What matters ?

At the root of the current climate crisis are the orthodox values inherent in contemporary neo-liberal consumer capitalism. What is needed, therefore, is a paradigm shift of economic value.

According to these values, humans, and the companies they form, are motivated solely by the need to acquire ever increasing amounts of financial and material wealth, that progress is measured solely according to financial and material criteria and that ‘markets’ are the most efficient way of allocating resources and wealth within society. It has become apparent, however, that these ideologies are advanced by people or agencies which stand to benefit most, according to narrow orthodox criteria, from these systems – at the expense of those who are less able to compete in the fierce, callous markets they extol. 40 years of neo-liberal orthodoxy has therefore resulted in increasing levels of inequality, both within developed societies / economies and developing societies / economies. Central to the operation of the neo-liberal model is the externalisation of social and environmental costs, most glaringly in the emission of the green-house gases that drive climate change.

The concentration of financial wealth in the hands of a new class of billionaire ‘oligarchs’ has brought a parallel concentration of political power in the hands of their client politicians and the broadcast and print media they own or control. They deploy this wealth and power to reinforce and perpetuate the economic and cultural systems from which they benefit, obstructing and resisting change, putting the health of the climate on which we all depend for our survival and prosperity at grave risk.

Clearly, therefore, the core values underpinning our economic and social systems are urgently in need of change. We must rethink what is valuable and we must create and sustain new media through which the necessary discussions can take place.

Leading thinkers such as Richard Layard, Tim Kasser and Oliver James, and think-thanks such as The New Economics Foundation and the Wellbeing Economics Alliance have argued and observed that a new set of values and criteria must be used to measure ‘progress’, ‘wealth’ and ‘development’. According to these, it is the happiness and wellbeing of the people that is of paramount importance and that acquiring ever increasing amounts of financial / material wealth, once a certain level of comfort has been achieved, is not a path to increased fulfilment or happiness. We therefore urgently need to move beyond obsolete concepts such as Gross Domestic Product that take no account of inequalities within states, or the social or environmental costs incurred, as a means of measuring ‘growth’. Instead, new ways of thinking about and measuring economics must be embraced.

Rather than embrace concepts such as ‘degrowth’, or the abolition of capitalism itself, that are popular in certain ‘anti-capitalist’ circles, therefore, it is perhaps more constructive to suggest that what is needed is a reappraisal of what kinds of growth are valuable and important and what instruments can be used to generate them.

Of course parallel to this must be the realisation that the relentless exploitation of people and the environment in the name of material and financial growth, to the benefit of the very few at the expense of the many, has to stop.

Does the end of this ‘relentless exploitation’ require the abolition of ‘capitalism’ and, if so, what are we to replace it with ?

This perhaps depends on how we define ‘capitalism’.

According to popular definitions, ‘capitalism’ is defined as an economic system characterised by :

  • Most means of production are privately owned.

  • Production is guided and income distributed largely through the operation of markets.

  • Individuals have a considerable degree of agency in making choices about their economic activities.

  • Individuals and companies compete amongst themselves, bringing about innovation and progress.

  • Human economic activity is motivated largely by the desire to generate financial profit.

  • Companies, which have legal personhood, raise investment finance by issuing shares to shareholders.

  • The dominant, legally enshrined, obligation of a for-profit company is the maximisation of shareholder value and to generate a high ‘return on investment.’

  • The exchange by ‘workers’ of labour in return for a wage – ‘wage labour’.

The classical alternative to ‘capitalism’ is ‘socialism’ defined as :

  • Public rather than private ownership or control of property, the means of production and natural resources.

  • Individuals do not, or should not, live or work in competitive isolation but live in cooperation with one another.

  • Everything that people produce is in some sense a social product, and everyone who contributes to the production of a good is entitled to a share in it.

  • The state has a powerful role in making decisions on behalf of society, with a subsequent limitation of the freedom of choice of individuals.

In practice, there are different ways in which both capitalism and socialism can manifest, both in practice and in theory, such that understandings of both need to be nuanced, to reflect the complexity, rather than simplistic.

