The Fundamental Flaw of Capitalism 2020 and Beyond
A Definition
You all know what it is. You’ve been a part of it from the first day you took your shiny quarter to the store and bought a piece of candy. I’m referring, of course, to capitalism:
“… an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.”
It runs along day in, day out, 24/7, 365, and by and large it has run smoothly for lo these many years.
That may be coming to an end sooner than we would like to believe, and if not an end then surely an overhaul of massive proportions.
Capitalism!
Don’t Misunderstand
I have absolutely nothing against capitalism. It’s served me well for seventy-one years. I’ve profited from it. It beats the hell out of some other economic systems currently at work on the planet, or so I believe. In theory capitalism is, to borrow from the young kids, The Bomb! It is at the core of that mythical fantasy, The American Dream, that ridiculous concept so many have chased after most of their lives. It is the reason why the United States enjoys such a high standard of living – we have played the Capitalism Game better than many countries for a long, long time.
No, I have nothing against this method of commerce; that is not the reason for this article. I am simply attempting to point out a problem which is rapidly racing in our direction, “our” meaning any nation dependent upon capitalism, and in a global economy that means all nations, a problem which will cripple this system unless changes are made.
Allow Me to Explain How It All Works
I refer you to the last sentence in that definition above, “the prices, production, and the distribution of goods….”
What that means is that businesses produce products, they ship products to markets, and those products are then purchased by the consumers of those products at a price determined by Supply and Demand.
There’s just one small problem, a problem which is becoming more apparent daily . . . those products require natural resources to produce, and those products require natural resources to ship. So what, you say?
Let’s look at it a little closer!
Capitalism
What Is the Goal of Capitalism?
I’m going to simplify this as well as I can. The ultimate goal of capitalism, me thinks, is to produce more and sell more. I have a degree in economics, and I really can’t remember the number of Economic courses I sat through, but I feel pretty good about boiling the whole system down to that simple explanation: more is better and desired, and it is all modified by the Laws of Supply and Demand.
And I understand it, and I’ve been a part of it, so this is not some attempt to change the minds of anyone. It’s simply a look at the system as it was and as it currently stands.
Capitalism has worked quite well for the United States and, really, for all industrialized nations, for quite a few years. Now that point could be argued by those on the lower end of the income spectrum. Ask a person living in a shotgun shack in New Iberia, Louisiana, how capitalism is working for them, and you might get a much different perspective than you would get by asking a Wall Street player making an income with seven figures, but truthfully that can be said about any economic system used during the history of mankind.
So What’s the Problem?
The problem, as I see it, is the need for natural resources. We, being you and I and the entire capitalistic system, have an unlimited desire for, and consumption of, a limited set of resources, and at some point in time, not today or tomorrow or even twenty years from now, but at some point in time in the “near future,” that approach will not work. We are closing in on eight billion people. Nine billion will happen very quickly after that, and the majority of those nine billion will be consumers, adding to the unlimited consumption. If we run out of resources, the entire capitalistic system will collapse.
Tell me I’m wrong!
What happens when we run out of iron ore, or natural gas? What happens when we run out of oil, or phosphorous? What happens, God forbid, when we run out of potable water or arable land? And don’t you dare tell me it can’t happen because, my friends, it is happening and will continue to happen. It’s a logical statement based on fact. This is not a statement based on some far-left, socialist agenda, but rather on common sense.
The fundamental flaw of capitalism is the same today as it was when the first capitalist chased after his dream hundreds of years ago: our economic system is based upon the need for resources which are in limited supply.
I’m not even sure people thought about this back in 1600. I’m not sure they gave it one thought in 1700 or 1800 or even 1900, but you can be sure they are thinking about it today in think tanks around the world. And no, this will not affect most of us in our lifetime. Our children may begin to see the effects of it, and I’m fairly confident that our grandchildren are really going to live with a new economic reality in, say, fifty years.
The Golden Goose may run out of eggs to lay.
How long before this river disappears?
