Saturday, August 13, 2016

How Individualist Economics Are Causing Planetary Eco-Collapse

By Richard Smith

While capitalism has brought unprecedented development, this same motor of development is now driving us towards ecological collapse, threatening to doom us all. Adam Smith's capitalist economics can offer no solution to the crisis because the crisis is the product of the same dynamic of competition-driven production for market that generates the ever-greater accumulation of wealth and consumption that Smithian economists celebrate. In his 1996 book The Future of Capitalism, Lester Thurow lucidly captured the socially suicidal aggregate impact of individualistic economic decision-making:
"Nowhere is capitalism's time horizon problem more acute than in the area of global environmentalism... What should a capitalistic society do about long-run environmental problems such as global warming or ozone depletion?... Using capitalist decision rules, the answer to what should be done today to prevent such problems is very clear -- do nothing. However large the negative effects fifty to one hundred years from now might be, their current discounted net present value is zero. If the current value of the future negative consequences is zero, then nothing should be spent today to prevent those distant problems from emerging. But if the negative effects are very large fifty to one hundred years from now, by then it will be too late to do anything to make the situation any better, since anything done at that time could only improve the situation another fifty to one hundred years into the future. So being good capitalists, those who live in the future, no matter how bad their problems are, will also decide to do nothing. Eventually a generation will arrive which cannot survive in the earth's altered environment, but by then it will be too late for them to do anything to prevent their own extinction. Each generation makes good capitalist decisions, yet the net effect is collective social suicide."

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