Anglo-Saxon manifestations of capitalism are different, for example, from north-west European ones. The former might reasonably be described as neo-liberalism capitalism, whereas the latter perhaps are ‘social democratic’ capitalism. The role of the state, in both owning, controlling or regulating the private sector will be different, as will the cultural values of the people. Levels of what many consider to be the inevitable consequences of unfettered capitalism, such as poverty, inequality and environmental degradation will similarly differ as will levels of happiness and wellbeing. Similarly, capitalism is not a static phenomenon, but is a system that has been in constant evolution since it emerged. 21st century north-west European capitalism is different, for example, in nature from 18th century capitalism. We must therefore adopt a historically nuanced understanding of the system, which might allow for its continuing evolution influenced by the social and environmental priorities of our time.

Similarly, with socialism, opinion differs as to what form it should take. One area of contention is the extent and the kind of property that society should own or control. Some socialists have thought that almost everything except personal items such as clothing should be public property. Other socialists, however, have been willing to accept or even welcome private ownership of farms, shops, and other small or medium-sized businesses. The second disagreement concerns the way in which society is to exercise its control of property and other resources. In this case the main camps consist of loosely defined groups of centralists and decentralists. On the centralist side are socialists who want to invest public control of property in some central authority, such as the state—or the state under the guidance of a political party, as was the case in the Soviet Union. Those in the decentralist camp believe that decisions about the use of public property and resources should be made at the local, or lowest-possible, level by the people who will be most directly affected by those decisions.

Advocates of a more fundamentalist form of socialism, which will entail the abolition of all forms of private property except for minor personal items, the transfer of economic choice and agency away from the individual to the state, the abolition of the profit-making company of wage labour as the means of generating and transferring value in favour of state control, must convince us that these systems are compatible with current stages of human motivation and development and the extent to which the credibility of such systems has been irredeemably compromised by the experience of 20th century totalitarian communism in the Soviet Union and elsewhere.

So, perhaps an initial conclusion might be that approaching a discussion of economic systems in stark, binary terms of capitalism v socialism is not helpful. A more nuanced approach will entail an appreciation that some elements of capitalism – those that create ‘wealth’ and prosperity (about which more below) will need to be retained, whilst some elements of socialism – particularly those that ameliorate the more harmful effects of capitalism.

A cultural, spiritual exploration of human motivation and values.

At the root of any discussion that seeks to address the contemporary ‘crisis of capitalism’ must be a discussion of human motivation and value – what do we mean by ‘wealth’, ‘progress’, ‘development’ or ‘prosperity’. Is it a valid assumption to conclude that merely because under some capitalist systems, the maximisation of individual financial profit at the expense of social or environmental concerns has been the dominant motivator of people and corporations ? Are humans fundamentally greedy and selfish or can they, under certain circumstances and when influenced by certain cultural, spiritual forces, embrace more considerate and caring behaviour ?

Once we embark on this journey of cultural discovery, we find that the things that generate the kinds of growth that increase happiness and wellbeing are, fortunately, those that are not energy intensive, do not inflict unaffordable and unsustainable environmental costs but actually entail the creation of a kinder, more caring society. Family, community, reconnecting with nature, the arts, sports, personal development, spirituality – these are all avenues of human fulfilment that are significantly more ‘productive’ in happiness and wellbeing terms than the relentless acquisition of energy intensive material possessions that people are taught to want to alleviate their status anxiety.

A more nuanced approached to the discussion of economic systems, therefore, might appreciate that there are certain aspects of a ‘capitalist’ economy we might wish to retain, such as a considerable amount of property remaining in private hands, the ‘profit’ motive and wage labour remaining as important, though not the sole, motivator of economic activity, and companies issuing shares as a means of raising investment and sharing benefit.

To counterbalance the effects of more extreme manifestations of capitalism, such as the neo-liberal versions currently in place in the Anglo-Saxon world (and exported internationally through globalisation), we need a strong, democratic state using innovative instruments such as a Basic Income Scheme, Jobs Guarantee Scheme, enshrining Enlightened Shareholder Value into company law enforced by strong governmental bodies such as the Environmental Protection Agencies to re-internalise ‘externalities’, properly resourced tax collection agencies to crack down on corporate and oligarch tax evasion and strong Trade Unions to demand better working conditions for the workforce and fairer levels of remuneration.

Alongside the implementation of these new technical instruments, we need a discussion of new concepts and values which underpin our economic systems – reappraising the role new ways of measuring economic progress and ‘growth’ beyond narrow GDP, exploring how our relationship with ‘work’ needs to change in an era of ever-increasing automation, how we need to strike healthier balances between prosperity in financial / material terms and in happiness / wellbeing ones, and how we can apply these new concepts to create a form of Ecological Capitalism fit for the 21st century.