Capitalism as Social Control

Some people have talked about actual functioning communism. It was the understanding that we have to deal with what we have, rather than what we wish we had. Soviet communism, for example, had nothing to do with what Marx wrote about. Nonetheless, Marx was irrelevant for someone living in the USSR. Someone could point to non-authoritarian examples of socialism and other left-wing politics, but that was besides the point. The Soviet citizen had to deal with the reality before them.

That is the situation we find ourselves right now with capitalism. Despite all the rhetoric, actual functioning capitalism doesn’t operate according to theory and ideal. It relates to what some have come to call capitalist realism—this is the belief that no matter how bad it is there is nothing better, that in some basic sense this is as good as it can get, and even that it is inevitable. Capitalism, in this view, is merely human nature. It’s pure cynicism and it shuts down imagination.

This is why it is all the more important to look at a social system for what it is. And, indeed, capitalism is first and foremost a social system. Economic ideology is window dressing. This was made clear to me by recent data I was looking at. There is one report from the UN. It looked major industries and specific externalized costs related to the environment. It was determined that many of these major industries either broke even or made a net loss. It was only because of externalization that they made any profit at all. To consider how massive is that externalization, all you have to is look at how wealthy and powerful are the corporations in these industries.

Those costs still are paid. Just not by the big biz. They are paid for by governments through subsidies, tax breaks, below market price resource extraction, public clean up of environmental destruction, etc. This is to say that all of this is paid for by the public taxpayer and by public natural resources, paid for in money and blood. Neoliberalism and corporatism also comes with many other costs that are difficult, maybe impossible, to calculate: destruction of communities, loss of social capital, destruction of culture of trust, and similar things. Actual functioning capitalism puts immense pressure on every aspect of society. And it is very much personal. The biggest producer of pollution is big biz. That pollution is responsible for 40% of the deaths in the world. Not just deaths, but also shortened lives, disability, suffering, and healthcare costs.

The UN report was rather limited. It only took into account easily measured externalizations. They barely got at the reality of the situation which is much starker. As a more specific example, consider Walmart. It has received a lot of attention and so its impact has been studied thoroughly. Walmart is the single largest employer in the United States. Their employees are the single largest group of welfare recipients in the country. And Walmart itself is the single largest beneficiary of the use of welfare such as food stamps. Walmart is the ultimate Welfare Queen.

It’s worse than only that. When a Walmart comes to a community, it is a net loss to the local economy. It forces out most of the local businesses. This leads to the death of downtowns which were the hearts of these communities. Walmart stores also decrease the number of employed, which is to say they either force more people into unemployment or to move out of town to look for work. For those who still are employed, Walmart drives down wages and so increases poverty even among the employed, which necessitates higher rates of welfare.

It occurred to me that Walmart isn’t being run as a normal for-profit business. It’s sole role is to externalize costs and redirect wealth upward while keeping the masses just barely comfortable enough with cheap food and cheap consumer crap, similar to the Roman plutocratic tactic of social control through bread and circus. But the only reason the masses need all that cheap stuff is because corporations like Walmart have put so many people into poverty. Their communities destroyed and their lives made desperate, consumerism becomes the new religion and Walmart the official state church.

As such, Walmart is the perfect expression of actual functioning capitalism, in the United States and increasingly around the world. But Walmart is far from alone (maybe a better or rather worst example is Amazon, starkly demonstrating what non-profit corporation looks like: Leaving Amazon and Plutocratic Mirage of Self-Made Billionaires). The UN report shows that some top industries aren’t being run like normal for-profit businesses, considering they aren’t really making profits when externalized costs are included.

That is to say they are a net loss for society as a whole. But it is a misnomer to call them externalized costs because there is no place to externalize them. We are part of the biosphere. Either we pay the costs now or we pay for them later, possibly not with money but with the lives of billions of humans when natural resource depletion reaches its inevitable conclusion, when ecosystems collapse and climate change catastrophes become the norm.

Capitalism is simply another name for corporatism and corporatocracy, what might ore accurately be called fascism. The reality has nothing to do with the rhetoric about competitive free markets. Like the political system, the economic system is rigged. It’s social control by another means.

