CAPITALIST EFFICIENCIES, EXPLOITATION AND EXTINCTION
I live in South Florida. My house is on a broad, flat cape. It is perhaps fifteen feet above sea level. One thing I take great pride in is the number of trees I have growing on my property. Over the years I’ve planted and cultivated a diverse population of trees and other plants. When my wife and I first purchased our house, there were no trees but for the obligatory palm and a small magnolia. These were added by the landscapers.
It’s a shame, really. Once upon a time that area where my house now stands was once a thriving ecosystem. It was surrounded by a deep mangrove forest at the coast. A winding, young river culminated with a teeming, brackish estuary at its mouth. The interior included sloughs, marshes and wetlands interspersed with pine highlands, palmetto fields and flag ponds. All manner of floral and faunal species lived in this vibrant ecosystem. The steamy summers were made bearable by daily afternoon downpours. Brush fires in the dry season kept the underbrush under control and rejuvenated the otherwise flimsy soil.
By the time my wife and I moved out there, that system was destroyed. This wasn’t the kind of “creative destruction” as identified by apologists of our current economic system. After all, it would have been possible to carve out communities in such an ecosystem in ways that were more sustainable. No. The destruction of the land that became my home was motivated entirely by capitalist concepts of efficiency.
I remember talking to an old “cracker” who, as a young man, witnessed the clearing of my town for development. He said the developers used huge machines with tires twice my height, run on electricity. These machines started on one end of the zone and rolled slowly to the other, grinding everything up along the way. Everything was flattened. Then they came in with huge dredgers and carved canals like patterned scars into the landscape to drain the marshes and the wetlands. The land was divided into plots. Roads were built and properties sold on the cheap to snow weary northerners.
Economically, this worked out quite well. Land investors made a lot of money. A regional economy was built based on rising property values, making it possible to keep municipal and state taxes low. Old people had a temperate place to come and retire. Younger couples, like my wife and I, were better positioned to start our own housing nest-egg. A win/win.
Now I look at my home and I think about the future…a future that may not be all that far away. My house, the biggest part of my wealth assets, has value because people want to live in a region that is warm and where the taxes are low. Taxes are low because property taxes are driven by increasing demand for housing.
How long can this virtuous cycle last?
I fear not long.
This year, from April into November, temperatures were consistently in the 90’s, with heat indexes bringing us well into the hundreds from May into October. It used to be that June through August were uncomfortable, but the rest of the year was fairly temperate. We even had some short-lived frosts a couple times a year. No more. What used to be our June through August discomfort is now a five month slog from May into November. June through August are simply unlivable. We don’t go outside. Once upon a time it was reasonable for northerners to give up being snow bound for three months in exchange for moderate temperatures most of the year with three months of uncomfortable heat…but that’s not South Florida any more.
So I wonder what happens to my property values when prospective buyers realize that the South Florida they always planned to retire to hasn’t existed for about ten years? What happens when they must make the calculus of leaving two months of uncomfortable cold in exchange for three months of insufferable heat and only maybe six months of the same comfort that they could have staying where they are. What happens to property values? And if property values tank, what happens to the tax base, to the roads, the bridges, the utilities, the schools?
But that’s only the beginning. As sea levels rise, will my house be an island in the middle of what used to be a cape? How long will residents of my hometown have to get used to high tides that last for months like what our neighbors in Key Largo are currently dealing with? What about pests? Mosquitoes bringing their pet parasites and diseases? West Nile? Dengue? Typhoid? What happens when the South Florida that everyone imagines can actually be found in southern Georgia–until it can’t?
Human beings have a long history of altering their landscapes and despoiling its resources. Human beings, as living creatures, must live from the resources provided by the earth. Human ingenuity vouched us the ability to transform ecosystems into something dedicated specifically to our existence. Since the advent of agriculture, human beings have been shaping environments, tearing up ecosystems, altering landscapes. This drive sustained increasing populations and spreading cultures–often at a cost that might be familiar to any urban denizen today yearning to break away from the noise and traffic for some quiet time in the country.
The modern, capitalist world raises the stakes of environmental exploitation. For capitalists, the exploitation of resources carries the weight of a moral imperative. Profit motive is the driving force of capitalism and the underlying economic structures of our society. Profit derived from the exploitation of resources, both human and natural, is justified as the right and natural way to economic growth. Furthermore, economic growth is defined as a good in and of itself. That this growth may be premised on a decline elsewhere is largely brushed aside as irrelevant, made invisible or defined in terms of “creative destruction.”
