What’s Wrong with Capitalism?

James Eggert is the author of Meadowlark Economics and a professor at the University of Wisconsin-Stout. Before Wall Street crumbled and the unemployment rate soared, Eggert was arguing for a new perspective on economics–one that included ecological principles, community values, and spiritual insights. From the wisdom of Thoreau to the close-study of meadowlarks in the fields near his home, Eggert combines various influences to form a new economic consciousness and a welcome change from unsustainable free-market capitalism.

The following is a sample chapter from Meadowlark Economics. Entitled “What’s Wrong with Capitalism”, the piece seemed fitting for a day when the Dow closed at its lowest level in 12 years.

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What’s Wrong with Capitalism?
By James Eggert

Earth is a laboratory wherein Nature has laid before us the results of countless experiments. She speaks to us; now let us listen.
—E. O. Wilson

Despite its materialistic virtues, something’s amiss in the Land of Capitalism. It’s a quality or force that all too often violates the natural laws that normally ensure life’s beauty and balance, its health and long-term continuity.

To search for that undermining force, let us pretend for a moment that you could literally pick up market capitalism as if it were a flawed gemstone. Now place it in the palm of your hand and, turning it over and over, inspect the gem for defects, fissures, and possible flaws. What would be the economist’s perspective? Now angle it slightly differently; what would be the viewpoint of an ecologist? And finally, is it possible to look at our economy from a prairie’s perspective, or that of an old growth forest?

Economist’s Perspective

Economists do acknowledge capitalism’s imperfections, often describing its defects as “market failures.” These include the many unintended impacts ballooning beyond regular business costs into what economists call “externalities,” where consumption and profit-making have spillover effects that all too often damage human health and landscapes, degrade water and air quality, endanger plant and animal species, and possibly, over time, even alter the very stability of Earth’s climate. And the remedy?

Corrective measures will usually require government intervention: first to scientifically verify damages, then to initiate policies—such as a health tax (on cigarettes), a green tax (on emissions), or the trading of pollution credits—and to enforce clean air, water, and endangered species laws or negotiate global agreements (whaling, chlorofluorocarbons, CO2, etc.) enforced by protocols, regulatory oversight, and international law.

Conceptually, these measures can be understood in the context of motivating businesses and consumers to pay the full direct and indirect costs (full-cost accounting) of their economic activity, including the costs of collateral damages to natural and human environments. Simply put, it’s a fairness issue, of playing the “game” (the capitalist game) fair and square. Let us look at a contemporary illustration regarding human health, a concern that was recently brought to my attention by the Physicians for Social Responsibility, an environmental advocacy group in Washington, DC.

Childhood Asthma
The issue is the ever-worsening problem of childhood asthma. Indeed, there’s good evidence that asthma is exacerbated by truck and automobile pollution, including elevated ground-level ozone in U.S. cities. Consider the following observations reported by a U.S. News and World Report article on the subject of transportation gridlock and urban sprawl:

• During the 1996 Olympics, Atlanta officials took dramatic steps to limit car traffic in the city. The measures worked so well that the number of cars in the morning rush hour dropped by 22.5 percent. But there was another benefit:
• The number of children suffering asthma attacks, a leading cause of childhood illness, dropped dramatically.

Atlanta’s inadvertent experiment and its intriguing results dovetail with other studies suggesting that ozone increases the incidence of asthmatic attacks (especially for inner-city children).

Armed with this information, I approached a Wisconsin state lawmaker asking if he would consider initiating a modest increase in our state’s gas tax (say, five cents) earmarked not for the usual highway construction and maintenance, but to reimburse parents for asthma-related expenses. I told him that I was upset because I was paying too little for my gas, disturbed that I was not paying my fair share of the spillover effects of my driving.

I asked why we should force families with sick children to subsidize an artificially low-cost transportation system. Relevant expenses might include:

• emergency trips to the hospital
• wages lost attending sick children
• asthma medication, inhalers, charcoal-impregnated face masks
• doctor’s fees and higher insurance premiums

Drivers, I added, should also be responsible for the extra costs of rescheduling outdoor sporting events, since many asthmatic children are forced to remain indoors during periodic ozone alerts. An increase in our federal and/or state gasoline tax would be a good beginning, a step towards a fair, full-cost accounting.

Any increase in fuel prices, whether through market forces (as in 2008) or a pollution tax, will create hardships, yes, but benefits too, including cleaner air and, as economists predict, fewer traffic deaths and injuries. Also, with higher gas prices, there will be more investments in biking and walking trails. Indeed, walkers and bikers in some cities have already pressured local governments to promote more walkable and bike-friendly neighborhoods. Whereas Atlanta is infamous for its unwalkability, Portland, Oregon, the other extreme, has some sixteen pedestrian districts where the street design, sidewalks, and traffic laws give pedestrians priority. And in Davis, California, there are safe, dedicated bike lanes on most city streets. Moreover, developers in Davis are required to provide bike access to new residential and commercial developments.

Full-cost accounting would also encourage more carpooling and, if available, greater use of public transit. Not only would urban adults and children breathe easier, but trees and wildlife would too. And finally, if truckers and car owners paid their full direct and indirect costs, economists believe these extra costs would begin to reduce road congestion while diminishing the political pressure to widen roads and highways, thus minimizing damage to local communities and to the landscape itself.

