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Capitalism’s woes will not be solved by 16th or 19th century economic theories

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The fall of the Berlin Wall, one of the starkest symbols of Soviet oppression, heralded the end of socialism. The collapse of Lehman Brothers will probably be the herald of the end of Anglo-American capitalism. Simon Leadbetter asks, what next?

To anyone, but the most ideological and dogmatic free marketer, there is strong evidence that capitalism’s current model is broken. Some economists will say that this situation is a result of too much state intervention and regulation, rather than a systemic failing of capitalism itself. Fewer regulations and smaller governments are the answer.

Those who hold this view are very poor students of history. It doesn’t make sense to use economic theories developed before the emancipation of women, rising globalisation and the information revolution. Similarly, theories that did not have to consider environmental and resource constraints cannot provide answers to our current challenges.

We saw the depressing effects of complete free market economics in the late 18th and 19th centuries. The rise of socialism and communism, as economic theories, and the more benign Keynesianism, were a response to the catastrophic and repeated failings of free markets. Crashes and poverty were endemic in unfettered markets. The welfare state was created as a result of the failure of free markets and austerity in the ’30s and the resulting second world war.

More recently, South America has rejected the free market experiments of the IMF (International Monetary Fund), demonstrating that other economic systems can prevail – despite our best efforts to crush their economies with debt and overthrow or kill their elected leaders. Indeed, the evolution of capitalism in China, India, mainland Europe and the Nordic countries is very different to the system advocated by some economists in UK and the US.

Markets that are completely unregulated, with profit maximisation being their only responsibility, according to the disciples of Milton Friedman, tend towards plutocracy and/or monopoly, a race to the bottom in quality and standards for the majority, damage to the environment and communities, and ultimately, the failure of society and nation states. The recent history of South America, for anyone who cares to open a book about the subject, shows the most egregious failures and outcomes of IMF free market experiments.

Some of the more swivel-eyed free market disciples see the end of nation states as a good thing. For them, the relentless destruction of lives, companies, governments and even countries is the natural order of things, regardless of the human or ecological cost. Nothing must fetter the market.

The subsequent argument is then characterised as a polarised conflict between those who advocate completely free markets and those who advocate interventionist or, what are often characterised in the right wing media as ‘socialist’, responses.

The problem is that the repeated failings of a 16th century economic system, capitalism, cannot be addressed by a 19th century economic theory, socialism. Smith, Marx, Keynes, Friedman and Hayek died long before the economic renaissance of China and India and the rise of the digital era, when computing capability is limitless and resources are scarce.

It is an insult to thinking people to argue that free markets are the high watermark of human civilisation and economics. Those who argue that our economy needs to encourage a relentless Darwinian struggle for survival within society and the environment have an odd concept of what civilisation is about.

For one thing, Darwin didn’t argue that it was the fittest or even the strongest who survive, but instead, those ‘most able to adapt’. The natural end state of unregulated capitalism, that of unmeritocratic plutocracy and monopoly, holds back adaptation and stifles innovation, meaning it is those with the deepest pockets and most power, rather than the most adaptable or innovative that survive.

For those who hold religious beliefs, none of the world’s religions argue that the acquisition of things is the goal of existence, that the poor should be allowed to suffer or starve, or that the natural world degraded.

Humans have, in many areas, thrown of the shackles of being an evolutionary and environmental victim. Unlike most animals, we can now extend our lives far beyond our natural span and we shape our planet more than it shapes us. When we are masters of so many aspects of our existence, why would we aspire to encourage a predatory economic system that condemns the vast majority of the population to poverty, starvation, disease and lives that are often nasty, brutish and short? Why would we allow our economic system and the companies within make the air we breathe and the land and sea that feeds us, become toxic.

We need a 21st century economic system to solve our current woes.

We need a system that recognises natural constraints. Constraints on resource usage, constraints on emissions and, dare we say it, constraints on growth. We live on a finite and fragile blue and green planet, but we are acting as if we live on an infinite one. Constraints do mean regulation and effective penalties for those that transgress them.

We would assert that a hybrid economic system has to be the answer to economic, environmental and society issues. This common sense position is being drowned out by hyperbolic extremists on both sides, as most debates are in the internet age. Very well-funded groups, with powerful vested interests in the media and politics, on the free market side of the debate, and poorly funded, disorganised and divided groups on the interventionist side.

The state can provide certain services better than free markets – natural monopolies such as national infrastructure, health and education, for example, although some would disagree. The private sector is better at providing other services – where innovation is required. Ironically, some of the most disruptive innovations in medicine (genome project), science and technology (the internet), have all been delivered by the public sector.

If we could have a mature debate about which sector, public or private, is best positioned to provide what, rather than the current level of debate that characterises each sector as ‘all bad’, we might just have a chance of recovery and progress.

The endgame?

The sad reality is that our system of free-wheeling capitalism, as advocated in the UK and the US, is in terminal decline. State capitalism, as promulgated by China, is in the ascendancy, without the democratic checks and balances we have built up over the years. This will, almost certainly, be a Chinese century rather than an American one, just as the 19th century was a British one.

We can, of course, throw ourselves into an unfettered and speculative race to bottom against China, abandoning workers’ rights and environmental controls, to compete with those who have none. This will mean accepting ever growing inequality, significant civil unrest and a degraded environment as a price worth paying to simply remain competitive.  The standard of living and quality of life for the majority will decline.