To understand this philosophy and its natural consequences we must examine two concomitant elements of economic growth: increasing efficiencies and externalized costs. Capitalism’s dependence upon these two philosophies of resource exploitation is not unbounded. They bring with them environmental collapse at local and regional levels. Ultimately, capitalism, as it becomes increasingly globalized, must lead to environmental collapse that itself can only destroy capitalism itself.
Capitalism is the science of exploitation, though economists usually use the term “value added” as a morally neutral euphemism. Value added is defined as the difference between the costs of producing a good or service and the amount for which it can be exchanged. Another way of looking at value added, however, is in terms of how effectively resources can be exploited. Regardless of how one defines the terms, value added is the underlying and self-reinforcing end of every economic institution under capitalism. Value added, under capitalism is the end unto itself. Any corresponding “value deduction” is irrelevant unless it manifests on a profit spreadsheet.
Value added is created in two ways. First, capitalist institutions maximize the efficiency by which human and natural resources can be exploited. Secondly, capitalist institutions seek to externalize any costs involved in that process. Historically, a left critique of capitalism is premised on the exploitation of labor, or what can be defined in terms of human resources. The exploitation of natural resources and the externalizing of the costs, however, are just as significant and are a relatively recent innovation in the leftist critique.
There is no virtuous capitalism when it comes to exploiting workers. It is workers who add value to goods and services. The workers who transform a tree into a pile of boards that can be sold on the market created the full value of the boards. These workers, however, cannot receive the full value of their labor. Their wages are drawn as a percentage of the sale value of the boards, the rest is surplus value that becomes the profit for the owner/owners of the lumber company. There’s no other way to do capitalism. Even the most morally upright lumber company owner cannot pay his workers the full value of their labor if he wants to make a profit. Furthermore, the less he can get away with paying his workers, the more profit he makes. This is the labor theory of value. Eliminating labor exploitation can only happen by eliminating capitalism.
Under a capitalist system, the best one can hope is for workers to gain enough power to act as a check against this abuse and to demand “less” exploitation in the form of wages and salaries calculated from a higher percentage of the value added. This is the focus of social democracy and related programs like the New Deal. Social democracy has, to date, demonstrated its value in cultivating more egalitarian and just societies while still preserving capitalism. However, so long as capitalists remain in power, they will work to undermine social democracy, because such a system limits their ability to exploit workers and to externalize costs. When workers and the demos, for whatever reason, lose their influence or become distracted from their interests they will experience increased exploitation at the hands of the ownership class. Any progress made toward making capitalism more equal will be, in the long run, undermined. This is because capitalism rewards the exploitation of labor. The greater the exploitation, the greater the reward.
The same rule holds true for the exploitation of natural resources. After all, my home town did not have to be built the way it was. We could have had sustainable homes interspersed in the palmetto and pine highlands. Roads and infrastructure could have been designed to conform to the needs of the ecosystem. This, however, would result in fewer plots of land available for sale. Sustainable land use by which living space is balanced against green-space is a less efficient use of the land in terms of value added. It’s better for the corporate bottom line to carve up the landscape into plots of land only large enough that individuals will be willing to take on debt to purchase and eliminate green-space and ecological set asides overall. Squeeze as many people in as possible. Maximize profits and go home. Home, for the ownership class is, let’s be sure, a place where living space is sustainably counterbalanced with vast preserved green-space, priced in such a way to make it impossible for average working people to enjoy such a life.
Furthermore, the corporate assault against green-space is incessant. Here in my home county the residents long ago decided to protect their water resources by setting aside land for low density development that would preserve green space and provide for hydro-logical recharge. To be sure, there is no more fundamentally sensible response on the part of citizens anywhere than to protect their water resources from exploitation. This strategy, however, puts thousands of acres of potential housing plots out of the reach of developers and their profit margins. This is unacceptable to any capitalist.
The battle strategy is basic. Business interests back friendly county and municipal politicians. They then buy up land in the protected areas. They then file for a “variance” giving them an exception to the community approved restrictions. Business friendly officials approve the variance. In some cases, a compromise is made with active environmental groups by which only half of the variance is approved or the landowner is required to purchase and protect a wetland area. No matter, the land owner agrees, then files another variance request by which a further compromise is made over the previous compromise–until there is no compromise left. A fellow activist mentor of mine referred to this as the piecemeal destruction of the defined green-space.
What is true for land management is true for any other natural resources. Capitalists, whether they are landowners or extraction industries, loggers or whatever, see their role as efficiently converting resources into final products. If my goal is to convert a forest into furniture and building supplies, I intend to strip the forest of every last piece of wood that I can. After all, it’s not about just adding value. It’s about adding value right now so I can pay dividends to my investors. But it’s also not just about paying dividends to investors. It’s about paying ever increasing dividends to my investors because doing so increases the value of the stock itself as measured every three months. So short term gain is emphasized.