Of course, the economist’s perspective—even with good science, logic, and sensible remedies on its side—is usually no match for well-funded special interests. In the case of increasing gas taxes for legitimate spillover costs, the powerful highway, oil, and automobile lobbies will often block legislation that would (as they see it), harm their industries. Indeed, in response to my gas tax suggestion, my representative told me, “I understand your point and yes, I even agree with you,” but then added, “Jim, you’d better forget it, politically it ain’t going to happen.”

Ecologist’s Perspective

I dream of a day when parents, children, politicians, economists, CEOs, bankers, miners, and loggers, among others, make decisions based upon a genuine ecological consciousness, including an understanding and full appreciation of the broad spectrum of environmental values that allow ecosystems to be healthy and whole.

As an example, consider the issue of logging in an old-growth forest, such as the few that still exist in the United States. In what ways would the ecologists’ perspective differ from that of a for-profit capitalist? To answer this question, I find it helpful to picture in my mind an image of a playground Teeter-Totter that has a large, colorful basket at each end. The basket on the left side represents capitalist values and the one on the right represents ecological values. Children begin placing weighted objects representing the different sets of values in each basket. What weights would they put into the capitalist values basket? Benefits might include:

• the monetary value of wood products (including export earnings), incomes for loggers, truckers, and sawmill operators
• increased sales for equipment, including manufacturing jobs
• an increase in these companies’ short-term profits
• corporate stock prices that would go up, adding value to stockholder portfolios

Importantly, from the for-profit point of view, there would be pressure to maximize these values in the short turn by clear-cutting the forest.

Now turning our attention to the right side (ecological values), what representative weights would the children put into their basket? In some old-growth forests (such as the Menominee Indian Reservation in Wisconsin), tribes engage in logging, which provides modest economic benefits while also maintaining their forest’s original ecological makeup for generations. The Menominee remove a relatively small portion of the forest each year using sustainable yield management principles that incorporate selective cutting based on cultural constraints laid down by tribal elders over a hundred years ago. With this selective cutting strategy, there is some monetary value gained from lumber, logging, sawmill operator’s jobs, and some export profits. The return in the short run is lower (compared to clear-cutting), yet over many years, income would be relatively stable.

Now in addition to the modest economic benefits, let’s ask the children to put into their basket the following weights representing a broader spectrum of ecological, scientific, and spiritual values:

• a habitat for endangered plants and animals
• the possibility of discovering new and effective wonder drugs from the forest’s plant life
• a “living classroom” to study a healthy ecosystem
• a source of beauty, inspiration, and spiritual sustenance
• cooler, cleaner, and healthier streams and rivers (compared to a clear-cut forest)
• the recycling of nutrients and the production of new topsoil
• the ability to sequester atmospheric carbon and generate oxygen

Tropical forests may also produce a sustainable supply of nuts, berries, valuable barks, tubers, mushrooms, and medicines for those who know how to find them. From an ecological perspective, forests roll up their sleeves and work hard to provide invisible yet important benefits, or so-called ecological services, based on the productivity of the forests’ intrinsic natural capital.

When we compare them, the children’s ecological-values basket ought to easily outweigh the capitalist basket. Yet in our current global economic arrangement of ultrapowerful forces of corrupt politics, obsession with unfettered free trade—plus, of course, inflated greed and short-run profit maximization—we find that the capitalist basket usually wins out. It’s as if the global economy were defying gravity as well as other vital laws of nature.

The Prairie’s Perspective

If I were asked to pick an analogy from which I might learn the principles for a future capitalism, my choice would be a native prairie ecosystem I walk by nearly every day. Some would think my example a little odd; it’s not exactly global free-market capitalism, but more a living example of what might be called local natural capitalism. Indeed, my prairie has become a mentor for me, as if it were trying to teach its lessons to a slow-learning yet earnest economics student. Nevertheless, I have now discovered that this flowering grassland is not only attractive but exceptionally diverse, and, like a model sustainable economy, remarkably productive, turning sunbeams into biotic beauty and eventually converting vegetation into rich, deep, loamy soils.

In addition, this prairie ecosystem has achieved something quite amazing: an exquisite balance between life and death, humming along year after year in a kind of steady-state, economic efficiency. It recycles virtually everything and unfailingly and blooms anew, spring after spring and every summer too!

Prairies are resilient in severe drought, yet they can also handle a week of drenching rain. Moles, monarch butterflies, and meadowlarks survive there. Blue stems and Indian grasses live in prairies too, and so do black-eyed Susans, purple prairie clovers, stiff goldenrods, and late-summer blooms of blazing stars.

Sometimes I also enjoy simply lying down in my prairie, accepting gravity, as it were, my back stretched out along the rough ground, my eyes taking in sun, cloud, flower, seedpod, and there high above me, tufts of blue stem grasses bending down and up, up and down, as if there were an invisible ocean of windblown waves.

So one might ask: What direction, what trajectory will we be able to follow to a more natural, indeed a more balanced capitalism? Can meadowlark values readjust and redress capitalism’s spillover effects and correct its corrosive externalities?

Can we conserve (as if an ecological consciousness were our second nature) our planet’s grasslands, soils, ancient forests, subterranean waters, its oceans, rivers, and reefs? Like the prairie, can we find a more harmonic, natural equilibrium that abounds in beauty, balance, and biodiversity? And finally, can we utilize renewable energies and make consumables durable (and fully recyclable) while preserving Earth’s realms of amazement, its landscapes of surprise?

From Meadowlark Economics by James Eggert, published by North Atlantic Books, copyright © 2009 by James Eggert.

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