Is Capitalism Sustainable?

Question

This is long, but please go through them all. And yes, there's a question for you at the end answerable only after you're clear of what this long essay is about.

Everything is about demand and supply. In order for a company to have sustainable growth, it must either increase production (thus increase sales, hopefully) or reduce costs (including human capital by substituting it with the latest technologies) or both.

Imagine if all the companies around the world succeeded in doing both, then it will be super high productivity and mass unemployment (or underemployment). When this happens, how in the world will the market be able to pay for all the excessive products/services when most are either unemployed or underemployed and thus can't afford much?

Governments will of course introduce new projects to stimulate growth and employment but I believe these new projects will still be futile because the modern consumerism is self-created (not natural) and has the tendency to break down. Next, banks can create economic spending by giving out easy credits that make a lot of people bankrupt, which is also equally unsustainable.

Progress is there to be seen but it's only at certain places, not every places. When a country or a company grows, it grows at the expense of others. Introducing more money into the market merely increase inflation that leaves a lot of people at disadvantaged. More loans merely create more debt that leads to recession.

In the end, when it's all about growth, I really don't think capitalism is sustainable because one's gain is another's loss. Of course everyone can win, but that'll be illusory by splitting the value of $1 to $0.5 by increasing things from $1 to $2, for example, to create the illusion of growth. The current capitalism is about substituting resources with money. But this is wrong. While money can't be depleted through constant credit creation, a majority of the depleted natural resource can never be replaced.

Capitalism is where the society exist to serve the economy, not the economy to serve the society. We see a lot of advertisements promoting new demands (harmful and unnatural demands) to stimulate sales and growth. In the end, the richer one group gets, the poorer the other group. Equal wealth distribution is critical. This is to eliminate rich-poor gap between people. But if everyone prefer only to uphold the status quo, motivated by selfishness and greed, then sooner or later the economy will come crashing down without revival. By that time, a lot of resources have gone to waste. My idea is this - the world can only survive (in the near future) by abolishing the economy, making it serve the society instead of the other way around, eliminating unequal wealth distribution (making everyone equally as rich/poor as another), and reforming our current system of living without working (by replacing every human capital in production with technologies). Other than all these, life will never get better. People in turn must change themselves to be cooperative, not greedy, and work not because they have to but because they want to contribute.

Now, I want to hear your opinion.

NOTE: There's a high possibility that I'll respond to answers I feel doubtful here, as addition.

mohamedjihad...: You're using "small" picture to represent the bigger picture as if everyone is a winner but economic history has repeatedly shown otherwise.

Zak: You misunderstood me when you talked about big government. I don't ask for big government with fair handouts. In fact when inequalities are abolished, no government will ever be needed. Please re-read my essay again. It's about the economy.

rjf: Just because I am anti-capitalism doesn't mean I am pro-communism. In fact, I don't think I made any statement promoting communism in my long essay. People have this idea that it's either capitalism or communism and nothing else. I just happen to believe there's a 3rd way out.

Kevin M:
- So far the only 2 ways of creating wealth are through new government projects and consumer credit to stimulate spending and thus increase productivity. These're not sustainable. That's why when there's not enough demand in the US to take up the overproduction, US companies lobby for globalization in the hope that foreign markets will open and take up the overproduction.

Kevin M:
- Similar as above, even if the pie grows by 100%, new government projects and consumer credit will never lead to sustainable prosperity. New projects and consumer credit will have to be continuously introduced to stimulate growth which later will experience great recession again when there's not enough market demand and consumer bankruptcy occurs large scale. You have to figure this out - if a company produces $1 million worth of goods and spend only $50k on human capital, how in the world will the extra $950k come by to take up the rest of this company's goods, considering if it's employees spend all of their salary on the company's goods? One thing leads to another.

Kevin M:
- Naturally the society doesn't serve the economy. I agree. But the economy function in such a way that if the society doesn't serve it, then there'll be no economy. And it happens that economic advantages grant social power and recognition, fulfilling our primal desires. Imagine what will happen to the economy if everyone suddenly become spiritual? If you're a rich and powerful person, will you allow this to happen?
- I believe it's a zero-sum game if you consider the "demand and supply" of all economic aspects (business production, market demand, employment, consumer spending and saving, inflation, debt, etc). One thing leads to another and they all balanced out. This'll require another essay to explain what I mean.

Kevin M:
- Equal wealth distribution (not wealth accumulation) matters a lot. Imagine the rate of progress we will experience if the top 10% richest people suddenly decide to spend 90% of their wealth on various social improvements that have nothing to do with capital return. Imagine if the Internet were heavily capitalized in the very first place.
- Not everyone wins. Just because the census shown such doesn't mean the SAME PERSON is better off compared to 30 years ago. A lot of people were and are continue to be unemployed or underemployed. And just because a US company gets to sell its overproduction to China, for example, doesn't mean China also win. And even if these particular Chinese buyers win, doesn't mean the Chinese government also win, for example. You have to trace the "cause and effect" to discover the win-lose situation and not just take into consideration the 2 direct participants and assume everyone (including others not involved in the trade) win-win.

