By capitalism I mean what all economists have always meant, including Marx: the exchange of goods and services such that the prices are determined by a market—supply and demand. The only significant alternatives to capitalism are (a) primitive autarky (subsistence without exchange, possibly augmented by a “gift” economy in which people have traditional obligations to provide specific parts of animal or fish to specific relatives, etc.) and (b) socialism.
I have visited socialist countries enough to be quite sure I do not want the government telling me what to produce or what I am allowed to consume. Markets work better. And it is too late to return to hunting and gathering or subsistence agriculture. Hence I opt for capitalism.
But yes, there are problems—though I don’t think inevitably so. In a knowledge economy, people do not exchange physical things so much as intangible symbols, which do not pollute and do not exhaust resources. Also, ideas (information, symbols, etc) do not conform to the first law of thermodynamics. There is no inherent scarcity.
Unfortunately, out of our history of scarcity, people have built up an ethic in which they appraise their state of well-being by comparing the amount of “stuff” they and their rivals possess. Everyone is presumed to continuously want more. The Left does not challenge this because we are so committed to the concept of equality. Leftists keep trying to equalize how much stuff people have, but that requires people to measure their own wellbeing by comparison to other people.
I believe, on the other hand, that every human being receives specific “assignments“ from life to perform his/her own unique set of responsibilities, based on his/her interests and capabilities. We each need a certain amount of stuff in order to carry out our assigned responsibilities but we don’t all need the same amount. It is a moral perversion to judge one’s own wellbeing comparatively, just as it is a moral perversion to want to perform responsibilities that are suited for others but not oneself.
The answer: My ethic is to look constantly at the duties that life is imposing on me, moment by moment, year by year, and ask whether I have ENOUGH resources to do those duties properly. I must not envy another person. On the other hand, I am obliged to try to make sure that others have ENOUGH resources to do their duty too. My task in life might be, in fact, to work on behalf of the unemployed to create for them the opportunities to serve in an appropriate way. That will have the effect of equalizing wealth or standard of living, but I work from an absolutely alternative point of view—from thinking about having ENOUGH and not in terms of envy or continuously getting more more more more more…..
If we get past the acquisitiveness of an economy based on the production and exchange of physical stuff, we will not need to consume or pollute much at all.
However, there will need to be some kinds of regulation anyway. I believe in a government that sets limits on the way things can be done, that acquires knowledge and applies it to “nudge“ people to do the right thing. (See Cass Sunstein’s books, Nudge and Simpler). There must be regulations and taxation can be used to create the right incentives for that — e.g. through carbon taxation and other ways of taxing “bads.” Corporations, in particular, must have knowledgeable, public-spirited citizens on their boards of directors, keeping them honest. There should be a global taxation system, with the revenue not only used to restrain power-hungry corporations but also to provide for the changing needs of various pockets of humankind.
All these things are ways of regulating a CAPITALIST economy, for we will continue to benefit from the way the market manages our exchanges to the general benefit of all of us. With lots of qualifications. I don’t want an unregulated market economy, of course, but I do want the regulatory agencies to include people from civil society. That’s my vision of a future democracy. We will each participate in the structures that govern society—choosing and being elected to regulatory agencies according to our own interests and talents.
A knowledge economy can still grow, and indeed must grow if we want to avoid a recession of the kind from which we are just now emerging. And yes, growth is measured the same way as usual — by changes in the dollar value of goods and services exchanged. But those goods and services will be regulated and will not be serving the materialistic wants created by an economy of scarcity, so growth does not mean resource depletion or pollution.
The changes that are required are political and moral. We have to learn to live our own lives, carrying out the assignments life issues to us instead of trying to be someone we are not called to be.
I should add one qualification. I have expressed my general (but not unlimited) appreciation for the market as the main mechanism for organizing the production and exchange of goods and services. However, I have also pointed out that we are entering a knowledge economy in which few of us will make our living by handling physical things that are subject to the conservation of energy. Markets really only work with THINGS, not ideas. Information is not conserved, so we products of our work are not conserved either. If I give away a thing I have manufactured, I don’t have it anymore. If I give away an idea I invented, you will have it and so will I and anyone else we share it with. No scarcity means that the relationship between supply and demand does not work as in a normal market of things.
The problem with the current commercialization of science or knowledge is that it is informed by the economics that applies to things, not to ideas. People are trying to MAKE ideas scarce so they can charge money for them. Hence the whole effort to patent ideas and attach contracts to anyone using them, with things like confidentiality agreements. This is a spurious effort, motivated only by greed. Ideas should be free. But then we would have to have some way of paying the scientists who produce ideas, and paying them without any index of their productivity or usefulness. Nobody knows how to measure whether a literary critic is worth her pay or not. There is no way of doing it except perhaps measure how many publications she has produced in the past year. That attempt at objectivity is perverse. Yet I do not have any alternative theory by which to reorganize the knowledge economy. I can only say that old fashioned economic theories will not work.