would be the viewpoint of the ecologist? And finally, is it possible to look at capitalism from a prairie's perspective, or say that of an old-growth forest?

ECONOMIST'S PERSPECTIVE

Economists do acknowledge capitalism's imperfections, often describing these defects as "market failures." These include the many unintended impacts ballooning up beyond regular business costs into what are called "externalities," where both consumers' behavior and profit-making may have harmful spillover effects that all too often damage human health and landscapes, degrade water and air quality, endanger plant and animal species and possibly, over time alter the very stability of Earth's climate. What's the remedy?

Corrective measures will most likely require government intervention to scientifically verify damages. This is necessary to initiate tax policies such as a "health" tax on cigarettes and a "green" tax on harmful emissions. it is also necessary to set more precise standards on pollutants like automobiles, coal-fired power plants, and municipal water supplies, and/or for the enforcement of strict energy efficiency standards (light bulbs, refrigerators, air conditioners). These are just a few examples of environmental regulations that have generally been accepted by the public in most industrial countries. Other areas of intervention include the trading of pollution credits and the enforcement of endangered species laws, as well as negotiating global environmental agreements (whaling, chlorofluorocarbons, CO2) enforced by protocols, regulatory oversight and international law.

Conceptually, all of these measures can be understood in the context of motivating businesses and consumers to pay the full, direct and indirect costs of their economic activity, including the costs of collateral damages to natural and human environments. Simply put, it's a fairness issue — playing the "capitalist game" fair and square. Let's take a minute to examine a way the "economist's perspective" would, hypothetically, tackle a common urban pollution problem, childhood asthma.

According to Physicians for Social Responsibility (PSR), the number of childhood asthma attacks is on the increase and at least to some degree, these attacks are exacerbated by truck and automobile pollution, including elevated ground-level ozone. Thus, armed with the PSR data, I approached a friend who's was a state lawmaker asking if he could consider initiating a modest increase in our state's gas tax (say, one cent per gallon) earmarked not for the usual highway construction and maintenance, but to try to mitigate the damages and costs of urban pollution, perhaps even to reimburse families for asthma-related expenses. I told the representative that I was upset because I was paying too little for my gas; indeed, from an economist's perspective (and moral perspective as well) we should all be disturbed that we were not paying our fair share of the spillover effects of our driving. Put another way, I asked him, "Why do we force families with chronically sick children to subsidize an artificially low-cost transportation system?" An increase in the federal and/or state gasoline tax would be a good beginning — a step towards a fair, full-cost accounting to help pay for the expensive health cost side-effects of automobile transportation.

Any increase in fuel prices, whether through market forces or a pollution tax, will indeed create some hardships for drivers, but there will be other benefits, too, including cleaner air and, as economists predict, fewer traffic deaths and injuries. Also with higher gas prices, there will be greater incentives to invest in biking and walking trails. Indeed, walkers and bikers in some cities have already pressured local governments to promote more walkable and bike-friendly neighborhoods. Whereas Atlanta is infamous for its un-walkability, Portland, Oregon, is at the other extreme with some sixteen pedestrian districts where street design, sidewalks, and traffic laws give the pedestrian priority. Additionally, in Davis, California, bikers enjoy safe, dedicated bike lanes on most city streets. Moreover, developers in Davis are required to provide bike access to new residential and commercial development.

A pollution tax would also encourage more carpooling and, if available, greater use of public transit. Not only would urban children breathe easier, but trees and wildlife would as well, while in the long run it would also reduce CO2 emissions and help stabilize the climate. And finally, if truckers and automobile owners paid their full direct and indirect costs, it would begin to reduce road congestion while diminishing the political pressure to widen roads and highways, thus minimizing damage to local communities and to the landscape.

Of course, this economists' perspective — even with good science, economic logic, and sensible remedies on its side — is usually no match for well-funded special interest groups. In the case of increasing gas taxes for legitimate spillover costs, the powerful highway, oil, and automobile lobbies will often block legislation that would, as they see it, "harm their industries." Indeed, in response to my gas tax suggestion, my politician-friend told me, "I understand your point, and yes, I agree with you," but then added, "Jim you'd better forget about it. Politically, it ain't going to happen."

ECOLOGIST'S PERSPECTIVE

I dream of a day when parents, politicians economists, CEOs, bankers, mining and logging companies, and others, make their decisions based upon an authentic ecological consciousness, including an understanding and full appreciation of a broad spectrum of environmental values that allow ecosystems to be sustainable, healthy, and whole.

As an example, consider the issue of logging an old-growth forest, such as the very few that still exist in the U.S. In what ways would the ecologists' perspective differ from that of a for-profit capitalist? To answer this question, I find it helpful to picture in my mind an image of a playground teeter-totter that has basket at each end. One basket represents strict capitalist, for-profit values and the other represents the universe of ecological values. Now pretend that you were placing weights represent the different set of values in each of the baskets. What would you place in the Capitalist's Values Basket?

