Will Capitalism Collapse?
If you’ve watched any of my content on social media, you know I am not a fan of Capitalism. See also: my petition to the House of Commons, please sign :)
Capitalism, as an economic system, has been a dominant force in the world for centuries. It is characterized by private ownership of the means of production, the pursuit of profit, and the market-driven allocation of resources. However, despite its widespread adoption and celebrated success, capitalism is inherently unsustainable and in my opinion is likely to collapse.
But fear not, after I explain why capitalism will inevitably collapse due to its unsustainability, I will outline ways that we can amend our current capitalist system towards a more fair and equitable system.
How is Capitalism Unstable? Let me count the ways
Constant growth is impossible
There are several reasons why I believe capitalism to be unsustainable. First and foremost, capitalism is based on the constant growth of production and consumption. In a capitalist system, businesses are constantly seeking to increase their profits. This means that they must either sell more products and services, or charge more for those products and services.
In order to sell more products and services, you must constantly increase production, which puts a strain on natural resources and contributes to the environmental degradation we are witnessing. The depletion of these resources and the eventual destruction of the environment will ultimately lead to a collapse of the system.
If selling higher quantities is not possible, the companies must charge more for the same products and receive a higher profit per unit. This is inherently unsustainable given the fact that the same population who are being underpaid for their labour (in the pursuit of higher profits) is the same population who must buy the overpriced items. As the gap between rich and poor grows, there are less people able to afford groceries, let alone consumer goods that are not a necessity.
2. Capitalism is causing growing inequality
Capitalism promotes inequality.
One of the ways in which businesses maximize their profits is by keeping their labour costs as low as possible. This is accomplished by using low-wage labour, requiring long (often unpaid) working hours, and providing poor working conditions. Benefits previously enjoyed by employees start to disappear, such as health insurance, paid time off and retirement plans.
When there is an economic downturn it is always accompanied by mass layoffs. In the Capitalist system, destroying the livelihoods of thousands of employees is preferable to losing profits for shareholders.
Let that sink in.
If you survive layoffs, you will be told how lucky you are. However, you are still being exploited. In order for the capitalist system to work and for profits to occur, the employees must be providing more value to the company than they are being paid. The moment this shifts and the employee costs more than they’re bringing in, they’re history. Those profiting off the labour are the executives and shareholders of the corporations. This results in the concentration of wealth in the hands of a few, which leads to widespread poverty and social unrest.
Are we there yet?
The pursuit of profit and the market-driven allocation of resources leads to a concentration of wealth in the hands of a few, while leaving most others behind. Once most of the wealth is concentrated at the heads of corporations, the natural progression is that the companies start to cannibalize each other. Mergers and acquisitions if you will. The pursuit of continual profit growth leads to the eventual creation of monopolies or oligopolies, where a small number of companies control a large share of the market. This further exacerbates the concentration of wealth and power in the hands of the few, while also limiting competition and innovation.
Capitalism contributes to growing social inequalities. Access to many resources such as education, healthcare, and housing are often tied to income and wealth. Those with more resources can access better quality resources, while those with fewer resources may struggle to access basic necessities. This perpetuates the cycle of poverty and social inequality.
It’s not a coincidence that corporations are trying to erode these public services and make them ‘for profit’ and therefore only accessible to those who have the means to afford them.
3. Capitalism leads to financial crisis
Capitalism is prone to financial crisis. The pursuit of profit can lead to speculative bubbles and financial instability. In a capitalist system, banks and financial institutions are incentivized to take risks in order to make profits. This can result in the creation and proliferation of complex financial instruments that are poorly understood, difficult to manage and carry high levels of risk.
When these financial instruments fail, it can lead to widespread economic collapse. In the lead up to the 2008 financial crisis, there was a proliferation of complex financial instruments such as mortgage-backed securities and collateralized debt obligations. These instruments were poorly understood and their risk levels were not adequately assessed, leading to a collapse of the housing market and subsequent financial crisis.
It’s happening again now as we’re seeing bank after bank in the United States fail. (Sidenote: why is it that these banks and their shareholders are made whole when these things happen while people are left to starve?)
Another factor contributing to financial crises in capitalism is the reliance on debt. In a capitalist system, debt is used to finance growth and investment. However, if too much debt is taken on, it can become unsustainable and lead to a financial crisis. This was another contributing factor to the 2008 financial crisis, where a large number of homeowners took on debt they could not afford, leading to a collapse of the housing market.