Yes, I can purchase a forest and log it sustainably. But that will not translate into quarterly returns. Thus, I have no incentive for doing this. I am incentivized to maximize extraction. Wood. Copper. Gold. Chromium. Wheat. It doesn’t matter. Anything that gets in the way of my company’s profit margin, whether it’s spotted owls or mountaintops, must be removed, bulldozed, eaten away by acid, burned off and dumped as the most efficient means by which I can turn any given resource into profit through a value-added model of production.
Which leads to the second element of capitalist strategies for adding value. Externalizing the costs.
Value added is a matter of gaining more for a good or service than the costs of providing the good or service. At least that’s what we are taught in our high school economics class (disclosure: I teach high school economics). Cost, however, is a pretty complex phenomenon. The cost, for instance, of building houses in my home town was a simple matter of calculating the expenses of clear-cutting everything, draining the wetlands and laying the infrastructure or working within and around existing ecological footprints in a sustainable way. The cost/benefit analysis was clear. Cut it all down, dig it all up and go. Developers laid down the costs of the clear-cutting. The public laid down the cost of providing roads, surveys and plotting.
However, that’s not the total cost. There’s also a thing called opportunity cost. After all, when a forest is cut down and a wetland drained in order to develop the acreage on which it is located, the potential benefits of the forest and the wetlands are gone. If the resources are used for one purpose, then the loss to any other purpose is a cost.
For capitalists, the incentive is in passing on this cost to others. This is called externalizing the costs. So when we, for instance, clear-cut an ecosystem like that which existed in my home town, we can expect that that system’s regulatory abilities are gone. We can expect erosion, salt water intrusion, cones of depression causing freshwater wells to dry up, among other problems. Dredging mangroves, for instance, sets the region up for increased vulnerability to hurricane damage. Someone must pay these costs, but it’s not the company or companies benefiting from the clear cutting.
This is a relatively minor, local/regional phenomenon, but we can see this process at work even on a global scale. When corporate farming benefits from massive use of nitrates to maintain the vitality of soil in a constant state of being leached by efficient monoculture farming, those nitrates make their way into the rivers and into the oceans contributing to the formation of hypoxic zones devoid of life. This is a cost paid for by fishermen and others who make a living on the ocean.
Dumping pollutants into our water systems or into the air is an efficiency for the companies, but the consequent costs to human health, to productivity, to life chances are borne by others.
The ultimate example, at this point, is the profits derived from fossil fuels that is contributing to climate change. On one hand we have trillions of dollars worth of resources sitting under the ground, owned or accessible to the wealthiest, most powerful economic interests in the history of mankind. On the other, it is absolutely necessary that said resources stay in the ground. If that resource is taken from the ground and burned into our fluid systems, the results will be catastrophic to the planet. If those resources are not developed, the results will be catastrophic for select industries. Weighing the costs here in any reasonable sense should lead us to the conclusion that the needs of humanity outweigh the needs of the industry. But that’s not how costs are calculated in a capitalist system. The capitalist pays only to get the resource out of the ground and sell it…and even then that is often subsidized by the public. Any associated costs of doing this are externalized to someone else.
Unfortunately, humanity does not have its own lobby…nor even, for that matter, it’s own well placed political party. So…
This has been a successful model for centuries. Indeed, modernity is built on the balancing act of advancing economic efficiencies while defraying the costs. In capitalist societies, these decisions are made by privately owned entities incentivized to maximize growth for their investors. This system has incentivized development and considerable ingenuity toward that end.
Now here is the rub. Even in large, state socialist societies, similar incentives apply. That’s because even in state socialism, capital and the drive to add value, is still the operative philosophy. The only difference is in the case of state socialism, the goal is to direct the value added to the state rather than private interests. From this perspective, state socialism is not a reasonable alternative to private capitalism. It’s still capitalist in structure by which states hold the capital rather than private investors.
In the end, it does not matter who holds the capital. When capital is the balance of value added derived from exploitation of labor and resources while externalizing the costs, the holder of capital can be the state or a private entity. The end result remains the same. Workers and ecosystems are exploited to maximize growth. The costs are externalized, often to the same people as pay the bill in capitalism, the demos. The Earth bears the scars from this brand of economic efficiency.
And people live within that scar tissue.
And the scar tissue continues to grow. Another way of understanding this growing scar tissue is as a cancer.