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None of the world’s top industries would be profitable if they paid for the natural capital they use
by David Roberts

Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment: None of the world’s top industrial sectors would be profitable if they were paying their full freight. Zero.

That amounts to an global industrial system built on sleight of hand. As Paul Hawken likes to put it, we are stealing the future, selling it in the present, and calling it GDP.

This gets back to what I was saying at the top. The notion of “externalities” is so technical, such an economist’s term. Got a few unfortunate side effects, so just move some numbers from Column A to Column B, right?

But the UNEP report makes clear that what’s going on today is more than a few accounting oversights here and there. The distance between today’s industrial systems and truly sustainable industrial systems — systems that do not spend down stored natural capital but instead integrate into current energy and material flows — is not one of degree, but one of kind. What’s needed is not just better accounting but a new global industrial system, a new way of providing for human wellbeing, and fast. That means a revolution.

New UN report finds almost no industry profitable if environmental costs were included
by Michael Thomas

new report by Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program, examined the money earned by the biggest industries on this planet, and then contrasted them with 100 different types of environmental costs. To make this easier, they turned these 100 categories into 6: water use, land use, greenhouse gas emissions, waste pollution, land pollution, and water pollution.

The report found that when you took the externalized costs into effect, essentially NONE of the industries was actually making a profit. The huge profit margins being made by the world’s most profitable industries (oil, meat, tobacco, mining, electronics) is being paid for against the future: we are trading long term sustainability for the benefit of shareholders. Sometimes the environmental costs vastly outweighed revenue, meaning that these industries would be constantly losing money had they actually been paying for the ecological damage and strain they were causing.

In terms of land and water use: almost no companies are actually paying a price remotely comparable for what they are actually taking away from the ecosystems. Consider that fact that Nestle pumps water out of drought-ridden California without limits for an unannounced but extremely low price, and turns around and sells this exact same water back to those affected by the resulting droughts for approximate $4 billion profit per year (based on 2012 data).

The even scarier fact in all this is that the indirect costs “downstream” from the industries are actually even greater.

World’s top firms cause $2.2tn of environmental damage, report estimates
by Juliette Jowit

The cost of pollution and other damage to the natural environment caused by the world’s biggest companies would wipe out more than one-third of their profits if they were held financially accountable, a major unpublished study for the United Nations has found. […]

The study, conducted by London-based consultancy Trucost and due to be published this summer, found the estimated combined damage was worth US$2.2 trillion (£1.4tn) in 2008 – a figure bigger than the national economies of all but seven countries in the world that year.

The figure equates to 6-7% of the companies’ combined turnover, or an average of one-third of their profits, though some businesses would be much harder hit than others. […]

The biggest single impact on the $2.2tn estimate, accounting for more than half of the total, was emissions of greenhouse gases blamed for climate change. Other major “costs” were local air pollution such as particulates, and the damage caused by the over-use and pollution of freshwater.

The true figure is likely to be even higher because the $2.2tn does not include damage caused by household and government consumption of goods and services, such as energy used to power appliances or waste; the “social impacts” such as the migration of people driven out of affected areas, or the long-term effects of any damage other than that from climate change. The final report will also include a higher total estimate which includes those long-term effects of problems such as toxic waste.

The price of environmental destruction? There is none
by Andrew Simms

A new UN report estimates that accounting for the environmental damage of the world’s 3,000 biggest companies would wipe out one-third of their profits. Any precise figure, however, is a matter of how risk is quantified and of where you draw the line. In 2006, for example, the New Economics Foundation (NEF), of which I am the policy director, looked at the oil companies BP and Shell, who together had recently reported profits of £25bn. By applying the Treasury’s own estimates of the social and environmental cost of carbon emissions, we calculated that the total bill for those costs would reach £46.5bn, massively outweighing profits and plunging the companies into the red.

Yet in exercises like this, we quickly hit the paradox of environmental economics. By putting a price on nature, hopefully it makes it less likely that we will treat the world, and its natural resources, as if it were a business in liquidation. Yet there is a point when it becomes meaningless to treat the ecosystems upon which we depend as mere commodities with a price for trading. For example, what price would you put on the additional tonne of carbon which, when burned, triggers irreversible, catastrophic climate change? Who would have the right to even consider selling off the climate upon which civilisation depends? The avoidance of such damage is literally priceless.

