The elephant in the room: Capitalism is not sustainable
By Sarah Jaclyn Hertrick, MPA
“Capitalism cannot function without growth and so here is the big thing that nobody wants to talk about and yet we have to: if we can’t have growth, we have to change capitalism.”
Capitalism is an unsustainable economic system. That idea may seem radical or extreme, particularly since the vast majority of us have been taught about and regularly experience neoliberal economics, but the truth is our current economic system is designed for consumption and growth, creating unsustainable conditions that are depleting our planet.
To further understand and explore this concept, Circular Triangle’s Executive Director, Jennifer Hill, recently interviewed Associate Research Professor of Economic History at the Duke University Sanford School of Public Policy, Dirk Philipsen, for his thoughts and expertise. Philipsen, a political economist and historian, has been working in the sustainability arena for thirty years and has written extensively about sustainability and economic metrics.
The interview began with what Phillipsen described as the five million dollar question, “What does sustainability mean to you?” Unsurprisingly, there are a lot of different definitions. Philipsen explained that initially sustainability came out of conversations concerned about the limits to growth. Therefore from the very beginning, in the political spirit, it is a question with an economic dimension.
Philipsen said that the term originated in the German forest industry by a ranger who wanted to maintain a forest in a way that could serve future generations the same way it serves the current. “Ultimately it is trying to figure out a way to run an economy and run a society in a way... so that we have in the 7th generation the same kinds of opportunities that you and I have today.” Specifically, sustainability means getting away from depletion and pollution, from degradation, destruction, and moving towards a circular economy.
Dirk Philipsen at TEDx “Chasing the Wrong Lead”
“If someone cares about sustainability, why should they also care about economics?”, Hill asked next. Phillipsen expressed his difficulty conceiving of anyone that does not care about sustainability, stating that if you care about the future of our children and grandchildren you have to care about sustainability because it is the proposition that we leave behind a world that provides equal or better opportunities.
However, “we are increasingly leaving behind a burning trash heap,” and the reason why is mostly because of our economic system. Phillipsen further explained that our current economic system does not know how to care for the future. Its one purpose is to create profit and growth through “extracting and exploiting and producing and creating evermore output,” ultimately producing for the trash dump.
If our current economic system works this way because it was designed for consumption and growth, we could also make it work a different way, Hill notes, further adding that we can choose a different economic model with different outcomes. “I describe waste as not a bug in the system but a feature of the system; it is designed to create waste and therefore it does.”
“I describe waste as not a bug in the system but a feature of the system; it is designed to create waste and therefore it does.”
The biggest elephant in the room is that the growth regime of our current economic system is not only unsustainable, it is logically impossible. Phillipsen turns to a book “Doughnut Economics,” by Kate Raworth, in which she describes that “sweet spot” in the center of a doughnut where everyone has what they need to thrive without exceeding the limits of the ecosystem.
Her book also examines the graph of exponential growth. Considered to be healthy and robust by economists, the United States currently has a growth rate of about 3%. At this rate, the economy (meaning consumption) would have to double every 25 years. Phillipsen states that this simply cannot happen no matter how much we innovate and improve efficiency. “This is a system that, more than any other system ever, benefits a shrinking number of people and we are now at a point where 8 people in the world have as much wealth as the bottom 50 percent (4 billion) of all people combined.” He continues to highlight the levels of inequality, “...you can basically throw out everything we believe about prosperity, freedom, democracy, justice ... all of that goes out the window.”
And yet, conservatives, liberals, and socialists have all subscribed to this idea of exponential growth. Phillipsen argues that we are already at a point where economic growth comes with more costs than benefits by destroying and exploiting, alienating, and producing inequalities.
However, we continue to live in a system that was deliberately designed to require growth. “Capitalism cannot function without growth and so here is the big thing that nobody wants to talk about and yet we have to, which is, if we can’t have growth we have to change capitalism.”
Perhaps the biggest challenge to making a change, is not so much designing an alternative economic model, as Philipsen states, but rather recruitment and organizing. “How do you get people to give themselves permission to imagine something different and better, because you and I and everybody in the world has never experienced anything other than capitalism. And to figure out a way to make it politically possible, to overcome the massively concentrated power and control in the hands of capital. That's a big step.”
To watch the complete interview (25 minutes) click here.
For more information and resources about these topics check out The Little Big Number by Dirk Philipsen, Economy for the Common Good by Christian Felbar and Gus Hagelberg and Prosperity Without Growth by Tim Jackson.