Up to now, the balance between efficient exploitation and externalized costs of capitalism has been a tenuous but sustainable balancing act–for some. This has been so because the benefits of exploitation tend to empower the exploiters while every effort is made to make sure the exploited remain powerless. So our advanced nations have a long history of sucking the capital from the less advanced, then use that capital to support and sustain often brutal dictatorships willing to impost the global capitalist order on the dispossessed. The winners in this system win big. Those proximal to the winners do marginally better as well.
Also, the costs and benefits are often localized or regionalized. We, over here, are doing fine. They, over there, are in abject poverty–but that’s their problem. Those who most carry the costs of capitalism are then bound in a vicious cycle. To improve their lives they must get access to the capital that only the winners can provide. The winners will only provide the capital if they can add value. Therefore, the most dispossessed in the world must submit to even more intensive levels of suffering and exploitation if they are to make any progress at all in a global capitalist system.
And the scar tissue spreads.
Now, however, with the expansion of global capital, growing populations requiring more resources and citizens of advanced economies demanding more junk for their closets, rampant growth is becoming a cancer. Our oceans are acidifying and filled with plastic. Our fisheries which sustain billions of people are threatened. Our atmosphere is unstable, holding heat, and spreading toxins. Floral and faunal species are dying off in numbers reminiscent of periods of major extinction. Bee populations are collapsing. Toxic brown zones are spreading over the earth making it difficult to breathe. Seas are rising threatening billions of people and all of our major finance centers. Hell, we are even fracturing the Earth’s crust, causing earthquakes, in order to suck the last fumes of ancient sunlight from the shale.
It is clear that we are approaching a tipping point in which the full costs of exploiting the Earth’s resources must come full circle. Beyond this tipping point, human life may be salvaged, but capitalism will be impossible.
One of two things must happen, both of which spells the end of capitalism as we know it.
The best case scenario is that we start making economic decisions based not on efficient exploitation and externalized costs, but rather on a true accounting of cost and benefit to all humanity. A true accounting of cost/benefit must take into account the dynamics of Earth’s biome. Such a political-economy must be universal in its approach, ensuring a fair distribution of benefits and costs to all. Only a truly democratic humanism, liberated from class, nationalism and ethnocentrism, can produce such an system. In other words, the best case scenario for humanity at this point is the conceptualization and integration of a political-economy that has never existed.
This is no small ask. The dominant political economies of our contemporary age amount to variations of the same theme–the concentration of capital in the hands of the few. In capitalist systems, the capital is held by increasingly fewer private entities. In contrast, our dominant state socialist models place the capital in the hands of a small knot of well placed state apparatchiks. Both are, in essence, models subject to the same twisted incentives of efficient exploitation and externalized costs. Both are inadequate to the impending tipping point we face as a human species.
The second option is significantly more ominous. We reach the tipping point and the Earth’s ecosystems collapse. Let’s be clear what is meant by collapse. Clearly, life will go on. Collapse does not mean extinction. It means the world’s bio-system will no longer be amenable to modern human civilization. At that point, all of the costs of modern capitalism will be externalized to everyone, or at least enough of the world’s citizens to make capitalism impossible.
We can look at the Dust Bowl in the mid twentieth century as a local example of environmental collapse intersecting with economic catastrophe.
Unfortunately, we don’t even have to look into history. We can just take a look around us. According to the United Nations the world is looking at a crisis of over 70 million refugees. Now, the causes of this crisis are admittedly complex, but arguably the largest contributing factor is environmental. There are Syrian refugees fleeing a civil war started, in part, from a drought. We have refugees from the Northern Triangle of Central America fleeing poverty and instability based on exploitative land use and starvation happening in what was historically some of the most fertile land on earth. Millions more are fleeing and will flee from rising seas. In most instances, environmental exploitation and externalized costs are deciding if overlapping variables displacing the equivalent of the population of Thailand.
This is going to get worse.
How much worse does it get before capitalism is unsustainable? We don’t have the answer. Certainly, capitalism will collapse before human life becomes unsustainable. Those who survive the collapse will have to come up with some other system of resource use. Will it be better? That remains to be seen, but decisions made in desperation are usually less than optimal.
Human beings are tied to the resources of the Earth. That is the one variable that will never change. Throughout history we as a species have found some innovative ways by which to use these resources. Capitalism is only one fairly recent innovation. We can argue the merits. To be sure, there have been some amazing benefits to capitalism. Even Marx conceded as much. But there’s no reason to believe that there are no alternatives. There’s no reason to believe that capitalism is the end of history.
Capitalism will end because it is, by its very nature, unsustainable. The only question is, how will it end, and who will pay the costs.