Capitalism and its Discontents
Capitalism is the most successful application of First Dimension thought. The foundation of capitalism is the market economy—an exchange system in which decisions regarding investment, production and distribution of goods and services are based on supply and demand. In such a system, the price of goods and services are determined by the interaction of buyers and sellers, with little interference from external players, such as government.
Capitalism ties all economic activities to individual human desire—the desire to acquire objects and engage services that will make life more comfortable and pleasurable. Thus, the principal actor in the capitalist world view is the rational, utility-maximising consumer, who is expected to estimate the utility of any product or service, and use this understanding to make decisions that will maximise his own benefit. This individual’s right to acquire products and resources to satisfy his needs and desires is a fundamental right of every citizen, as sacred as the rights to life, freedom, justice, and expression. Modern capitalism is thus rooted in the democratic ideals that we hold so dear: each individual has the right to own things, and the freedom to dispose of them as he wishes.
The ills caused by capitalism are legion. Its underlying focus on profit has led to social and economic inequality of staggering proportions. The degree of this inequality has been documented repeatedly, and continues to make headlines on a regular basis. A 2017 investigation by Oxfam, for example, suggested that just eight individuals now account for as much wealth as the poorest half of the world’s population.
Capitalism also leads to unbridled consumption. The accumulation of profits that defines success in capitalism requires a constant, and always increasing, production and purchase of goods and services. The incessant urge to consume has led to a massive and unsustainable depletion of natural resources, from petroleum and forests to fresh water. It has also brought about undesirable externalities in such proportions that they can no longer be ignored—everything from accumulation of garbage and defilement of waterways to climate-changing air pollution. Above all, capitalism’s continuous consumption has impoverished humanity by celebrating the consumer as the ultimate decision-maker whose excesses of greed are, perversely, good for the economy. Capitalism, in short, has turned us into the sum total of what we consume.
Why is capitalism, as a system of economic exchange, flawed? Its fundamental shortcoming is that it caters only to the demand of the individual consumer. If enough individuals desire something, whether this is a naturally occurring need (for food and shelter, for example) or a more contrived desire (for chewing gum, or telecommunication devices, or weight-loss therapies), capitalism will deploy science to investigate it, technology to engineer a product to satisfy it, private capital to fund it, wage labour to produce it, and the market economy to price it and distribute it.
The capitalist economy is able to value only things desired by individuals because their ownership, before and after sale, can be established. When an individual or a business entity owns something (i.e., it has the right to decide how to dispose of it), that item can be priced and exchanged easily. But when something capable of providing a valuable benefit belongs to no-one in particular—for example, clean air, groundwater, forest, health, knowledge, good governance—the capitalist economy is unable to assign it a value and enable its exchange. In fact, it just ignores such benefits and assumes they are devoid of value.
To explain this complex idea, we have developed a model called the Spectrum of Demand. It is explained in detail in the following video.
A Better Capitalism in the Second Dimension
How do we tweak the market economy to encourage it to function more efficiently and sustainably in the underrepresented segments of the Spectrum? The goal is to create individuated demand for those goods and services that are currently not being produced by the capitalist economy. Creation of demand can be accomplished by passing simple, effective legislation that will engender market-like mechanisms that allow for the pricing and trade of intangible goods.
An example of an artificially created exchange economy is the Clean Development Mechanism (CDM) stipulated under the Kyoto Protocol. It generated demand for an intangible benefit (reduction in carbon emissions) by creating exchanges to trade this good (primarily the European Union’s Emission Trading System, or EU-ETS), and a currency with which to transact the exchange (Certified Emission Reductions, or CERs, also known as carbon credits). Here, a legislated commitment gave rise to demand for a new commodity, which, in turn, created the necessary tools to enable investors to trade. The market for CERs is also a good example of how externalities like carbon emissions, wastewater, solid waste, and industrial and agricultural by-products, can be traded on a national or international scale.
Intangible benefits arising from natural resources can be handled in a similar manner. For example, we could create an Environmental Per Capita Quota (EPCQ) by which every community would be required to maintain a certain surface area of natural environment (forest, wetland, prairie, etc.) per inhabitant. Communities with surplus forestry or biodiversity credits would sell them to urban communities that lack them. A dedicated standards authority would determine the price per unit and maintain a ratings system.
The EPCQ system is illustrated here.
