The True Costs of Extractive Capitalism

With the Industrial Revolution in the nineteenth century came a new set of economic systems that served to benefit those with wealth, and extract from those without. Among these was modern capitalism, the system adopted by most of the western world. In the United States in particular, capitalism was combined with a political system that compensated for only some of its inherited and created inequities (and that generally has done so unequally along racial lines).

This model came to dominate the global economy by the end of the 20th century, but soon began to show signs of instability. People in the most-developed countries faced chronic unemployment as yet more factories moved abroad to cheaper labor markets—leading to the biggest resurgence of nationalist politics since World War II. People in developing countries saw many lifted out of poverty, but many were left behind while elites got richer—while pollution, corruption, and violence often worsened. Add in the Middle East refugee crisis, the splintering of the European Union, and the election of an unapologetically disruptive economic protectionist as President of the United States, and it’s clear that the equity challenges of the past decades have become a global equity crisis.

The term “extractive capitalism” captures the way in which our current political-economic system has created this crisis, extracting wealth from the Earth, workers, and communities without fair payment or regard for the problems that ensue. Indeed, it is not so much the functions of capitalism itself but the extractivist mindset behind it that is the driver of the inequity both historically and today. “Extractivism,” as Naomi Klein explains, “is a nonreciprocal, dominance-based relationship with the Earth, one of purely taking.”

Extractive capitalism has led to todays’ historic levels of economic inequality both within and among nations. It is a feedback loop: one of the dynamics of inequality is that the beneficiaries of the political-economic system turn their greater wealth into political clout, tilting the playing field further towards financial benefit. Today this role is played by the global corporate elite—the beneficiaries of corporate extractivism—which has used its clout to privatize public resources, slash public spending on social programs, and eliminate worker and environmental protections.

Extractivism is not inevitable; there are now many proposed models for a non-extractivist economics suitable for the modern industrial world. But what will it look like to put a non-extractivist model into practice? The answer might come from the “Just Transition” movement, which advocates for ensuring that the transition to a post-carbon economy does not unjustly leave workers or communities behind. Ideas from this movement include the creation of funds for workers and communities adversely affected by the shift away from fossil fuels, and decent-paying jobs through massive investment in renewable energy generating facilities and retrofits to existing infrastructure. But ultimately, we must envision a human community that lives in harmony with the Earth’s limits, rather than in a constant attempt to dominate and exploit.

This is a chapter summary based on the The Community Resilience Reader: Essential Resources for an Era of Upheaval published by Island Press.