Or we can say productive, competitive and regulated free markets, that enshrine social and environmental responsibility, coupled with publicly funded provision of essential services, an accountable and transparent democracy and the rule of law, are the systems we believe in and will fight for. Unless we take a lead, why would anyone else?

Cicero attributed to a Roman consul, Lucius Cassius, a simple question to ask of any act or policy, “Cui bono?” or “Who benefits?“. It finds a modern form in, “Follow the money“. The question we should constantly ask is who benefits most from maintaining the status quo, moving economic power to undemocratic China, or changing the system. Sadly, the answer is often a very small elite of wealthy and powerful people.

The solution to capitalism’s failure is not more lightly regulated capitalism, but sustainable economics that balance the needs of the planet and its people and is a successful example the world can follow.

Further reading:

Witnessing financial capitalism’s failure

With Libor fixing, the surprise is that anyone was surprised

Are we investing in the future we want for our children and grandchildren?

PM calls for ‘popular capitalism’ despite difficult economic times

We’re not all in it together: the rise of bloated capitalism

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

Environment

How to be More eco-Responsible in 2018

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eco-responsible
Shutterstock / By KENG MERRY Paper Art | https://www.shutterstock.com/g/kengmerrymikeymelody

Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.

Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:

1. Energy – produce it, save it

If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.

It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.

While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.

energy efficient

Shutterstock Licensed Photo – By My Life Graphic

Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!

2. Don’t be just another tourist

Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.

3. Let your beauty be also eco-friendly

eco-friendly

Shutterstock / By Khakimullin Aleksandr

We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t  mean that some of the product’s ingredients haven’t been tested on some poor animal.

To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.

It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.

4. Know thy recycling

People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.

People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.

5. Fashion can be both eco-friendly and cool

Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.

All in all

The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.

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Energy

Top 5 Changes You can Make in Your Life to Reduce Your Carbon Footprint

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reduce carbon footprint
Saving money and reducing your carbon footprint? What isn’t to love? - Image from Shutterstock - https://www.shutterstock.com/g/thodonal88

In a world, where war rages and global warming threatens our very existence, the inhabitants of earth need to be extra vigilant in their efforts to go green. This includes reducing your carbon footprint on the earth and leading a more sustainable life.

Many homeowners feel perplexed by all of the options available to reduce their carbon footprint. They may even feel (falsely) that making their household more green will fail to make that much of a difference in the fight to save our planet.

Even a single home going green has a massive impact on the environment. We can win this battle on home at a time. If you’re interested in accepting the challenge of making your household a green home, read on below for a few of the top changes you can make in your life to reduce your carbon footprint. We all stand to benefit from making the earth safer for future generations – and your wallet won’t complain when you start to see the savings in annual energy costs.

Switch From Dirty Energy to Clean Solar

The ION Solar reviews tell it all–solar is the best way to go. Whether your goal is to slash your energy bills, or to reduce your carbon footprint, the sun is a fantastic source of renewable energy.

It’s important to get past the hype from solar installers. Instead, listen to the plethora of impartial customer reviews that mention everything from a $20 energy bill, to the incredible feeling of knowing that you are doing your part by going green and minimizing harmful emissions in to our atmosphere.

The average investment is $15,000 to $30,000 for installation and purchase of solar panels. Optional battery power packs can help provide consistent power during both night and day. And many government agencies provide federal, state or local grants to help offset upfront investments in clean energy.

Depending on which installed you choose, your household may qualify for low-interest or zero interest loans to cover the up-front cost of your installation. And the loan payments are usually less than your current monthly power bill.

It really is a win-win, as home buyers are looking for homes that feature this technology – meaning solar power installation improves the resale value of your property.

Home Modifications

And there are a number of additional home modifications that can help improve the energy efficiency of your home. A programmable thermostat can better manage energy consumption from home cooling and heating systems while you’re away from home. And weather stripping your doors can help keep cool air in during the summer, and warm air in during the winter.

Of course, energy conservation starts at home. And this includes setting a powerful example for your kids. Teach your children how to close windows, strategically keep doors open or closed based on airflow, and encourage them to leave the thermostat alone – opting for adding or removing layers of clothing instead.

Unplug Appliances and Shut Off Electronics

Unplugging your appliances when they aren’t in use, such as the toaster and the coffee maker, has more of an impact than you might think. Set your TVs and stereos on sleep timers, instead of letting them run around the clock. The cumulative impact of wasteful electronic device usage is horrible for our environment – putting unnecessary strain on our electrical grid.

Recycle

One of the simplest and easiest ways to reduce your carbon footprint is by recycling. You are already throwing this stuff away anyway, right? It doesn’t take much more effort to just put recyclables in a separate container to be recycled, now does it?

Oh, and did I mention that you can earn money for recycling? Yes! Many cities and towns have recycling centers that will purchase your clean plastic and glass bottles for reuse.

Minimize Your Water Usage

Water is one of the easiest things to forget about when it comes to reducing your carbon footprint. Preserve water by turning off the faucet while brushing your teeth. Shorten your shower by a few minutes and turn down the heat on that water heater. You’ll be surprised at how much lower your water bill and your energy bill will be.

Saving money and reducing your carbon footprint? What isn’t to love?

These are just a few of the top ways that you can reduce your carbon footprint and start living a greener lifestyle. And we aren’t factoring in all of the advantages that we’ll reap from public investments in a smarter energy grid.

From decreasing your water usage, to switching to solar for your home’s energy needs, you will feel good at the end of the day knowing you are doing your part to save the future of this planet for generations to come!

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