It is possible, with a bit of political will and ingenuity, to implement mechanism that would allow us to bring both externalities and ecological resources—goods that were previously peripheral, at best—into the fold of the market economy, so that they can be accounted for fairly. This, hopefully, would help to correct some of capitalism’s imbalances.
What about social goods? These, surely, would be much more difficult to include in any kind of free-market mechanism. Here are a few socially desirable goods, chosen at random, that are rarely delivered by capitalism:
Thought-provoking art film
High-quality investigative journalism
Sensibly planned low-income housing
Immunisation against deadly third-world diseases like Ebola
Why does the capitalist economy fail to deliver these goods? Because there isn’t sufficient demand for them, at least not enough individuated demand. Those who desire these goods are unable to express their demand individually because they don’t have enough money to support production of these goods. And money is the only viable signalling mechanism in capitalism. If you don’t own capital, you cannot express your needs in a way that the capitalist economy can understand and react to.
What if we enacted simple legislation to mandate a certain supply for these goods? Imagine, for example, that every cinema, in order to maintain its license, had to devote, say, 20% of its prime-time screen time to films from independent production companies? Or, if a magazine was compelled to devote a certain proportion in each issue to thoughtful, high-quality articles? Or, if Big Pharma companies had to devote a part of their R&D budget to contagious diseases that affect primarily developing countries? Or, if cities were required to commission a number of new low-income housing units corresponding to the number of high-income units built by private developers within their city limits?
Such regulations attempt to address the imbalance of the capitalist economy and to deliver the desired social goods in adequate quantities. In the case of journalism, magazines and think-tanks would begin to specialise in intelligent investigative journalism, creating a surplus of articles that could be traded to other, more mass-market print media, in exchange for advertising income.
In housing development, sensible, thoughtful legislation could also bring about the desired outcome without physical intervention by government. Here’s a good example in the urban development history of Cornwall, an affluent rural community in Connecticut. Gifted with natural beauty, a progressive and enlightened community, and driving distance from New York City, Cornwall real estate was the natural target for many wealthy New Yorkers seeking to build second homes or holiday homes. Real estate prices rose continuously, and low-income inhabitants were priced out or prevented from moving there. The community addressed this imbalance by simply changing the zoning rules for certain tracts of land: they divided large plots (one, three, and five acres) into much smaller plots. Wealthy buyers were not interested in such small units, so demand for them was naturally lowered. This, in conjunction with a state-sponsored program to extend low-interest, low-down-payment home loans, ensured that lower-income inhabitants could acquire homes in an otherwise very affluent place like Cornwall. The top-down intervention was minimal (changing a zoning regulation) and the market economy took over to generate the required result.
The purpose of EPCQs and other per capita apportionments will be to enlarge the field of operation of the market economy. Once legislated, they will hugely reduce the economic role of governmental administration, which often leads to static, unresponsive mechanisms. The objective here is to move government out of all segments of the Spectrum of Demand by creating alternative ways to value, trade and allocate environmental and public goods and share externalities in a transparent manner.
In the end, however, the legislation needed to create such a shift derives from moral judgment. A government decides that certain goods, though not expressed through individual demand, are desirable for the welfare, edification, and happiness of its citizens, and contrives for them to be delivered through a market-mimicking process. There will always be a moral imperative to supersede the amoral functioning of a free market. What is important, however, is the very definition of that morality. When we say “moral” here, we don’t refer to the morality of old, based on ethical or religious notions of good and evil, but rather a new, Second Dimension morality based on the recognition of interdependence. Simply put, each individual’s right to trade a private good must not interfere with another’s right to enjoy a public good or derive benefit from a common good.
Higher Consciousness and the Marketplace
As you may have noticed in the Spectrum of Demand diagram, there is still one class of demand that is not addressed in the Second Dimension: the demand created by elevated consciousness. Why are we treating consciousness itself—such an abstract concept—as a stakeholder in the marketplace? What are the economic repercussions of heightened consciousness? What would a capitalist economy look like if the majority of its actors—individuals as well as enterprises—were not motivated by maximisation of utility or self-interest?
The Third Dimension will see a decided shift away from the policy inputs that were needed in the Second Dimension. The Third Dimension will be characterised by the development and continual application of the qualities of devotion, forgiveness and compassion. These qualities are the foreseeable outcomes of a heightened consciousness and will enable us to express a new level of empathy toward our fellow human beings. If such qualities are the very definition of the Third Dimension, then by extension it can be expected that they will also redefine our system of economic exchange. Thus, in the Third Dimension, economic exchange will be guided primarily by love and respect of our neighbours.
