Adam Smith (1723-1790) maintained that individual self-interest can and should be the principle guiding our economic behavior. He told the readers of his book The Wealth of Nations, that, as if guided by an invisible hand, individual self-interest leads to the general good. To put is in fewer words, Smith maintained that greed is good. However, during England's industrial revolution the contrast between the lives of factory owners and those of slave-like workers, who had been driven off the land by the Enclosure Acts. Grees was good for the few factory owners, but bad for the large majority of England's citizens. Today, the defects in Smith's assertion that greed is good are numerous and glaring1.
In Oliver Stone's film Wall Street, Michael Douglas makes a speech in which he says: “Greed is good!”. The film was meant to be a satire, criticizing Wall Street and greed, but many viewers took the film as a demonstration that greed really is good.
Oligarchy, loss of democracy, and militarism
In the Bible the Parable of the Talents ends with the words “To him who hath, it shall be given, but from him who hath not, even that which he hath shall be taken away”, a strikingly realistic but immoral conclusion. One of the defects of capitalism is that it leads to excessive inequality. The rich get richer, and the poor get poorer.
There is ample evidence that in countries with little economic inequality, all social indices are better: crime rates are lower; there is less drug abuse; people are happier; average educational levels are higher, and so on. Examples of countries with little contrast between rich and poor are the Scandinavian nations, Denmark, Norway, Sweden, Finland and Iceland. Examples of countries with excessive inequality are the United States and Brazil.
In the United States especially, excessive economic inequality has led to oligarchy, loss of democracy, and militarism. Wealthy corporations control politicians through their donations to political campaigns as well as outright bribery. Thus, the few individuals who control these corporations form an oligarchy that has replaced democracy. Among the most wealthy corporations are those associated with the military-industrial complex, against which President Eisenhower warned in his Farewell Address. Money from these corporations controls politicians, who then vote for obscenely enormous “defence” budgets, further enriching the corporate oligarchs. This diabolical circular flow of money has been called “The Devil's Dynamo”2.
Limits to growth
Adam Smith visualized a continually growing economy in his book The Wealth of Nations. He thought that a virtuous factory owner ought to enlarge his factory or build others. In general, economists who are part of the capitalist system are almost religiously dedicated to growth. The notable exceptions to this rule were the members of the Club of Rome who commissioned the MIT report, Limits To Growth. When this book was published in 1972, it immediately became both an international best-seller, and a subject for bitter controversy. The controversy was of course due to the fact that the book challenged the growth-religion of conventional capitalist economists. Of course, the perpetual growth of anything physical on a finite planet is a logical impossibility, but conventional economists avoid facing this impossibility by refusing to look more than a decades or two into the future. The general conclusions of Limits to Growth hold up well today, although we now would use the Hubbert Peak Model to study the time-dependence of the availability of non-renewable resources.
The mania for growth of capitalist economists is ruining our planet. Because of unrestricted growth, we are threatened with a climate catastrophe, the beginnings of which can already be seen. We are also threatened with the catastrophic loss of plant and animal species, and this loss has already begun.
Capitalism and the climate emergency
At the Paris Climate Summit, all the nations present agreed that global warming should not be allowed to exceed 1.5 degrees Centigrade. Recent reports of the International Panel on Climate Change tell us that we have only a short time in which to act and that we are nowhere near to achieving the goal that was agreed upon in Paris. This is because decisions are being motivated by the maximization of profit rather than the goal of saving the future for human society and the biosphere.
We need a new economic system. Capitalism is driving us towards disaster.