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Luke Hutchison

TED Fellow,

TEDCRED 50+

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Is capitalism sustainable?

Bono stated in his TED2013 talk that the numbers show that we can eradicate all poverty worldwide by 2030. While I really hope that is true, it begs the question: Is capitalism sustainable? Is it possible to have a rich and middle class without a poor class? The sad reality of capitalism is that if there is an exponentially small number of people with exponentially large wealth, there has to be an exponentially long tail of much poorer people who are each contributing to that wealth. Not that we necessarily need an exponentially small number of people with exponentially large wealth, but would the world keep running without capitalistic incentives that increase the separation between rich and poor? Can we eradicate all poverty without the rich sharing their riches? What happens to civilization when nobody is willing to work in the factories and orchards, or build roads?

(Please don't take this question the wrong way! Personally I wish that nobody had to work menial jobs. I just don't understand how we can eradicate poverty when so many jobs will always translate into low-paid labor.)

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    Feb 27 2013: The question becomes very fundamental when we take all forms of capital in question. Plus the in the form we see Capitalism now, the divide between poor and rich is a normal outcome not a defect. Moreover, Capitalism in its present form is inefficient to say the least.
    The problem seems to be the inherent inability of the neo-classical economics in the Capitalist models of Market Economy to account for the long term ecological costs on present economic activities. While ‘Degrowthists’ forsake such models altogether, Natural Capitalism seeks to account for such costs. Paul Hawken, Amory Lovins and Hunter Lovins in their 1999 book named Natural Capitalism: Creating the Next Industrial Revolution” said, (the traditional ‘Industrial’ Capitalism) “does not fully conform to its own accounting principles. It liquidates its capital and calls it income. It neglects to assign any value to the largest stocks of capital it employs- the natural resources and living systems, as well as the social and cultural systems that are the basis of human capital.” They also asked fundamental questions like: What would our economy look like if it fully valued all forms of capital? What if our economy were organized not around the abstractions of neoclassical economics and accountancy but around the biological realities of nature? What if Generally Accepted Accounting Practice booked natural and human capital not as a free amenity in inexhaustible supply but as a finite and integrally valuable factor of production? What if in the absence of a rigorous way to practice such accounting, companies started to act as if such principles were in force?
    You may like to check my blog posts here:
    http://pabitraspeaks.com/limits-to-growth-and-beyond-part-ii/
    http://climatechange.thinkaboutit.eu/think4/post/the_wealth_question_in_climate_change/
    http://climatechange.thinkaboutit.eu/think4/post/climate_change_and_future_of_economics_-_can_we_put_nature_on_balance_sheet

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