If that sounds dramatic, consider that last September a large, international group of scientists published a paper in the journal Nature which identified nine key planetary boundaries for key biological systems upon which we depend. They found that we had already transgressed three of those, and were on the cusp of several others. All are potential points of no return as such complex systems begin interacting.

The huge advantage of the UN work is that it attempts to improve the feedback system between the economy and its ultimate parent company, the biosphere. Better risk assessment and value measurement is essential to help prevent what happened to banks happening to the planet.

The concept of a balanced budget, so loved by conservatives in relation to finance and spending, seems to be an alien concept when the consumption of natural resources and the production of waste is concerned. Yet it is far more important to achieve a balanced environmental budget than an economic one. You can always print more money, but you can’t print more planet. As John Ruskin put it, “There is no wealth but life.”

Hitting toughest climate target will save world $30tn in damages, analysis shows
by Damian Carrington

Achieving the toughest climate change target set in the global Paris agreement will save the world about $30tn in damages, far more than the costs of cutting carbon emissions, according to a new economic analysis.

Most nations, representing 90% of global population, would benefit economically from keeping global warming to 1.5C above pre-industrial levels, the research indicates. This includes almost all the world’s poorest countries, as well as the three biggest economies – the US, China and Japan – contradicting the claim of US president, Donald Trump, that climate action is too costly. […]

The research, published the journal Nature, is among the first to assess the economic impact of meeting the Paris climate goals. Data from the last 50 years shows clearly that when temperatures rise, GDP and other economic measures fall in most nations, due to impacts on factors including labour productivity, agricultural output and health.

The scientists used this relationship and 40 global climate models to estimate the future economic impact of meeting the 1.5C target – a tough goal given the world has already experienced 1C of man-made warming. They also assessed the long-standing 2C target and the impact of 3C of warming, which is the level expected unless current plans for action are increased.

“By the end of the century, we find the world will be about 3% wealthier if we actually achieve the 1.5C target relative to 2C target,” said Marshall Burke, assistant professor at Stanford University in the US, who led the new work. “In dollar terms, this represents about $30tn in cumulative benefits.”

The estimated cost of meeting the 1.5C target is about $0.5tn over the next 30 years,” he said: “So our evidence suggest the benefits of meeting the targets vastly outweigh the costs.”

“We also calculated what’s going to be the additional economic cost if we hit 3C instead of 2C. This will cost the globe an additional 5-10% of GDP, relative to 2C; that is tens of trillions of dollars. These are very large numbers,” he said.

The researchers acknowledge there are significant uncertainties in their economic modelling, but said they are confident that keeping climate change to 1.5C is very likely to benefit the vast majority of the world’s people.

Frrrreeeeeddoommmm?????

Jared Dillian wrote an article simply titled, Frrrreeeeeddoommmm. I think we are supposed to imagine the title being screamed by Mel Gibson as his Braveheart character, William Wallace, is tortured to death. The author compares two states, concluding that he prefers ‘freedom’:

“If you want someone from Connecticut to get all riled up, drive extra slow in the passing lane. Connecticutians are very particular about that. The right lane is for traveling, the left lane is for passing. If you’re in the left lane for any other reason than passing, you are a jerk.

“So if you really want to ruin someone’s day, drive in the left lane at about 50 miles per hour. They will be grumpy for three days straight, I assure you.

“I was telling this story to one of my South Carolina friends—how upset people from Connecticut get about this, and how people from South Carolina basically drive however the hell they want—and he said ruefully, “Freedom…”

“He’s a guy who perhaps likes lots of rules to organize society, and perhaps he’d rather live in a world where some law governs how you conduct yourself in every aspect of your life, including how you drive. I tell you what, after growing up in Connecticut and then spending the last six years in the South, I’m enjoying the freedom, even if it means I occasionally get stuck behind some idiot.”

Here is my response. Mine isn’t exactly a contrarian view. Rather, it’s more of a complexifying view.