The pursuit of profit leads to a focus on short-term gains over long-term stability. This results in risky investments and speculation, which further exacerbates instability and increases the risk of financial crises.
4. How much can a consumer consume?
Capitalism is dependent on consumerism. People are encouraged to consume more and more, as this drives economic growth. However, this constant consumption is leading to environmental degradation, resource depletion, and ultimately the collapse of the system.
Consumerism relies on the consumption of resources such as fossil fuels, minerals and water. These resources are finite (once they’re gone they’re gone!) and can be depleted over time, which leads to environmental damage and resource scarcity.
The culture of consumerism encourages people to continually consume more and more, leading to a cycle of overproduction and waste.
Consumerism contributes to economic instability by encouraging people to take on debt to finance their consumption. We’ve already gone over why this is not a good thing.
This is all very depressing. What comes after Capitalism?
Usually whenever I criticize capitalism, I get comments such as:
“So we become communist? No thank you!”
Note: most of these comments are from accounts which look to be bots. Either they are bots paid for by billionaires to criticize anyone badmouthing capitalism, or they’re people too insecure about their views to show their faces and make videos about their stance. Not sure which it is, I just know that none of them have made a video when I’ve asked them to substantiate their views.
There are some things about our current systems that work, if you take out the greed and inequality. It is important that we shift towards more sustainable and responsible production and consumption patterns in order to create a more sustainable economic system.
There are many ways we could amend capitalism to be more socialist so that society is more equitable and fair. Of course the 0.1% aren’t going to like these ideas, and they are going to throw a lot of money towards campaigns to make capitalism seem like a dream utopia, and attempt to scare the masses into thinking that anything other than the current way of doing things is bad. But I beg to differ.
Some of these approaches could include:
Implementing progressive taxation: Progressive taxation means that people with higher incomes pay a higher percentage of their income in taxes than those with lower incomes. Did you know that billionaires pay a very low rate of tax? The rules have been rigged in their favour and there are so many loopholes they are able to take advantage of. I am a big fan of Canadians 4 Tax Fairness, they put out great material advocating for tax reform.
Strengthening labour protections: Labour protections such as minimum wage laws, overtime pay, and unionization can help to ensure that workers are treated fairly and have a say in their working conditions. It is not a coincidence that large corporations (and the politicians who support them) hate unions and “union busting” has become all too common. At this stage of the game, the capitalists need their workers to have as little rights as possible.
Investing in public services: Public services such as education, healthcare, and infrastructure are essential for a functioning society. Investing in these areas helps to ensure that everyone has access to the resources they need to survive and thrive.
Regulating corporations: Corporations are often driven solely by the pursuit of profit, as I outlined extensively above. This leads to environmental destruction, labour exploitation, and in my opinion eventual collapse of the whole darn thing. Regulations can help to ensure that corporations operate in a socially responsible manner. Regulations have to be set forth by governments, and for some reason they seem to be hesitant to go after big corporations. (THIS IS WHAT WE ALL NEED TO BE FOCUSED ON RIGHT NOW.)
Action item: Sign my petition in the House of Commons.
Providing a basic income: A basic income, or universal basic income (UBI), is a regular payment made to all individuals regardless of their income or employment status. To learn more about this visit UBI Works. This can help to ensure that everyone has a basic standard of living and can reduce poverty.
Promoting worker ownership: Worker cooperatives, where workers collectively own and manage a business, can help to reduce income inequality and promote democratic decision-making in the workplace. The best example of this in action today are co-operatives. Unfortunately, many struggle to survive and keep costs low enough to compete with the giants like Walmart and Amazon. Learn more about Co-ops, and see what is around you.
These are just a few examples of how we can amend capitalism to be more socialist without moving towards any sort of full dictatorship communism that so many think anyone criticizing capitalism are gunning for. By implementing these and other approaches, we can create a more equitable and sustainable economic system that benefits everyone, not just the wealthy few.
While capitalism has been a dominant economic system for centuries, it is inherently unsustainable and is likely to collapse at some point. The constant pursuit of growth and profit, the promotion of inequality, the susceptibility to financial crises, and the dependence on consumerism are all factors that contribute to its unsustainability. It is important for us to start thinking about alternative economic systems that are more sustainable and equitable, before it is too late.