Skip to main content

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.



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!



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.

Scroll to Continue

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?

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.