So What Happens Then?
Again, let me point out, I have nothing against capitalism. I’m not some commune-living hippy who has dropped out of modern society and is living in La-La Land. I’m a card-carrying member of the “chase-after-the-American-Dream Society. I’m just pointing out what, to me, is a very obvious truth, and if it is, in fact, a truth, then what will have to happen to avoid some very upsetting results related to this “over-consumption?”
Change of some sort will have to happen, plain and simple. What that change looks like is anyone’s guess. It may be that science finds a way to produce goods without the resources we currently use. It may be that new resources will be discovered. It may be that we become greater and greater users of renewable resources. Hell, it may be that we learn to mine distant planets.
Or we may learn to modify capitalism and use less; this would certainly not be a permanent solution, but it would be one which would surely postpone the inevitable.
I’m like the apprentice chef who tosses pasta against the wall to see if it sticks. I’m just tossing ideas out there for consideration. The only thing I know for certain is that any system based on unlimited consumption of limited resources is bound, eventually, to fail unless modification occurs.
Hell, I’ll be dead within twenty years, so this really won’t affect me, but I would like to think my son, when he reaches my current age, won’t have to worry about an economic collapse of unthinkable proportions.
Will Change Happen?
That’s the million-dollar question, isn’t it? Will change happen? I believe it will, but I also believe change happens slowly in this country. We are seeing more and more electric vehicles but, still, the production of those vehicles requires resources. We have seen, and will continue to see, increased efforts in recycling, but even recycling is a stop-gap activity. Right now, at many locations around the globe, the smartest minds in the world are tackling this very dilemma and, hopefully, they will present alternatives and nations will embrace those alternatives.
But change happens slowly!
Just something to think about as we approach 2021. If you were looking for a solution to this impending problem, in this article, you are about to be very disappointed.
2020 William D. Holland (aka billybuc)
Comments
Bill Holland (author) from Olympia, WA on November 01, 2020:
Nithya, I sure hope someone is working on it and they realize the urgency. :( Thank you!
Bill Holland (author) from Olympia, WA on November 01, 2020:
I think if I had to walk ten miles to the village well, William, I would be open to this solution. :) Thanks my friend, and Happy Sunday to you.
Bill Holland (author) from Olympia, WA on November 01, 2020:
Thank you AnnMary! I appreciate it.
Bill Holland (author) from Olympia, WA on November 01, 2020:
So do I, Rajan! It will be interesting to see how the future turns out, my friend.
Nithya Venkat from Dubai on November 01, 2020:
Yes that is a million dollar question. Let us hope changes do happen that will benefit society. Natural resources are being depleted rapidly and we have to come up with innovative solutions and soon.
William Kovacic from Pleasant Gap, PA on November 01, 2020:
Some things to think about, Bill. But even after watching the video, I think I'd have trouble drinking toilet to tap. I'm not sure I could get over what was once in that water. But then again, you do what you have to do. Have a great week, my friend!
AnnMary37 on November 01, 2020:
Informative Article..!!!
Check out some Acclaimed Businesses in DUBAI
Rajan Singh Jolly from From Mumbai, presently in Jalandhar, INDIA. on October 31, 2020:
Food for thought, certainly! I believe theories about a new world order have some iota of truth in them.
Bill Holland (author) from Olympia, WA on October 31, 2020:
Eric, good to see you back among us. Leave it to you to suggest a better title, and be correct about it. Greed, my friend, a nasty habit to get into, don't you think?
Take care, buddy! Have another hike, on me, free of charge!
Eric Dierker from Spring Valley, CA. U.S.A. on October 30, 2020:
So Bill this is heavy. I got to chew and write on it. After much writing and thinking and even discussing such lofty matters, I just decided your title is wrong -- understandable with an Economics degree.
The proper and more accurate question/title Is "The Fundamental Flaw of Man".
I was having a bad hike. I was dragging into the 4th mile. My son took me aside and asked "Are you a giver or a taker?" Take a man like you and you inspire us to be givers and not takers.
