Capitalism and sustainable development : an oxymoron?

SpaceX, an enterprise of U.S capitalist, Elon Musk, plans to launch a constellation of 12,000 satellites into space, called Starlink, to provide internet connectivity in an unprecedented way. Space travel and a holiday on the Moon are some of the other ventures that the company wants to embark upon in the near future.

Starlink satellites in the night sky

Elon Musk is a South African by birth. Against his father’s wishes, he moved to Canada, so that entry into the United States of America would be easier. He is a living example of the American dream. He has stated ‘ I remember seeing and thinking that America is where great things are possible, more than any country in the world’. Today, he is one of the top 20 richest men in the world. His vision- mitigating global warming through sustainable energy production and consumption. And colonizing Mars to save the human race from extinction. This is how capitalism rewards entrepreneurial spirit and individualistic aspirations.

So, what exactly is capitalism?

Capitalism is an economic and political system where individuals, called capitalists, control the trade and economic activities in a country, with the goal of increasing their wealth through profits generated out of their enterprises. In capitalism, the market, i.e, the demand and supply dynamics, controls everything, from what kinds of goods are produced to how wealth is distributed as well as what is imported and exported. In capitalism, profit-making is the overarching motive and everything else is subservient to it. Capitalists claim that the market is the better determinant of a country’s economic activities and reject interference of the State ( government) in the trade and economy of the country.  It has been victorious in its battle against communism and is the only model of economic system followed across the world today.

The USA has been the champion of capitalism and has striven to spread it across the world. Capitalists were an important force behind the USA’s support for decolonization of India and other 3rd world nations. The motive was far from humanitarianism; it was the prospects of new, naïve markets in the decolonized countries. It is also the primary reason for the USA’s broken healthcare system and its bungled response to the COVID-19 pandemic. Much of the US healthcare system is under the private sector and it is prohibitively expensive. The US government and citizens both spend more than double that in other equally developed countries, for the same or worse quality of healthcare. This can be attributed to profit motive even in basic necessities such as health, as the country believes price controls go against the grain of capitalism.

Bleeding Mother Earth for profit

The USA, under President Donald Trump (also a capitalist) has withdrawn from the Paris Climate Agreement, which aims to limit global warming to below 2 degree Celsius. The President refuses to recognize climate change as a reality and acknowledge that relentless pursuit of growth and profit is harming the environment. Because accepting the grim reality facing us will imply that capitalism has its limitations. Which will lead to a backlash against it. Which means MNCs will make lesser profits. Which should be avoided at all costs.

In historical times, exploitation of natural resources was limited due to lack of technology needed to ease the process. For example, with the primitive boats that fishermen of olden times used, they could not venture out far from the coast. With the coming of deep sea trawlers and sources of pollution like industries, only 13 % of the Earth’s oceans are untouched by humans. Technology fuels capitalism and vice versa. Twin sisters with one objective – make more from less. Development of technology aids exploitation of resources, in which capitalists see an opportunity. When capitalists see an opportunity and are willing to make an investment, development of new technology becomes lucrative. The result is, research and development is also controlled largely by capitalists, who channel it into profitable avenues, sidelining public welfare and environmental sustainability.

Man has become the deadliest predator globally. Human population is exploding. More people are coming out of poverty each year. Asian and other third world economies are growing at double digit rates. Growth occurs only when natural resources are extracted, value-added and monetized. This is not happening at the expense of developed countries. Even as populations go down in developed countries, the per capita usage of resources keeps rising, offsetting any conservation of resources due to population decline. It is happening because spread of technology has made exploitation of resources easier and capitalism has made it profitable.

Earth overshoot day is the day when we have used up as much resources as the Earth can regenerate. For 2019, it was on July 29th, the earliest ever
Blind consumerism

Capitalism encourages blind consumerism. Apple releases new models of its mobile phone at least once a year, with minor variations from the previous one (sorry geeks, its the sad truth). People buy new phones even though the older one was  working perfectly and fulfilling all their needs. Imagine if all the people in the world had phones which they used for 10 years; Apple would shut down after a few years (assuming phones are its only product). For a business to stay relevant and make profits, there should always be a demand for goods and services, on the supply of which, it makes profits. More the demand, more the profit. To create demand, people are subjected to relentless advertising; brand value is created for some goods and services, making people compete to have them. This is how tech giants like Google and Amazon are monetizing our personal data. Like a makeup tutorial page on Instagram and advertisements of makeup brands will be displayed on your browser, Facebook page etc.

In such a scenario, how can we live sustainably? We are encouraged to consume more goods and services irrespective of whether we need it or not. Countries strive to maintain positive growth rates, even though they are well developed, putting further strain on resources. Capitalism also creates vast wealth inequality among people, putting greater purchasing power in hands of a few. The rest have to fight for scarce resources, exploiting nature even further. Gandhiji said that ‘ The Earth can fulfil everybody’s need, not everybody’s greed’. Private enterprises should either grow or perish. There is nothing like a static business, where the same balance sheet is maintained for years together. If you don’t expand, you will be cut across by another competitor, because capitalism thrives on competition to gain profits.

Capitalism is based on the premise of prudent allocation of scarce resources to obtain maximum profit. There is a need for reorientation of capitalism, where ‘profit’ should mean individual aggrandizement as well as public welfare. The scarcity of natural resources and the need to conserve it for future generations should be taken into account while hashing out the balance sheet. Capitalists should behave as entrepreneurs as well as responsible humans, just like investor sentiment is driving sustainable climate policies in MNCs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Author: Mahima Prasad

Doctor, dog enthusiast, UPSC aspirant

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