Kevin M:
- People don't become worse off compared to 30 years ago because they're lucky enough to be able to continue work, substituting human labor with wealth (salary/wages) in order to survive. Later when technologies replace human labor, more will be unemployed and underemployed. Many other living in poverty stay in poverty even after 30 years.
- Throughout my life, I've came upon many people pioneering new technological breakthroughs and social solutions solely out of personal interests to achieve such, not monetary motivation. Cooperation does improve things and increase productivity. And competition isn't the one and only way to make life better. Don't forget US practices protectionism too. And this will take another essay to point out the evidence.

Kevin M:
- Natural resources are replenishable but they take a very long time to do so. The current economic system breeds mindless consumerism (to boost demand, spending and sales, thus economic growth) and as a result a lot of product wastes harmful to both living beings and the environment are there that aren't so easily recoverable and recyclable even if we want to.
- The only way sustainable wealth can constantly be created is through resource capitalization, substituting everything with monetary value (both tangible and intangible). And the only way such continuous conversion is possible is through senseless consumerism and the false belief that money is the prime mover of everything, and thus wealth accumulation is of utmost concern. As if Capitalism is the enforcer of fair trade and motivator for people to work. Real life experience and observation taught me otherwise.

Answer 1

I'm going to disagree with much of what you said. In no particular order,

Capitalism is not a zero-sum game. One's gain is NOT another's loss. Because capitalism is completely voluntary on all parts, every transaction is a win-win. Also capitalism creates new wealth. This is observable because the US national economy grows faster than our population base. Extra wealth is being created!

Say there are 10 people splitting a pie equally, and the pie grows by 20%, even if 1 person takes more then his share, the others still have more pie than they started out with.

The society does not exist to serve the economy. The economy is just a measure of the multitude of transactions we all make, each of which improves our lives. You can make the argument that we've replaced traditional values with materialism, and that we are not better off for doing it. I won't argue with that. It's up to each person to find out what makes them happy. For some it's stuff. For others it's spirituality, family, friends, etc. It took me until my late 30's to realize that acquiring stuff improved my happiness margin only slightly, while the debt contributed to making me less happy.

The old canard of the Rich get richer while the poor get poorer is horse manure. Under capitalism, especially in the USA, all income groups get richer over time. This is FACT! See the link below for official US Census data on the matter. Again, it's because wealth is being created faster than population increases.

Equal wealth distribution is not important at all. This gap between the rich and poor is exploited for political reasons to ignite class warfare and garner votes from the "oppressed" groups. As long as the poor and middle class get richer too, it doesn't matter if the rich get richer faster than us. So when you see politicians bloviating on the news about the wealth gap, how come they never mention that the poor and middle class are better off then they were 10, 20, 30+ years ago???

Cooperation has it's place at times, but it often results in stifling ambition, hard work, and creativity. The competition resulting from capitalism on the other hand forces businesses to improve and innovate, resulting in better products and services for us all, at lower prices.
After all, if we're all cooperating, where's the incentive to do better?

This is why monopolies are so terrible. How fast did the AT&T introduce new products and services and how fast did they lower prices, prior to Ma Bell being split up. Not very! After they split up, new services quickly emerged, phones got a lot cheaper and offered more features, and communication prices plunged. They did this because they had to compete! Imagine if the cable companies had to compete, instead of being handed a monopoly in your city or county.

As for the natural resources, I've thought about this a bit. Certainly things like oil are consumed, but there is a lot more oil on this planet than you are being told about. What we will run out of us easily extracted and easily refined oil. There is plenty of oil for hundreds more years, but it is less easily obtained and used in the form of shale oil, tar sands, etc. This oil will become more economical as technology advances, and as the easily extracted oil prices go higher as the supply decreases.

Many other resources like metals still exist after they are used and discarded. When it becomes less economical to mine fresh metals and other stuff, we'll start mining landfills for it, and recycle it then.

Answer 2

Ugh. I don't know if I ever seen anyone misunderstand an economic system as much as you and that is really saying something for this website.
It really is sad you have so little faith in the ability of the individual.

There is not one entity or institution (not even religion) on this planet that has caused as much carnage and destruction as big powerful government.

Nuclear weapons
World wars
Holocaust
Famine

Yet you sit here and call for big powerful government. That is the only way you can accomplish your goals.

Should I accept indentured servitude to politicians and government now, or wait until they completely control me?

I will leave you with a quote that describes you and many others perfectly:

“Few men desire liberty. The majority are satisfied with a just master.”
-Gaius Sallustius Crispus (Sallust)
.

Answer 3

it has been and always will be, the peasant woman who sells three bananas at the village market is a capitalist. capitalism is the natural default state of a complex society. the unsustainable aspect that you claim are unsustainable are not necessary for capitalism to thrive and continue to grow. what your equation misses out is the other side where some one buys some thing for 50 cents more then uses it to make another good worth $1.00 in order to pay for the next purchase AND EVERYONE IS A WINNER

Answer 4

I see you are a Communist. How successfull has that been around the world? Your view takes the incentive to succeed out of life thereby dropping everyone to the lowest common denominator. If everyone shares equally, why not be a slacker and still get your equal share?

Answer 5

Capitalism is a means by which the ultra ambitious can attain everything. One only needs to find the least amount of compensation that people are willing to be pacifistic for in exchange for letting someone walk all over them.

Its either capitalism or domination/attainment of wealth by force.