Bill Holland (author) from Olympia, WA on October 30, 2020:
Denise, I did a blog post about a month ago, concerning the amount of self-storage units we have in this country. It's an obscene amount, and the majority of them are to store our excess junk. Only in America will you find that kind of excess, and it's disgusting.
Blessings always
bill
Bill Holland (author) from Olympia, WA on October 30, 2020:
Liz, I'm a little surprised hemp isn't used for more products. I suspect it will be, for the reasons you gave. It really is a super products.
Greed? Disappear? Maybe lessen, but I doubt you and I will see it happen in our lifetimes.
Bill Holland (author) from Olympia, WA on October 30, 2020:
Manatita, I look at this country through realistic glasses, not rose-colored. We have much work to do if we are to live up to our potential here in the U.S.
Blessings to you as well.
Bill Holland (author) from Olympia, WA on October 30, 2020:
Sha, hopefully, this national nightmare will end on Tuesday, and healing can begin. I'm afraid, if we don't start changing things soon, it will be too late. Let's hope I'm wrong.
Denise McGill from Fresno CA on October 29, 2020:
It is the massive overconsumption that is the biggest problem. For instance, did you know how many storage places are in use in this country? It seems it is three times the current population. That means American people have so much stuff they have to rent someplace to store it so they can buy more stuff. That's just ridiculous. If we only bought and consumed what we needed, we wouldn't have this problem. But then the fat-cats would not be making as much profit either. They would hire people like me to create beautiful, clever advertising campaigns to get people to buy more stuff than they need so the fat-cats could make more money than they could possibly spend in one lifetime. It is a vicious cycle. I have no answers either. I hate that my artist friends are forced to become a part of this system just to survive as creative people. It's all so wrong.
Blessings,
Denise
Liz Elias from Oakley, CA on October 29, 2020:
Interesting...and well thought out.
I have one possible solution that too many establishment minds are set against due to misinformed prejudices: HEMP. Infinitely renewable, and useable for the manufacture of everything from plastics to clothing to even autos! (Henry Ford made a hemp car way back in 1941--- 7 years before my time!) AND--products so made remain biodegradable.
The other solution is not so easy--and that's convincing corporate America to stop being so GREEDY! This nonsense of raising or charging exorbitant prices on goods is counter-productive. If the aim is to make money, you do better to sell for less and make up the difference in volume of sales!
manatita44 from london on October 29, 2020:
Yes, Bro.
You understand. I was worried about offending you, but you and I take a more sensible approach to these things. No need to go into details for the discerning and again it is also good to move on when we can. Yet some are where they are, still seeking for answers and a sense of identity. It is Black History month here and a lot comes up.
My Guruji loved America and the soul of America. I love it too. Much Love.
P.S I pray the election is peaceful and final. God bless.
Shauna L Bowling from Central Florida on October 29, 2020:
Bill, you've presented a very strong argument for why we should start repairing our environment and the wildlife that inhabits our earth. The politicians only see how much money can be made right now, immediately. They're not looking at the big picture and the inevitable outcome if things continue as they are.
You should write a letter to Washington. Our current leader has reversed just about everything we had in place to repair and rebuild. All in the name of profit. How near sighted can he be?
Bill Holland (author) from Olympia, WA on October 29, 2020:
Manatita, let me just add, that America probably leads the world in gaining wealth at the expense of others. We have made it an art form, so to speak.
And I'm afraid massive change in the way America looks at the Earth, and its inhabitants, will take a very long time.
Let's hope I'm wrong.
Peace, my friend!
Bill Holland (author) from Olympia, WA on October 29, 2020:
MizB, it's really easy to have your optimism dimmed when thinking about this topic. The kinds of changes are so huge, and change happens so slowly, I often wonder if there is any hope that we will get it right.
But I'll be dead, so there you go. lol
Take care, my friend!