I take seriously the freedom to act, even when others think it’s wrong, depending of course on other factors. But there is no such thing as absolute freedom, just trade-offs made between benefits and costs. There are always constraints upon our choices and, as social animals, most constraints involve a social element, whether or not laws are involved.

Freedom is complex. Freedom from what and/or toward what?

The driving example is perfect. Connecticut has one of the lowest rates of car accidents and fatalities in the country. And South Carolina has one of the highest. Comparing the most dangerous driving state to the safest, a driver is 10 times more likely to die in an accident.

Freedom from death is no small freedom. Yet there is more to life than just freedom from death. Authoritarian countries like Singapore probably have low car accident rates and fatalities, but I’d rather not live in an authoritarian country.

There needs to be a balance of freedoms. There is an individual’s freedom to act. And then there is the freedom to not suffer the consequences of the actions of others. There is nothing free in externalized costs or, to put it another way, all costs must be paid by someone. It’s related to the free rider problem and moral hazard.

That is supposed to be the purpose of well designed (i.e., fair and just) political, legal, and economic systems. Freedom doesn’t just happen. A free society is a creation of choices made by many people over many generations. Every law passed does have unintended consequences. But, then again, every law repealed or never passed in the first place also has unintended consequences. There is no escaping unintended consequences.

There is also a cultural component to this. Southern states like South Carolina have a different kind of culture than Northern states like Connecticut. Comparing the two regions, the South is accident prone in general with higher rates of not just car accidents but also such things as gun accidents. In the North, even in states with high gun ownership, there tends to be lower rates of gun accidents.

In Connecticut or Iowa, it’s not just lower rate of dying in accidents (car, gun, etc). These kinds of states have lower mortality rates in general and hence on average longer lifespans. Maybe it isn’t the different kinds of laws that are the significant causal factor. Instead, maybe it’s the cultural attitude that leads both to particular laws and particular behaviors. The laws don’t make Connecticut drivers more safe. It’s simply that safety-conscious Connecticut drivers want such laws, but they’d likely drive safer even without such laws.

I’m not sure ‘freedom’ is a central issue in examples like this. I doubt Connecticutians feel less free for having safer roads and more orderly driving behavior. It’s probably what they want. They are probably just valuing and emphasizing different freedoms than South Carolinians.

There is the popular saying that your freedom ends at my nose. Even that leaves much room for interpretation. If your factory is polluting the air I breathe, your freedom to pollute has fully entered not only my nose but also my lungs and bloodstream.

It’s no mere coincidence that states with high accident rates also tend to have high pollution rates. And no mere coinicidence that states with low accident rates tend to have low pollution rates. These are the kinds of factors that contribute to the disparity of mortality rates.

It also has to do with attitudes toward human life. The South, with its history of slavery, seems to view life as being cheap. Worker accident rates are also higher in the South. All of this does have to do with laws, regulations, and unionization (and laws that make union organization easier or harder). But that leaves the question of why life is perceived differently in some places. Why are Southerners more cavalier about life and death? And why do they explain this cavalier attitude as being an expression of liberty?

To many Northerners, this cavalier attitude would be perceived quite differently. It wouldn’t be placed in the frame of ‘liberty’. This relates to the North literally not being part of the Cavalier culture that became the mythos of the South. The Cavaliers fought on the losing side of the English Civil War and many of them escaped to Virginia where they helped establish a particular culture that was later embraced by many Southerners who never descended from Cavaliers*.

Cavalier culture was based on honor culture. It included, for example, dueling and violent fighting. Men had to prove themselves. Recent research shows that Southerners are still more aggressive today, compared to Northerners. This probably relates to higher rates of road rage and, of course, car accidents.

Our culture doesn’t just encourage or discourage freedom. It more importantly shapes our view of freedom.

(*The apparent origin of Dillian’s article is a bit ironic. William Wallace fought against England which was still ruled by a Norman king, which is to say ruled by those whose descendants would later be called Cavaliers in their defense of the king against the Roundheads. The French Normans had introduced such fine traditions as monarchy, aristocracy, and feudalism. But they also introduced a particular variety of honor culture that was based on class and caste, the very same tradition that became the partly fictionalized origin story of Southern culture.)