I have often wondered why no matter how much effort well-intentioned people put into making needed changes in a system such as our economic model, the trajectory remains the same. Specifically, the power of corporations continues to grow, their methods become more exploitative leading to increasing wealth disparity between the owners and the working class. And our leaders are determined to keep the economy growing despite the obvious fact that we live on a finite planet with finite resources.
Many of us have made the connection between the capitalistic system, with its addiction to growth, and the environmental and social emergency we face today. Historically, there have been some significant efforts to control the power of corporations. The Sherman Act of 1890 aimed at preventing collusion between corporations to set prices during the height of the railroad boom. Corporations changed tactics. US Steel began merging with competitors until it controlled 65% of the steel manufacturing in the US. Theodore Roosevelt tried to break the company up, but it was not until the Clayton Act in 1914 that the antitrust laws had real teeth. But the rapid innovation of businesses always outpaces regulation as demonstrated by the stranglehold on information that Facebook and Google have.
One of the provisions of the Clayton Act gave labor unions the right to strike. Their power was instrumental in cubing the power of corporations during the period, but the influence of labor unions peaked in the 1940s and since then corporations have had the ability to limit wage growth by moving operations overseas. Corporations have always been able to restructure themselves or find some other way to continue to grow.
We do not ordinarily think of an economic structure as having a life of its own, but Ilya Prigogine opened our eyes to the concept of self organizing structures in chemistry, a discovery that won him the Nobel Prize in 1977. His research has been applied to many fields including biology, social theory and economics. Paul Krugman explored the idea in his book The Self Organizing Economy. The common thread joining each example is that the totality of local actions made independently leads to the creation of an ordered system that is decentralized and can maintain itself as long as sufficient energy is available.
We live with the belief that we have created an economic system called capitalism and that we have control over it though government policy and taxes. What if the tables were turned and capitalism only describes a self organizing system that creates itself in an environment of surplus goods and services? It is not only self organized, but as long as there is an input of energy supplied by trade and the exchange of goods, the structure of capitalism will continue to grow, despite our human attempts to tame it and make it more user friendly. This is how Wikipedia describes a self organizing system: “The resulting organization is wholly decentralized, distributed over all the components of the system. As such the organization is typically robust and able to survive or self-repair substantial perturbation.” 1 This ability to “self-repair” creates a totally different perspective on our current economic / environmental crisis. We cannot blame any individual corporation or government. Instead, we must address the core issue – what supplies energy for the system to grow?
The profit motive drives every economic decision. The quest for profits has some obvious consequences, such as scaling up of businesses, leading to consolidation of power in a few multinational corporations that are able to drive smaller family owned businesses out of the market. Once the market for essential goods was satisfied fairly early in the industrial revolution, capitalism’s natural impetus to grow spawned a whole industry to sell new products to as many people as possible whether they needed them or not. Advertising became an industry in itself. Once information could be communicated easily it was commoditized, beginning with newspapers, then it really took off with the internet. Once the data came to have economic value, however, the natural impetus of capitalism created businesses whose only purpose was to make money from data accumulation and sale. Google and Facebook began with relatively altruistic motives, to provide information and enhance communication between individuals, but that was lost as the business models shifted to selling data rather than providing information. We can say that their values were corrupted by power, but in essence it is simply the result of small decisions made by individuals seeking to preserve the survival and growth of their business in the face of competition.
The common theme throughout the evolution of the economy is the shaping of consumer loyalty and beliefs to support the further growth of the individual corporation and thus the whole economy. First there was the acceptance of factory work as a steady job despite the abysmal conditions, then the growth and even loyalty to corporations as we aligned ourselves to its products and had our favorite brands. Currently we are conditioned to put up with the loss of privacy for the ability to communicate on Facebook or Twitter. The media corporations began publishing material whose primary function was to generate revenue for the corporation and a secondary function of convincing the user that they were deriving value from their alliance with the media stream or particular device. The system thus uses the consumer and the businesses themselves, often unwittingly, to augment its ability to “to survive or self-repair substantial perturbation.”
Where does this lead? Stewart Kauffman brilliantly summed up the process: “I suspect that the fate of all complex adapting systems in the biosphere – from single cells to economics – is to evolve to a natural state between order and chaos, a grand compromise between structure and surprise. Here, at this poised state, small and large avalanches of co evolutionary change propagate through the system as a consequence of small, best choices of the actors themselves, competing and cooperating to survive. I will suggest that, on small and large scales, we all do the best we can but will eventually be hustled offstage by some unanticipated consequences of our own best efforts.” This is a critical understanding. If we come from this perspective, we cannot blame any particular person or entity. The current crisis is not the fault of government bureaucrats, the 1%, the indulgent consumer, or the multinational corporations. Each is making the best decisions they can from their perspective. The problem is the system itself and in order to find a solution we must all come together in a cooperative effort.
What are the key vulnerabilities of this system? Where is the leverage to change it? A self organizing system is dependent on an outside source of energy; capitalism is driven by profit. Society has conflated economic wealth with happiness, progress, self worth and security. To unravel capitalism requires re-focusing our mental and emotional systems to look at what we truly want and move in that direction. There are many paths to that goal, spiritual, psychological and social. In the scope of this article I will point out only one.
The fundamental orientation of the economy is growth, and that is currently measured by the gross domestic product. Books have been written about this misleading indicator which has little relevance to the quality of life of the citizens. In fact wars, floods and hurricanes all count as positive additions to the GNP. There is an increasing awareness of the devastating effects of pursuing growth as measured by the GNP. Some of us are becoming aware of the fallacy of equating consumption with happiness, but it is too much to ask for the individual to forgo the acquisition of wealth when they are embedded in a society that promotes money as the key to happiness, and legislators will not change the rules as long as the electorate continues to demand more of everything.
In 2008 Bhutan incorporated the idea of Gross National Happiness in their constitution. In 2011 it was adopted by the UN and countries were encouraged to follow the example of Bhutan. The measurement of GNH includes psychological well-being, health, time use, education, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards. 4 Since then other countries have adopted variations of the index.
In 2019 Jacinda Ardern, Prime Minister of New Zealand, adopted a “Happiness Budget” requiring that all government spending be directed toward either improving mental health, reducing child poverty, addressing the inequalities faced by indigenous Maori and Pacific island people, thriving in a digital age, and transitioning to a low-emission, sustainable economy. Arden intended to lay the foundation for a different approach for government decision-making altogether.5
Moving away from GDP to a measure of general well-being would help shift how the consumer values his free time and family versus the accumulation of money. More importantly it would change the orientation of the businesses themselves by acknowledging the value of businesses oriented around the mission to serve the public. The government would be incentivized to change tax laws to encourage businesses that look at a “triple bottom line” (profit, people and the planet). Politicians would potentially lose votes by making decisions siding with corporate power that lowered the GNH number whereas in the past they could justify such decisions by claiming it would increase GDP. There is obviously resistance to such a move, but it may be a small enough gesture that it could be done. The result could be the proverbial Trim Tab that turns the rudder that turns the ship of state.
- Foroohar, Rana, Don’t Be Evil: How Big Tech Betrayed Its Founding Principles — and All of Us
- Kauffman, Stewart, At Home in the Universe, oxford University Press, P. 15.