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Luke Hutchison

TED Fellow, Google

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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  • Mar 16 2013: Larry, You mentioned earlier I think about the environmental aspect of capitalism running out of materials and resources? What about charging businesses for the things they take out of the environment? I'm just spit balling here but could there be a way to charge a "true price" for resources? Say we charge for things that belong to the public like clean air, water, minerals etc that belong to all of us but companies use or pollute? Call it a resource tax. Thoughts?
    • Mar 17 2013: I feel what you've hit on Tyler is a major component of reforming and rationalizing Capitalism. Law & Economics tends to phrase it as "ensuring that prices reflect the true cost of goods". It's a major component of tort theory (you use civil law monetary penalties to ensure a business doesn't profit from what is a net societal harm).

      Applied to the production of goods, it is basically using taxes tariffs and regulation to ensure that what you pay at market for something reflects not only the seller's "cost" but the cost of all of the effects of production. I'd lump all manner of things in there, environmental effects of goods and production, effects on worker health and welfare, effects on consumers etc.

      It isn't really an anti-capitalist notion, just recognition that prices in an unregulated market can't be relied on to encorporate the intangible or second order effects, and that the market forces unfettered producers to avoid every cost they can with little thought to the harm. In a system where prices reflected the true cost of goods "market price" would still exist, but "supply and demand" effects would be a margin on top of the true cost rather than the inexorable economic force that gives us nine-year olds sewing soccer balls.
    • Mar 17 2013: Resource use charge: This is a good idea good imho because it recognizes something actually beyond the bottom line. The problem with Capitalism has always been the accounting system - there are traditional ethical and practical issues around Interest, (Magrit Kennedy in "Interest and Inflation free Money is very good on that) but going deeper the concept of private property is intrinsically anti -science, anti human and anti-environment. (It is often confused with respect for other humans which is another thing altogether. Interesting that the concept of Private Property for other animals has never been championed.).

      We know very well that individuals do not live in isolation yet wealthy people and their followers continue to preach self interest, even base whole economic philosophies on it and impost it on other cultures by force.

      Pathetic, really but that's the way it is for the moment. There are stirrings of hope here but the next 50 years are going to be very interesting at least.

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