What’s so incomplete about capitalism?

I believe in capitalism as the best economic system out there (or, as Winston Churchill said about democracy, it’s the worst system there is except for all the others). But by its own conceptual framework, it is incomplete.

With the crash of the worldwide economic system (and since I have been without a job for a few months!) I’ve been musing about what the heck happened.

I’ve also spent the better part of 20 years involved at issues at the intersection of business and the environment, refusing to accept theĀ apparent zero-sum game between a healthy environment andĀ a strong economy.

All this had led me to the realization that capitalism as it is practiced today is incomplete. Not only is it incomplete, but economists aren’t even very rigorous in applying their own frameworks in evaluating the global economy. Some of the thoughts I will pursue on this blog include:

  • If economists talk about 3 factors of production — land, labor, and capital — why is only capital regularly and rigorously measured and reported?
  • If the true purpose of society is to “promote the general welfare”, why do we obsess on GDP growth, the stock market and other expressions of the financial dimensions of our lives? When did it come to be assumed that as long as GDP grew, everything else would take care of itself?
  • Despite 40 years of evidence that environmental regulation doesn’t tank the economy, why does that argument still come up and have such power every time a new environmental initiative is proposed?
  • Why would anyone ever believe that humans are rational actors pursuing their enlightened self interest? Why on earth would Alan Greenspan be surprised that greed could so skew the economy?
  • Much of this thinking originated with Adam Smith, and is little changed since his day. Why hasn’t it evolved more when other scientific and philosphic ideas have been greatly improved over the past two centuries?

Stay with me as I muse on these and other questions so try to fill in some of the missing areas that make capitalism incomplete!

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