A Toast to Capitalism--And Now Junk It

David Brooks: defender of capitalism & yet conservative

I want to take up David Brooks’s challenge set forth in his column “Two Cheers for Capitalism”. But let me first state my opening position:

Capitalism is the best form of economic system—ever. And it needs to be replaced. Starting now.

Brooks argues in defense of capitalism that its better than socialism. He doesn’t use the word “socialism”, but it’s implied when he writes “government planners are not smart enough to plan complex systems”. True but trivial. Centralized planning as an alternative to markets lost long ago. No serious commentator wants to restore central planning.

Brooks ignores the extent that business and government are  intertwined in early 21st century consumer capitalism. We delude ourselves in believing that mainstream economics, which provides the intellectual infrastructure for capitalism, could ever escape political economics. An economy is always nested within political and cultural systems. The most important intertwining of politics and government in the U.S. today has to do with regulatory capture, not regulatory restraint. Big government today is controlled by Big Money. Big Money includes individuals (yes, think Koch) and aggregates (trade organizations, corporations, etc.). Adam Smith, the intellectual godfather of capitalism, pegged it when he observed that when two or more merchants meet, the conversation would inevitably turn to restraint of trade. We could add "politicians" to any merchant or private interest, and we'd get the same effect. This happens--often--and we ordinary folks suffer for it. (For an enlightening—and frightening—discussion of regulatory capture and flaws in economic thinking, read Dr. Robert H. Lustig’s Fat Chance: Beating the Odds Against Suger, Processed Food, Obesity and Disease (2012) (review forthcoming)).

Brooks is correct that capitalism has lifted more people out of poverty than any time in history. As one currently living in China, I see proof everywhere of the power of consumer, market capitalism (for good and ill). But will it last?

Here I come to my greatest critique of contemporary capitalism: can this ride last? I do not (now) fear the backlash of resentment that growing inequality can spawn. Only a little of this has occurred yet. Humans are not the biggest challenge to the system, although this could change quickly. Rather, Mother Nature is the ultimate judge of capitalism.

I know that you’re thinking, “Yea, yea, and you forget the Ehrlich-Simon bet and how Ehrlich lost it—big time.” No, I don’t. Ehrlich lost within the time frame set for the debate, but Mother Nature doesn't recognize such puny time frames.

Every economic system extracts energy from the environment and returns entropic waste. Contemporary capitalism and its civilization do this more effectively than any other civilization. According to Dr. Joseph Trainer, Dr. Thomas Homer-Dixon, Dr. Jared Diamond, and Dr. William (Patrick) Ophuls, among others, no civilization has escaped the limits of the environment and entropy. It’s a social and environmental-economic challenge that capitalism has met better than any other system by using industrialization, rationalization, and technology. But no system—not even contemporary capitalism—can negate these limits. We’ve known about these limits in the form of global warming from dumping waste into our environment for over 20 years, but we've attempted to ignore it. Even the Pope, head of an organization not known for its embrace of cutting-edge science, has recognized the problem. (Pope Francis and his predecessors have long-recognized the corrosive social costs of capitalism.)

John Stuart Mill wrote about the need for a steady-state economy in the mid-19th century, well ahead of his time. We need to address these issues now. Endless acquisition and endless growth don’t square with the limits placed upon us by the natural world—the world of our atmosphere, our oceans, our lands, and our societies.

The hope I have is not for a revolution (or  rather only one seen only in the rearview mirror in slow motion). Nor am I a Luddite. Rather, we need to improve our lives by using what we have, consolidating our gains, and re-thinking some of our fundamental beliefs. This will be an immense challenge, but it’s a project that conservatives, like David Brooks (to the extent he’s really a conservative), should embrace. Not the factory, but the garden should serve as our guiding metaphor: we prune and graft and cultivate with the seasons, we don’t lay waste and move on. This is how capitalism must become something new. If grafted and cultivated along with democracy—real democracy—it could become something of lasting value.