Bill Holland (author) from Olympia, WA on October 29, 2020:
Exactly, John! Thanks for your thoughts. I actually like capitalism, but it needs to be modified...but by whom, and how will the public react to that modification? This is not an easy problem to solve, I'm afraid.
Bill Holland (author) from Olympia, WA on October 29, 2020:
Pamela, for sure, there are things being done and proposed. The question is will the government act on those proposals, and will the public be willing to embrace them? They now have portable water purifiers for homes, where you just keep recycling the same water, but they are not mass produced and they are too costly...we need more solutions like that one.
Bill Holland (author) from Olympia, WA on October 29, 2020:
Thank you Meg! I suspect things are going to get much worse before they get better.
Bill Holland (author) from Olympia, WA on October 29, 2020:
Thank you Devika! I hope this finds you doing well.
Bill Holland (author) from Olympia, WA on October 29, 2020:
I don't think your point and my point are mutually exclusive, Paul. In fact, I think it's always been there way, and will continue so, into the foreseeable future.
Bill Holland (author) from Olympia, WA on October 29, 2020:
Thank you Linda! I know you understand what is at stake.
Bill Holland (author) from Olympia, WA on October 29, 2020:
Marlene, I share your frustration. I think one of the problems is this: the solution to these issues would have to be drastic, and no politician hoping for re-election wants to touch this issue. It would be career suicide, don't you think?
Bill Holland (author) from Olympia, WA on October 29, 2020:
I tend to believe you are correct, Linda! I'm not too impressed with the American spirit right now. Our image must suck to the rest of the world, and that's embarrassing.
Bill Holland (author) from Olympia, WA on October 29, 2020:
I agree with you, Flourish, about the over-population. I'm not sure how you would regulate that, but I suspect it will regulate itself through starvation and other extreme consequences.
Bill Holland (author) from Olympia, WA on October 29, 2020:
Something got to give, Peggy! An obscene percentage of the wealth is owned by 1%, and that just isn't going to work in this world much longer. I sense a major uprising by the workers, sooner rather than later.
Bill Holland (author) from Olympia, WA on October 29, 2020:
Heidi, I always found that fascinating as well, world leaders dividing up the New World....heck, Germany and Russia had a meeting where they did the same thing in 1943. Glad that didn't work out in their favor.
As always, thank you! Let's hope our government keeps vigilance over use. These are strange and dangerous times.
DreamerMeg from Northern Ireland on October 29, 2020:
You are quite right. We cannot keep using up our natural resources at the current rate. We are creating a debt our children and grandchildren will have to suffer through.
Devika Primić from Dubrovnik, Croatia on October 29, 2020:
Bill interesting and so well written. I am glad you wrote this article I learned lots from your side of the world.
Paul Richard Kuehn from Udorn City, Thailand on October 28, 2020:
Thanks for sharing a very interesting, thought-provoking article, Billy. I always thought the basic injustice of capitalism was the exploitation of the working class.
Linda Crampton from British Columbia, Canada on October 28, 2020:
This is a thought-provoking article, Bill. The points that you've discussed are a big concern with respect to our future. They are important to consider.
Doris James MizBejabbers from Beautiful South on October 28, 2020:
I had hoped for a quickie lesson in economics because that's the one course (along with poetry) I avoided in college. I do think you idea that globalism is affecting capitalism is on track. There's no doubt that we've over-consumed. However, I think some people are waking up and trying to do something about it. California is outlawing the internal combustion engine effective in 2025, and I'm sure that other states will follow. Of course Red states will go kicking and screaming because Bubba won't want to give up his old truck. Colleges are now offering degrees in alternative energy. A friend of mine received his BS in it a few years ago and is working in the industry.
I was about to brag that Denmark had established a windmill blade company in Little Rock in 2007, but then I found a story that said the plant was closing this year, not because of the coronavirus, but because of less demand. That is sad news in more ways than job loss. Well, that dimmed my optimism, so I guess I'll sign off for now. Great article though, my friend.
manatita44 from london on October 28, 2020:
Haha. Looks like you're preparing, Bro. Well, you and I will check out sooner or later. Lol.
