The relentless revolution: a history of capitalism (68 page)

The best way to open opportunities to the children of the poorest in any society is to invest in public benefits like good schools, health care, parks, clean air, unpolluted water, effective police protection, and public art. Only in this way can some of the inequalities of very unlevel playing fields be addressed. This takes money or, more precisely, revenue. Peter Barnes has a number of ingenious ideas for raising money within the capitalist system. Barnes was one of the founders of Working Assets Long Distance, an organization that combines telecommunications with liberal do-gooding like encouraging customers to buy worthy books, donate to environmental causes, and fire off letters to their congressional representatives. In
Capitalism 3.0,
Barnes explores the idea of “the commons,” the things that we share like air, water, ecosystems, languages, and cultures. He makes a good case for including science, technology, and legal arrangements in our concept of the commons. Arguing that we need to cultivate our common wealth to balance private wealth, he stresses that what we own in common is much greater than we realize because we don’t think about it, measure it, or exploit it.

One of our greatest shared assets is the legal instrument of incorporation. We own it; our legislatures dispense articles of incorporation; our courts adjudicate corporate issues. So why not exact some rent for this valuable privilege? After all, it enables firms to limit their liability and create a new entity, the corporation, endowed with rights and privileges. Barnes also proposes new institutions to manage common property, now rather sloppily run by various government agencies, subject to the whims of incoming administrations. Using the Alaska Permanent Fund as an example, he shows how it turned the windfall from state leases to oil companies into a public investment company paying yearly dividends to every resident. He sees the need for more of the already existing state land trusts. Nothing if not imaginative, Barnes imagines a public awakened to its great wealth starting an air trust, a watershed trust, a buffalo commons trust, a children’s opportunity trust, and an airwaves trust. Like most reforms, the ones that Barnes advocates require that people break out of conventional ways of looking at things. In other words, they must innovate the way private entrepreneurs do.
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Feeding the world’s hungry has inspired Frances Moore Lappé, Walden Bello, and Raj Patel, all of whom have written powerful studies of what’s wrong with our efforts. Patel, a sociologist, worked at the World Bank, World Trade Organization, and the United Nations, experiences that turned him into an outspoken critic of organizations promoting globalization. Lappé achieved fame as the author of
Diet for a Small Planet,
which sold several million copies. In 1975, she launched Food First to educate Americans about the causes of world hunger. Like Sen, she has emphasized that world hunger is caused not by the lack of food but rather by the inability of hungry people to gain access to the food abundance that exists in the world. Contrasting the “thin democracy” of mere voting with a “living democracy” enriched by participants’ wise choices of what to buy and how to live, she is a tireless advocate for the poor. Bello, a sociologist like Patel, has founded Focus on the Global South, a policy research institute based in Bangkok.

The spike in food costs has triggered an interest in the potato, whose virtues have been rediscovered. The United Nations declared 2008 “the Year of the Potato.”
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Its price has not soared like those of grain and rice because it is highly perishable and hence not suitable for export. It is favored more in the West than elsewhere, but food experts have been urging the world’s poor farmers to plant them. Harvests ripen in fewer days with less land and fertilizer. Chinese production of potatoes rose 50 percent between 2003 and 2005. The fact that two of the most powerful newcomers to the world economy, China and India, must grapple with the prospects of famines means that the challenge of getting food to the hungry will not drop out of their minds, as it does so easily among the well fed.

These imaginative thinkers are not without critics. Opponents of De Soto’s program to secure land titles for the poor say that this effort weakens collective tenures. The poorest squatters may even be evicted when others, less poor with better claims, register the land. They lament that the most able of the poor benefit to the detriment of the least able. The same argument could be lodged against microlending institutions like the Grameen Bank. Not all poor women have the talent to run their own operations even if reasonable loans were made available to them. This criticism calls attention to the fact that capitalism is a system of rewards. Those who do well in their market transactions prosper. In traditional societies, men and women inherited their status while command economies like those of the former USSR, Eastern Europe, China, and Cuba offered their people equality and guarantees of a certain standard of living. Neither traditional nor command economies were very good at creating wealth. They suffered through years of famine, even in the modern period, but they did respect shared human needs and put a brake on the incessant competition among their people.

There’s actually a phenomenon called Yugonostalgia which is an expression of yearning for the days of leisure, fun, and equality once enjoyed in the Balkan states of the former Yugoslavia before its disintegration in 1989. As one sufferer from Yugonostalgia explained it, “in Yugoslavia, people had fun. It was a system for lazy people; if you were good or bad, you still got paid. Now, everything is about money, and this is not good for small people.”
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Those committed to the capitalist West want to scream, “But what about medical advances, great universities, laborsaving devices, easy global communication, and longer lives that hard work and deferred pleasure have brought us?” Worldwide life expectancy went from forty-eight years at mid-twentieth century to sixty-six years in 1999, and it’s continuing to rise! Still, it would be nice to eat cake while keeping lazy ways too.

Signs of a Green Revolution

The Green Revolution is not philanthropic, but it is visionary in its plans for the future. Capitalism’s voracious appetite for natural resources, especially oil, has led to the unthinkable: human beings making the atmosphere of their planet permanently inhospitable. It’s a problem so profound that it was hard to take it seriously. The moment of truth and celebrity arrived when Albert Gore’s movie
An Inconvenient Truth
won an Oscar, his book of the same name a Pulitzer, and his personal efforts a Nobel Peace Prize in 2007. Acceptance of the possibly monumental consequences of environmental degradation has been made difficult by the fear that it could not be solved in the usual way with new techniques. Or could it be?

