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< Back to question What are the pros and cons of capitalism? Show more Show less

Capitalism is an economic system in which the four factors of production (entrepreneurship, capital goods, natural resources, and labor) are owned by private entities with the aim of generating a profit. Capitalism requires a free market economy driven by supply and demand. There is a lack of government intervention. Competition helps keep prices moderate and production efficient. This stands in opposition to socialism, a system in which the means of production are owned by the state.

Capitalism is bad Show more Show less

Capitalism ignores peoples' needs, results in wealth inequality, and does not promote equal opportunity. Capitalism also encourages mass consumption, is unsustainable, and provides an incentive for business owners to harm the environment for monetary gain. Capitalism is also ineffective and unstable.
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Capitalism is harmful to the environment

Capitalism has led to significant environmental degradation. Capitalism encourages mass consumption, is unsustainable, and provides an incentive for business owners to harm the environment for monetary gain.
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Proponents


The Argument

Capitalism is based on growth which encourages mass consumption. Companies also use planned obsolescence (making a product so that it will become obsolete) to require consumers to consume more of their products.[1]. This results in the environment being unsustainably exploited. In The End of Growth Richard Heinberg argues that the global economy is approaching its growth limit since the environment is being damaged and depleted. [2] Consumption is fundamental to capitalism and results in the use of limited resources, pollution, and the destruction of natural habitats which causes declining biodiversity. This end of growth can be seen in fossil fuel depletion. Resources currently being extracted are more expensive and difficult to access than in the past. [2] Capitalism also ignores negative externalities (harmful consequences of consumption/production that is not factored into the price).[3] As a result, many corporations and businesses are willing to damage the environment in order to make a profit. It is more cost-effective for corporations to ignore their harmful emission levels or their contributions to pollution than it is for them to invest in environmentally friendly technology. In the end, damaging the environment is not only terrible for the earth and the species living on it, but it is also not cost-effective. The results of the climate crisis are having economic impacts that will continue to grow. In 2017, the US spent $306 billion on climate-related disasters. [2] Unfortunately, capitalism focuses on short-term profits/costs. If an action is considered profitable then it is worth pursuing. This mindset results in capitalist societies avoiding environmental reforms that are needed to address the Climate Crisis. Investors who could possibly lose money due to their companies closing or being forced to adopt less harmful (yet more expensive) business practices have an incentive to spread false information and deny the existence of climate change in order to protect their financial interests. Twenty fossil fuel companies are responsible for nearly "one-third of all greenhouse gas emissions in the modern era."[4] These companies continue to compete with each other to expand their businesses while ignoring their devastating impacts on the environment. Capitalism provides a financial incentive for them to do this that would not exist under a different economic system.

Counter arguments

Capitalism is not to blame for wasting limited natural resources or creating pollution. These environmental problems occur because of consumerism which would be a result of any economic system. Additionally, the notion that capitalism requires consumerism is predicated on the idea that spending causes economic growth which is not true; investment not spending causes economic growth.[5]

Premises

[P1] Capitalism encourages mass consumption. [P2] Capitalism incentivizes businesses to value profit over the preservation of the environment. [P3] Capitalism has led to significant environmental degradation.

Rejecting the premises

[Rejecting P1] Consumption would be a result of any economic system. [Rejecting P3] Capitalism is not to blame for wasting limited natural resources or creating pollution.

References

  1. https://www.bbc.com/future/article/20160612-heres-the-truth-about-the-planned-obsolescence-of-tech
  2. https://www.resilience.org/stories/2018-04-11/the-end-of-growth-seven-years-later/
  3. https://www.intelligenteconomist.com/capitalism/
  4. https://www.theguardian.com/environment/2019/oct/09/revealed-20-firms-third-carbon-emissions
  5. https://mises.org/wire/capitalism-doesnt-cause-consumerism-%E2%80%94-governments-do

This page was last edited on Friday, 17 Jul 2020 at 00:37 UTC

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