Now with good intention, here, I have to say that land has been a resource for a long time, and the Portuguese continued in the early 15th century. They did by going to foreign lands and seizing the resources by force. Europe followed later: Dutch, English, Spanish, Belgiums, Germans ... initially as pirates and buccaneers amongst themselves then followed the Portuguese to Africa and India and before that North and South America.
So not only land: Gold and diamonds ... but humans also became a resource. They are still a resource today on the coffee plantations and in the clothing industry, where labour is exploited while you and I sadly, enjoy our cup of coffee and wear nice clothes.
Yes, Think-tanks existed even in the Chinese Dynasty. What we call Spin doctors and lobbyists, were called strategist and they were so smart that they could make an entire country fall. Same old and some new, but the pattern is similar, as the lust for power and greed remains in humans everywhere.
So wise guys like Jesus had no time for a Barabbas who wanted to fight for justice with the sword. Instead, he used the slow trickle method of trying to win men's Hearts with Love and got killed for his troubles.
Not easy, bro. But you are trying to understand it, that's good. Complacency remains, because we actually enjoy Capitalism, which is by its very nature at the expense of others. Sorry, my brother. America has done its fair share of taking too. Just saying. Much Love.
John Coviello from New Jersey on October 28, 2020:
Good write up Bill. I learned a few things about our economic system from this article. I think our overuse of fossil fuels is a good example of capitalism run amok. If we keep on using fossil fuels as we have been for decades, we're going to have dangerous global warming later this century. Capitalism a great system that allows people to pursue their dreams, but its consequences are not always so great. It seems to work best when their is a modifying force, such as consumer push back or regulation.
Bill Holland (author) from Olympia, WA on October 28, 2020:
Thanks for the information, James. I'm not sure what this has to do with the topic of resources, but thanks for weighing in.
Pamela Oglesby from Sunny Florida on October 28, 2020:
This is sure a thought provoking article, Bll. I think there are some things being done for the future although not enough. I wrote an article about all the companies working on artificial meats and about a year ago I wrote about about Marshall Mendoff. He has a company that is using leaves to make plastic silverware that will biodegrade in a couple of months. He has made several other products also. These things are not really enough, but I find it comforting that some people are trying to make good changes for the future.
We are greedy for sure. I like capitalism and am fearful of socialism, but I sure don't have many answers to save humanity. I think this is an excellent article as it spells out the problems that will affect our grndchildren. I hope the great minds will come up with more solutions to save humanity.
Marlene Bertrand from USA on October 28, 2020:
I don't think people are thinking about this hard enough. I feel like people are sitting at the round conference table "discussing" it and not having any solutions they go to lunch and come back to the office to schedule a meeting to talk about what they will discuss at the next meeting.
I agree with you on this subject. I wish I had a solution. I'm going to go have lunch and maybe think about it some more.
I know I am making fun of it all, but truly it will be a serious day when people wake up and all the resources are gone. What then? Back to caveman days, I suppose.
Linda Lum from Washington State, USA on October 28, 2020:
Wow Bill, I thought this was going to be an easy-peasy no worries day! Consumerism in the United States is vastly different than in just about any other part of the world. We are far too greedy, "need" far too much, throw away what isn't broken, and waste like there's no end in sight. Maybe the problem isn't a lack of resources but a lack of morality.
James A Watkins from Chicago on October 28, 2020:
Because of Capitalism, there is less extreme poverty than ever right now, less than 8% of the human race, a percentage that was in 1990 35%, and in 1820 was 94%. The speed of poverty alleviation in the last 25 years has been historically unprecedented. Not only is the proportion of people in poverty at a record low, but, in spite of adding 2 billion to the planet’s population, the overall number of people living in extreme poverty has fallen too. In the last quarter century, more than 1.25 billion people escaped extreme poverty. In 1820, only 60 million people didn’t live in extreme poverty. In 2015, 6.6 billion did not.