In particular, much government expenditure aimed at building healthy communities and natural environments—things like infrastructure and public services—will have been taken over by philanthropy. Today’s mega-rich individuals have already shown us the way. The richest individuals on earth, whose personal fortunes amount to billions fo dollars, have already begun to disburse their wealth, systematically and consistently. Individuals like Bill Gates and Warrant Buffet, having amassed fortunes well beyond anyone’s imagination, have dedicated much of the rest of their lives to giving them away. Why should we expect the majority of wealthy people to follow their example in higher dimensions? Simply because the higher level of consciousness which they will have achieved will dictate that they do so. In a social environment that welcomes and fosters philanthropy, most wealthy individuals will recognise that the only sensible thing to do with a large fortune is to apply it to the betterment of society, especially their immediate social environment.
Imagine, therefore, a Third Dimension society where many community needs are met by philanthropy. Some will donate their time (recall the suggestion that all adult citizens devote 30% of their time to working for the community); but most will donate in the simplest way of all, namely, in cash. Most needs requiring capital expenditure will be funded almost entirely by such donations, from the new community sporting facility to the upgrade in communications infrastructure to the provision of free career counselling or life coaching at the local community centre. Businesses, especially corporations, will participate in this effort as well. Their primary goal will no longer be financial profitability, and this will allow businesses to engage in social and environmental betterment on a scale much greater than modern-day CSR programmes allow for.
Much of the economic exchange in the Third Dimension will have shifted away from today’s purely transactional forms, where goods and services are purchased anonymously, without any obligations or considerations, using an impersonal financial instrument like money. As Charles Eisenstein has suggested, much of the economy of a society that has reconciled its spiritual and practical needs will have reverted to a gift economy. Many goods and especially professional and personal services will be exchanged freely (“freely” means without the burden of an accurate valuation, or the mediation of currency) by economic agents at Community level. They will be gifted to one’s fellow citizens out of compassion for their needs, or devotion to their wellbeing, without expectation of reciprocity. Such exchanges will encompass the complete gamut of economic activity, from remodelling the kitchen to receiving psychological counselling, from borrowing a holiday home to sharing agricultural crops, from financial advisory to driving lessons, from used cars to new clothing.
Reverting to a gift or barter economy may seem like a quaint but impractical idea. And it may smack of a commonplace escapism by which we tend to assume, wishfully, that primitive societies and their habits were somehow better and more genuine than our own. In fact, the notion of a gift or barter economy is not obsolete—it is rapidly regaining its place in the economic landscape of the present. What makes it modern and more viable than ever is the advent of new technologies that enable it to function in larger, more stratified social settings: the Internet, primarily, as well as location-based services reliant on GPS, and sophisticated data analytics. Think, for example, of how innovators like Uber and Airbnb have thoroughly disrupted and redefined the ground transport and hospitality sectors, respectively. These services are not part of a genuine gift or barter economy because someone (the driver in Uber’s case, the homeowner in Airbnb’s) is still earning money. But imagine that instead of earning money they were able to earn points or credits, which could be applied only toward their own transport or housing needs in the future—wouldn’t that bring them much closer to a genuine barter economy?
Indeed, such platforms already exist. BlaBlaCar, for example, is a ride-sharing platform that connects drivers and passengers willing to travel together between cities in several European countries. The only money that changes hands is a contribution from the rider toward travel costs, and a small commission to the technology operator who enables the exchange. In the hospitality sector, there are already several home exchange services that allow homeowners to swap homes for a period of time, without paying anything.
These sharing services leverage modern technology to achieve what was possible only on a local scale in the gift economies of the past. The Internet allows users to find exact matches to their needs across vast distances; while location-based data allows systems to be optimised so that each user can find the supplier who is available soonest or nearest. Most importantly, these sharing platforms have managed to solve the problem of trust, which, in the past, rendered barter almost impossible beyond one’s immediate community. They do so by providing reciprocal rating and review mechanisms, guaranteeing payments and security deposits as an interested third party, and mediating disputes. What we now call the sharing economy, therefore, is merely a new, technologically enabled incarnation of an ancient custom of reciprocal gift-giving. And it will play an increasingly important role in the future.