Rogoff and the (sustainable?) future of Capitalism

In his CNN  blog post entitled, Is capitalism sustainable?, Harvard Econ Professor Kenneth Rogoff makes a case for the ability of capitalism to perpetuate itself. His argument misses the point of sustainability and conflates it with capitalism’s ability to persist. If sustainability means that we are able to provide for present needs without damaging our ability to provide for future needs, the capitalist paradigm of infinite growth and the material throughput of finite resources are inherently in conflict with each other. The answer here is clear: our capitalism is not sustainable. 

Rogoff’s statement that there is no “viable replacement waiting in the wings” to supersede capitalism isn’t an argument for the viability of the current system. Instead, it is an admission of our collective creative failure to conceive of a new, sustainable system.

It is this kind of rhetoric about capitalism which encourages us to think that we are stuck with this system. It is this kind of rhetoric that promotes the idea that the human economy is somehow an immutable representation of the natural order of things and that competition, rather than cooperation is the most effective means to our collective ends.  

In his piece, Rogoff is actually arguing that our capitalism will persist, not that it is sustainable. He writes that “all current forms of capitalism are ultimately transitional” and points to the failures of leading capitalist economies to price public goods, to prevent inequality, to provide social support (health care, etc.), and to value the welfare of unborn generations. The neoclassical habit of calling these problems with Capitalism “market failures” should be telling and instructive; they are endemic of the ultimate market failure–the failure of capitalism write large to provide for societal needs and provide a sustainable future for people living on this planet.

Markets fail to address societal and environmental needs not because of small flaws in the capitalist system euphemized as ‘market failures but because our government is willingly handcuffed by corporate interests (under the guise of Capitalist faith in the free-market, and the invisible hand paradigm). The very systems which we established to provide a better life for all citizens have been turned over to a small number of immensely wealthy individuals who use our political system to grow their corporations, banks, and private accounts. This brand of capitalism is clearly unsustainable.

The task now is to actively engender the shift from greed and corporate-driven capitalism towards a holistic, democratic system which places the power back in the hands of the people from whom it has been wrested. 


One comment on “Rogoff and the (sustainable?) future of Capitalism

  1. Samantha von Ende says:

    Nice, Daniel. This relates directly to my thesis. The current plutocracy is absolutely unsustainable and certainly not what Smith had in mind when he conceptualized the invisible hand. If we could more readily and creatively incorporate Rawls notions of social justice, as based on his understanding that the rational/reasonable attributes of human nature enable our willingness to cooperate to achieve ends, our markets would be better off and so would our social support. Even Smith, father of capitalism, acknowledged that certain social phenomena (think health care, education, welfare) are exempted from Laissez faire economics. I’ll have to read Rogoff’s piece, but it would certainly be nice if our generation became the first to dismiss our absurd notion of a civic religion and re-embrace the founding father’s true drives when they developed this system: creative problem solving that acknowledges the need to change with time.

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