What is capitalism?

“Capitalism is an economic system in which employers, using privately owned capital, hire wage labor to produce commodities for the purpose of making a profit” (Andersson & Eriksson 2010, p.125) Also 🔮 DICTATORSHIP-A for a definition of “workplace dictatorship.”

Another good book might be “how to be an anti-capitalist in the 21st centure” by Olin Wright.

three things work together: profit-driven capitalism, statusdriven consumerism and power-driven international competition

“The three mechanisms described above are interlinked and feed on each other. In order to get rich and strong a country needs to develop its economy in cooperation with national and international investors/capitalists. Capitalists look for states that are growth-oriented and provide the best workers and markets. Career- and consumption-oriented individuals again prefer firms and states that are economically successful” (Andersson & Eriksson 2010, p.125).

the sustainability problem with capitalism

“If money could grow without being invested in real capital for the production of material commodities, this urge could be reconciled with ecological sustainability, but to earn profits money must in general be invested in real assets (Andersson & Eriksson 2010, p.126).

unemployment increases if GDP goes below 3 percent

“According to the so called Okun’s law there is a fixed relationship between the rate of growth of real GDP and the change in the unemployment rate. If GDP grows less than a certain percent the rate of unemployment will increase. A 3 percent growth is often mentioned as necessary for the USA to avoid unemployment from increasing.1 This “normal” or “natural” growth in the production of goods and services is due to growth of the labor force, capital accumulation and technological progress. The link between growth and employment makes degrowth politically unfeasible as long as job creation primarily depends on the pro fi t motive” (Andersson & Eriksson 2010, p.126).

the financial market is huge and largely decoupled from real value

🔮 MMSFinanceVisual: The total value of foreign exchange transactions worldwide amounted to US$1.5 quadrillion (1 quadrillion is 1,000 trillion) in 2010, whereas the total value of international trade was only US$20 trillion, or less than 1.4 percent of all foreign exchange transactions. Says Lawrence Lau, professor of economic development, emeritus, Stanford University, and chairman, CIC International (Hong Kong): “The overwhelming majority of foreign exchange transactions are thus purely speculative, in effect, pure gambles, and serve no useful social purposes.” (Otto Scharmer & Katrin Kaufer, p.5)

Ecologically unstainable exchange: money flows might be balanced but physical resource flows are not

“Even if international trade may be balanced and pro fi table in money terms for all producers, it may be highly unbalanced and unsustainable in biophysical terms (Andersson and Lindroth 2001). In order to fi nance their imports or to pay their loans, some countries may be obliged to export natural resources, biomass or exergy to such an extent that their own life-support systems are weakened” (Andersson & Eriksson 2010, p.126). __ Andersson, J. O., & Eriksson, R. (2010). Chapter 9 “Growth and Degrowth - Is Another Economy Possible? In Elements of Ecological Economics (1st ed., p. 176). Taylor & Francis.

Scharmer, O., & Kaeufer, K. (2013). Leading from the Emerging Future: From Ego-System to Eco-System Economies (1st ed., p. 304). Berrett-Koehler Publishers.


ID OVERVIEW-CAPITALISM