Elaina Baker from USA on October 28, 2020:
We need far fewer people as well. The consumption is just abhorrent. One way or another there will be a correction. I much prefer capitalism but we have taken it to an extreme in some segments of society.
Peggy Woods from Houston, Texas on October 28, 2020:
Clean water and enough available food are already in short supply in many parts of the world, and it has been the case for some time. We get used to seeing those bloated bellies on television by charities asking for money to alleviate the starvation.
Even the making of clothing takes resources. Some people have an overabundance, and others have so little. We can all do our part to consume less, reuse items, and recycle them.
The benefits and flaws in capitalism are showing up more and more as the rich continue to get richer, and an ever increasing number of people are becoming poorer. It is a scenario for disaster. Let's hope that equitable solutions lie ahead.
Heidi Thorne from Chicago Area on October 28, 2020:
Adam Smith's "invisible hand" doesn't always work for so many reasons. Unintended consequences, tragedy of the commons, cultural differences... the list goes on. And so could this conversation. I'll leave that rant to maybe a visit with you on the virtual porch.
But the one thing that I found so interesting in watching a documentary on the notable explorers of the New World, and the rulers that funded them, is that countries divided up "ownership" of the globe as if it was theirs to take. What worries me now is who will claim they own the Moon? Again, don't get me started.
I, too, am a "Yay for Capitalism" person, but am glad that we have laws and government to help keep it from running amok.
Only 6 days 'til Election Day, thank God. But I guess it could take until mid-December to declare a winner with mail-in ballots and such, especially if the Presidential race is close. Let's hope it's not.
Bill Holland (author) from Olympia, WA on October 28, 2020:
I do too, Liz, but I'm not betting on it. :) Thanks so much, my friend. Let's hope the world leaders clue in on this problem sooner rather than later.
Bill Holland (author) from Olympia, WA on October 28, 2020:
Good morning Ann!
Yes, it is all a drop in the ocean, but the alternative is to do nothing, and I can't do that. My actions may mean nothing in the grand scheme of things, but at least I'll know I did something to try and tip the scales.
Besides, I do think positive change is happening. It happens in such small increments, it is sometimes hard to see it, but those tiny increments add up.
Let's hope I'm not delusional. LOL
Have a brilliant Wednesday, Ann!
bill
Liz Westwood from UK on October 28, 2020:
This is a very thought-provoking and interesting article. You have introduced this important topic well. There is plenty to think about. I hope you might be around for longer than 20 years though to see how the world fares.
Bill Holland (author) from Olympia, WA on October 28, 2020:
Thanks a bunch, John! This is one of those problems I won't be alive to see the outcome, but it is a problem worthy of great thought and bold action. Let's hope the next generation is wiser than the preceding ones.
Ann Carr from SW England on October 28, 2020:
It's good to make us think about all this and to try to find our own solution within our own lives. We all live differently, in varying degrees, so some will make more impact than others, negatively or positively.
It's hard to make changes when one is comfortable with life the way we've seen it for a while now.
On a personal level, we have exchanged one car for an electric, smaller one. It has benefits for us as well as the environment (no annual road tax, electricity is much cheaper than petrol, insurance is less, emissions are nil). I have modified my driving to try to charge up the car with regenerative braking (you take your foot off the accelerator in a pre-selected mode, and the car brakes itself, using the energy produced to create more charge). This means your range of miles is increased.
We have cut down on plastic. This is a difficult one as packaging still uses too much plastic, instead of paper, papier mâché, or light wood shavings. I don't think companies are doing enough to change that.
We are trying to be more self-sufficient, growing produce, using solar panels to generate power for lighting, placing more containers to use as water-butts (the water can be used to feed our cisterns and running water indoors).
This is a drop in the ocean but if we all did it - and it's not that difficult - then we would make more difference. Trouble is, we don't have a lot of time, so we need to do all these things more quickly.