Even though doubting Thomases continue to resist the idea of global warming, the elevated prices of oil in the first decade of the twenty-first century gave venture capitalists the push to move ahead on the technological front.
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The Natural Resources Defense Council Action Fund has run ads explaining that “tackling global warming will generate a jobs program of epic proportions.” The U.S. Senate has a Climate Security Act on its docket. The Russians have pioneered nuclear-powered civilian ships as icebreakers in the Arctic Circle. Nuclear power, never abandoned in France, may get a second chance to replace oil elsewhere.

Rediscovering human power may also fight the battle of the bulging waistline. Municipalities in Europe are buying thousands of bicycles to place strategically around their cities for their citizens to pedal to their destinations. Most popular in France and Spain, sharing bikes joins old technology to new. Electronic cards and computerized bike stands let riders pick up and drop bikes with fees easily registered on their credit cards.
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The green industry is finding cheap space for making the component parts of their wind machines and solar panels in the closed factories of the Rust Belt. Builders in Germany are constructing houses that use virtually no energy for temperature control. Venture capital is accumulating for the next round of fuel innovation. Detroit is getting serious about making electric cars. The broad reform and recovery plan of President Barack Obama made energy independence for the United States one of its goals. The adjustments are going to be wrenching. Still, the augmentation of artificial energy is absolutely essential if we are to confine evidence of poverty to museums.

Some Closing Thoughts about Capitalism

Capitalism is not a unified, coordinated system, despite that suggestion in the word “system.” Rather it is a set of practices and institutions that permit billions of people to pursue their economic interests in the marketplace. There is no monolithic international corporate power, but many diverse players in the world market with, yes, a wide disparity in the influence that each wields. Among all the legitimate interests at play in the market are the less appealing opportunities to exploit legal loopholes, buyers’ ignorance, and unexpected windfalls. Because of these and without coordination from any center, capitalists can cause serious damage, as the subprime mortgage meltdown abundantly proved. And it will not be the last panic. The dot-com bubble and the housing bubble had their forerunners in the South Sea Bubble of the eighteenth century and the tulip bubble of the seventeenth century. It’s hard to believe that it won’t happen again.

Capitalism’s history suggests that democracy and capitalism might be decoupled because they generate values that are often in conflict. Democracy means majority rule with regular, contested elections; American and European democracies include the protection of civil and personal rights. Capitalism refers to investments in productive processes that may or may not rely on politically empowered participants. Capitalism is amoral while democracy is suffused with moral concerns about the well-being of the whole and the rectitude of leaders. Since capitalist growth depends upon innovation, and innovation upsets the status quo, the free market system regularly creates social problems that the government must address. “We, the people” then jars against “I, the individual.” Capitalism relies upon technological wizardry to maintain its momentum, but applying new techniques requires stability in order to secure labor, supplies, customers, legal protection, and even peace. Democracy and capitalism go together nicely, but they often act like the couple that can neither live with nor live without each other.

A good deal more fraught with tension is the relationship between capitalism and equality, but its roots are entwined. The concept of equality as a prime social good emerged out of the Enlightenment. It found expression in the closing decades of the eighteenth century in the American Declaration of Independence and the French Revolutionary slogan of “Liberty, equality, and fraternity.” Prior to that, the inequality that made some people dukes and others porters seemed as normal as the rising of the sun each morning. The Enlightenment thinking that undermined this acceptance of inequality owed much to capitalism, to the awe stirred by the human capacity to comprehend and harness natural forces for the benefit of all. The prosperity that the French espied across the Channel in England gave rise to the hope that the future would bring benefits, both tangible and intangible and previously unthinkable, to men and women, among them to be treated equally. Equality has remained more ideal than real, but an ideal with legs.

American economic leadership is now about one hundred and twenty years old. Since the middle of the 1880s the United States has had the world’s largest economy, accounting for 25 percent of the whole, except during post–World War II decades, when its share totaled 50 percent! It will probably remain twice the size of China for the next two decades. Unlike the other two great centers of wealth and dynamism—Europe and East Asia—the United States is geographically independent with vibrant market centers on coasts that front both the Atlantic and Pacific trade worlds.
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Globalization, which the United States has pushed for at least a century, has succeeded spectacularly in creating many centers of influence and wealth. Perhaps because of this sponsorship, countries around the world consider America’s leadership essential to recover the momentum behind its once expanding prosperity. Americans too are learning that what’s good for a national economy is also good for a global one: competition, open access, and cooperative ventures. Nothing promotes growth more than having rich neighbors, as Adam Smith pointed out in his eighteenth-century classic
Wealth of Nations.

Another eighteenth-century seer, James Madison, the so-called father of our Constitution, said something else pertinent to our times when he warned that the concentration of power in one branch of government is tantamount to despotism. The whole structure of the U.S. Constitution involves a balance of powers with additional checks on abuses (you remember those civics lectures on “checks and balances”). The danger of concentration is even greater if the two leviathans in our lives—the government and the economy—read off the same profit sheet. When government works hand in glove with the nation’s businessmen, you can be sure that the market’s own corrective mechanism will be disabled. Competition will then be muted, cronyism rampant, and inefficiency protected. The cash nexus between candidates for public office and wealthy donors, including labor unions, causes problems. Lobbyists have a field day with the quid pro quo of donations and favors. In the long run, raising small campaign donations from ordinary voters through the Internet may reduce politicians’ dependence upon big-buck contributions. For the near future the convergence of good intentions with close encounters with disaster might revive some of the market’s own self-regulating mechanisms. New and better regulatory systems are in the offing.