Benefits might include:

• The monetary value of wood products (including export earnings); incomes for loggers truckers and sawmill workers.

• Increased sales for equipment, including manufacturing jobs.

• An increase in each of these companies' short-term profits.

• A short-term increase in corporate stock prices, adding value to stockholder portfolios.

Importantly, from a for-profit point of view, there would be pressure to maximize all of these values in the short-run by clear-cutting the forest.

Now turning our attention to the other side (ecological values), what representative weights would you put into the Ecological Values Basket?

In some old-growth forests, such as the Menominee Indian Reservation in Wisconsin, the tribe has been engaged for many years in logging, which provides some modest economic benefits while also maintaining their forest's original ecological makeup generation after generation. The Menominee remove a relatively small portion of the forest each year using sustainable management principles, which, in turn, incorporate selective cutting based on cultural constraints laid down by tribal elders over a hundred years ago. With this selective cutting strategy, there is some monetary value gained from lumber, logging, sawmill jobs, and some export profits. The return in the short run is modest compared to clear-cutting, yet over many years, income would be relatively stable.

In addition to these long-term economic benefits, you might now add the following weights representing a broader array of ecological, scientific, and spiritual values:

• A habitat for endangered plants and animals.

• The maintenance of a "living classroom" enabling students and scientists to study a health ecosystem.

• A source of beauty, inspiration, and spiritual sustenance.

• Healthier rivers, streams, springs (compared to a clear-cut forest).

• Old growth forests protect and create new topsoil, prevent excessive run-off of rainwater and helps recycle nutrients more efficiently than clear-cut forests.

• Old growth forests sequester atmospheric carbon which helps stabilize the Earth's climate.

Tropical old-growth forests, in turn, can provide a sustainable supply of nuts, berries, valuable barks, tubers, mushrooms, and plant-medicines for those who know how to find them. From an ecological perspective, these forests are, in a sense, rolling up their sleeves as they work hard to provide invisible, yet important benefits, or so called ecological services, based on the productivity of the forests' intrinsic natural capital.

When we compare the weights on one side with the other, the Ecological-Values Basket should easily outweigh the Capitalist-Values Basket. Yet, in our current global economic environment involving ultra-powerful forces of profit, propaganda, political corruption, and an obsession with unfettered free trade, we find that the Capitalist Basket almost always wins out. It's as if the global economy were defying gravity as well as other vital laws of nature.

THE PRAIRIE'S PERSPECTIVE

If I were asked to pick an analogy from which we could learn some essential principles for a future economy, my choice would be a native prairie ecosystem that I walk by nearly every day. Some, of course, might think the analogy a little odd, it's not exactly global free-market capitalism, but more a living example of what might be called local natural capitalism. Indeed, this prairie has become a mentor for me, as if it were trying to teach its lessons to a slow-learning, yet earnest economics student. Over the years, I've discovered that this flowering grassland is not only attractive but exceptionally diverse and, like a model sustainable economy, remarkably productive — turning sunbeams, minerals, and carbon dioxide into biotic beauty and eventually converting its plant material into rich, deep, loamy soils.

In addition, this prairie ecosystem has achieved something quite amazing: an exquisite balance between life and death — humming along year after year, in a kind of steady-state "economic" efficiency. The prairie recycles virtually everything and unfailingly blooms anew, spring after spring and every summer too!

Prairies are resilient in severe drought, yet they can also handle a week of drenching rain. Moles, monarchs, and meadowlarks survive there. Blue stems and Indian grasses live in the prairie, too, as do black-eyed susans, purple prairie clovers, stiff goldenrods and late summer blooms of purple blazing stars.

Sometimes I enjoy lying down in the prairie, accepting gravity as it were, my back stretched out along the rough ground, my eyes taking in sunlight, clouds, flowers, seedpods — and there, high above, tufts of grasses bending down and up, up and down, as if there were an invisible ocean of windblown waves.

So one might ask, "what direction and what trajectory can we follow toward a more natural, more balanced capitalism?" Can meadowlark values readjust and redress capitalism's spillover effects and correct its corrosive externalities?

Can we conserve — as if an ecological consciousness were our second nature — our planet's plants and animals, its grasslands, soils, ancient forests, subterranean waters, its oceans, rivers, and reefs?

Like the native prairie, can we find a more harmonic, natural, equilibrium abounds in beauty, balance and biodiversity? And finally, can we use renewable energies and make our economic production more durable and fully recyclable while preserving Earth's realms of amazement and its landscapes of surprise?

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LeAnn R. Ralph is the publicist for Professor Eggert