The Trouble with Capitalism

Why our economy is broken and how to (hopefully, maybe) fix it

There’s a set of leaterbound books on a shelf in my living room that details the rise and fall of the Roman Empire. Each book spine features a classical column in a gradual state of decline, a metaphor for Rome’s slow collapse. Every time I pass by this row of books, I wonder: where in this process is American democracy? 

What’s the Problem?

The Roman Republic survived for more than 450 years before it devolved into civil war and ultimately, imperial rule. The empire that followed lasted yet another 500 years, at its height (about 150 years in) including 1.9 million square miles of land and between 50-90 million people – roughly 20% of the world’s population. Hand-wringing about the state of American democracy is everywhere, but we’re probably several decades (maybe even centuries) away from the point of total collapse. 

Still, the lines of system decline are definitely starting to show.

What made Rome so resilient wasn’t necessarily its system of governance but its economy. The logistics of empire allowed for free trade across the world while a world-dominating military enforced the rule of law. For the first time in history, millions of people were mandated to pay taxes and received some degree of benefit in return.

Questions of governance are almost always economic. People interact with their economy every single day while, in the best of circumstances, they engage with their government once every two to four years. The endurance of American democracy isn’t just a matter of the durability of a 235-year-old constitution, but of the economic system of capitalism that underpins it. 

Modern democracy and capitalism emerged at roughly the same time – Adam Smith’s Wealth of Nations was published just 117 days before the Declaration of Independence. The Founding Fathers of the United States wanted a new form of government because they were tired of monarchy robbing (taxing) them of their “well-earned” wealth. Democracy established the rights of the individual to elect his* own governance while capitalism defended a man’s* right to control his own resources.

As global capitalism approaches its 250th anniversary, it seems an apt time to reflect on the health of the economic system we live within.

Is it working? Is it well-positioned to endure?

I asked ChatGPT to summarize why capitalism is bad for humans in 200 words. Here’s what it said:

Capitalism, despite fostering economic growth, has significant negative impacts on human well-being. It creates and exacerbates economic inequality, leading to vast wealth disparities where a small percentage accumulates substantial wealth while the majority struggle. Workers are often exploited with low wages, poor working conditions, and minimal benefits. The relentless pursuit of profit also results in environmental degradation, as natural resources are overexploited, causing pollution and climate change.

Capitalism promotes consumerism, leading to materialism and negatively impacting mental health. The emphasis on consumption can overshadow the importance of relationships and community. Social fragmentation occurs as competition replaces cooperation, eroding social bonds and leading to isolation and loneliness. Additionally, capitalism creates significant disparities in healthcare access, resulting in worse health outcomes for disadvantaged populations.

While capitalism has driven economic growth and innovation, its focus on profit often comes at the expense of human and environmental well-being. Addressing these issues requires rethinking our economic systems to prioritize equity and sustainability, ensuring that the pursuit of profit does not undermine human welfare and the health of our planet.

You don’t have to be an all-seeing AI to know that capitalism is deeply problematic, but it helps to have it laid out so succinctly.  It’s popular to think that capitalism can somehow be modified in ways that diminish these substantial negative effects. But it’s more likely a well-conceived alternative would help prevent the environmental and social crisis that are undermining human life on earth.

Who Gets to Decide What We Do About It?

Progressive pundits and thought leaders are fond of referring to “late” or “late-stage capitalism,” suggesting that its expiration is near. Yet, despite the persistent and overwhelming evidence that capitalism is bad for humans (and life on planet Earth, generally) we can’t seem to make it obsolete. 

Humans are suckers for the status quo. Our species’ tendency to keep things the same has no doubt been an evolutionary asset, yet in modern times, it seems a growing liability. It’s too easy to believe that things will stay the way they are, forever, until someone forces us to think differently, often staring down the barrel of a gun. 

For the better half of the last century, Americans and Western Europeans prized the benefits of capitalism because of its implied support for individual freedom in contrast to the state control of Soviet Communism. American leaders (with help from the American media) successfully enshrined a prevailing narrative that freedom was good and control was bad, and any attempt by government to shape or control the choices of citizens in the name of greater equity was a form of fascist state control that deserved to be eradicated. Neoliberalism further entrenched these ideals. 

Not only did democratic capitalism make the rich richer and the poor poorer, it also served to justify American imperialism and military control in dozens of countries around the world, from Guatemala to Vietnam. 

In recent years, a growing number of experts and scholars have begun to agree publicly that neoliberalism at least has been bad for humans generally. The command economy of the Soviet system didn’t fare much better, proving to be equally vulnerable to imperialism and corruption. 

So here we are, still letting wealth accrue to the top while a majority of people accept conditions of basic wage slavery to survive life on earth. What to do?

The greatest barrier to system change is that those who benefit most from the system are also those who control it. That doesn’t just account for the billionaires who keep America’s politicians in their pockets. Widening income inequality and the growing expense of life in America means that those in the top 20% (people in households earning more than $150,000 a year) make the gross majority of decisions that sustain the status quo, while those in the bottom 80% clean floors, drive buses, teach school, and dispose of waste with little say over the systems that control their lives. This doesn’t just include decisions about fiscal policy or the national poverty level, but also what salary and benefits you offer your employees, how many hours a week constitutes “full-time work,” and how much vacation is enough. There is so longer an aspirational middle class in America. You’re either on one side of this divide or the other. And wherever you are, you either feel in control of your own life, or you don’t.

How Do We Make It Obsolete?

It’s not easy to envision a functional alternative to capitalism because it is so enmeshed in the function of almost every system humans have created. 

We take for granted that every object on the planet should have a fair market price and that everyone (except the most wealthy) need to work to afford to live.

But a successful alternative has to start with a contradictory organizing principle. 

If capitalism is built on “every man is for himself,” an alternative could be: “everyone is for everyone,” or “we are for us.”

This kind of tautological utopia may seem naive, but consider for a moment the idea of a Solidarity Economy.  How might we organize systems to support around community needs or mutual aid rather than individual gain?

Co-operative businesses are perhaps the most solidarity-driven “corporate” structure that manages to survive in a profit-driven ecosystem, and co-ops offer a uniquely viable model for doing something to convert profit-driven structures into community-driven structures immediately. But they are highly under-utilized and poorly understood. We’re so immersed in a cultural narrative that profit-driven capitalist behavior is the best way to operate, we can’t get our head out of the ground long enough to deeply consider a pathway to viable alternatives. 

Food distribution, housing and land ownership, childcare and education, and even services like law and healthcare have the potential to be re-imagined in co-operative, solidarity-driven ways. But the first step is the hardest: recognizing collectively that the current model is, if not broken then, breaking.

If you’re one of the status-quo-bearers making more than $130,000 a year, ask yourself: 

Am I willing to give up what I have to create something new?

NOTES

*Both democracy and capitalism were systems created by and for white men. While it’s easy to call them “broken,” the current state of both shows white men to be, on average, doing better than others.