Capitalism Without Employees

As John Locke pointed out centuries ago, capitalism is a self-initiating strategic response to the possibility of becoming independently wealthy once the state lost or diminished its ability to arbitrarily assume ownership of individual wealth. The idea is simple enough: combine the assets of several people into a single corporate body so that each contributes capital making it more possible for the single corporation to control production and distribution to dominate the market and thus maximize the amount of wealth that can be shared amongst the owners of capital (so-called capitalists) within the corporation. Because it is an economic system, not a social system, the corporations (thus the capitalists in the system) are nothing more than strategic constructs. They have no inherent mechanism of exhibiting social consciousness or social responsibility for people beyond the ownership of the corporation. Many corporations require employees, but many do not, they can be operated completely with owners and no one else. Employees in a capitalist corporation are really just packages of energy and skills. If the “person” part of the employee can be more inexpensively replaced by a machine, the corporation “feels” no compunction about making that replacement.
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Red Flag Review – Social Norms and Global Environmental Challenges: The Complex Interaction of Behaviors, Values, and Policy. Kinzig et al

When learned people publish a serious proposal to gain special access to public policy makers to promote their specific perspective, they have a responsibility to establish proper rationale and safeguards in their proposal. This is especially true in today’s digital world where anyone with a computer linked to the Internet – not just the intended specialist experts – can read at least part of the paper free of charge. Authors Kinzig, Ehrlich, Alston, Arrow, Barrow, Buchman, Daily, B. Levin, S. Levin, Oppenheimer, Ostrom, and Saari present a case for narrowing the gap between science, scientific discoveries and insights, and the development and delivery of public policies (policies created and implemented by government). They offer no mechanism for their accountability as scientific advisers in the proposed special committee to advise non-scientist policy makers. They make a bland statement that their proposed improvements in modification of social norms and the messages they wish to promote can be carried out in a transparent, fair, and representative democracy, while at the same time acknowledging that some of the recommendations will carry a burden that even a majority of society would not want.
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The One Percent Syndrome

The 1% syndrome — the concentration of wealth in a mere 1% of the population. Why does that happen in essentially every economic system from dictatorships, to communism, to capitalism? It happens because all organisms including people need energy and water to survive. So all organisms including people develop strategies to ensure that energy and water is constantly available. The “requirement” to have such a strategy means that on an evolutionary basis, there is a drive to access or control energy and water either by remaining close to the sources, or by defending a territory around or to the sources. In economic terms such a strategy also applies to energy and key resources. The concept of controlling production and distribution of products so that wealth can be distributed among a select group is derived directly and spontaneously from the inner drive that organisms have to ensure a safe and secure future. By controlling production, or the source of production, and how it is to be shared or distributed leads, willy-nilly, to the potential for acquiring more than individual need and spills over to broader support for families and extended families in many species and certainly among people. In an economic system, the concept of an extended family can reach out to favoured friends or in capitalist systems to corporate shareholders. The more successfully the strategy of control is implemented, the more production and sharing is limited to that individual’s or corporation’s influence.
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Measuring Natural Justice, Fairness, and Empathy in Political/Economic Systems

People are naturally interested in justice, fair play, empathy, altruism, reciprocity and many other aspects. A method of measuring the degree to which these concepts are applied in an economic and political system would be both interesting and potentially instructive. Any economic and political system is a complex interplay of an enormous number of factors and interrelationships, but the end result of all those interactions defines for any individual within the system, how fairly the resources are distributed and in what way society provides for efficient and humane (or not) convenience and safety nets. We can judge economic systems according to the way they operate with regard to individuals and communities on all the basics of natural justice. For example fair play implies that when people exchange things, they generally assume there should be a high degree of similarity in the total value each has received. We are all familiar with comparing the relative cost of purchasing something ready-made to the cost of time and materials involved to make it ourselves. We also expect to be paid a fair wage for work we undertake for someone else. We also know that this is not very often a truly “fair” exchange. Of course, we are all familiar with the idea of helping out someone who needs a temporary helping hand. This might be a neighbour who asks to borrow a cup of sugar, or it might be a donation to a worthy cause. These empathetic motives are common to us all, but are often differently developed or contextually important. For example, I might be in favour of giving to a women’s shelter in favour of abortion, whereas another person might not be in favour of helping such an organization, even though in each case the women are in trouble and need help.
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Why Capitalism Fails Society


Capitalism is an economic system, not a social system. Capitalism regards an employee as a cost, an expensive package of skills and energy, not a person. The cost of employees needs to be reduced as much as possible to increase profits. Capitalist owners monitor profits, and expectations of profits in the stock market based on their investments. Capitalist strategies control production and distribution to dominate the market. This domination trends to mega-corporations eliminating smaller businesses and corporations while reducing employee numbers or their wage levels as much as possible. The end-point has the unintended consequence of reducing the financially capable consumer base to just those who own capital, or who manage to maintain an entrepreneurial business against the competitive pressures of capitalist giants. Everyone else is a low-paid employee or unemployed and not able to purchase many products or services. On a world scale capitalism has not reached this point yet, so has not yet had to adapt to the end point of the trend. Instead it has moved to global markets and employee bases to delay that inevitable end point of capitalist strategies that necessarily omit people from the equation.
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Econosystems: Spontaneous or Planned?

No one would question the fact that economic systems have planning within them and that successful business ventures have elaborate planning often right down to the tiniest percentage of a market share point and how to capture it. But is the system itself planned?

Consider the same question from a biological perspective. Is an ecosystem planned or spontaneous? Is the evolution of biological organisms planned or spontaneous? How might one frame this as a question that can be tested? For example in a planned system one should be able to describe the outcomes. The outcome of natural evolution is biological organisms that can be broadly grouped into species, genera, families and so on. The outcome of ecosystems is individual and species associations and relationships into patterns depending on their interactions. Those are the forms of the results. In each case a conceptually simple process of elimination based on how well the fit is to the conditions. In the case of evolution, the selection takes place at the genetic level and is expressed at the individual level. In the case of the ecosystem, selection takes place at the individual level and is expressed at the species level.
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Who is Responsible for the Unemployed, the Weak, the Poor, and the Desperate?

Who Are We Talking About

In a modern society, are we collectively responsible to make sure no one starves to death, freezes to death, or is denied access to life-saving medical treatment? To be sure every society has great people, good people, average people, not-so-good people and some downright criminal people. Any of these categories of people can be rich or poor, employed or unemployed. But society also has people who are ill, wounded, starving, weak, mentally ill or lacking in capacity, or just unable to fit into normal society. Many of these people cannot take care of themselves, and hidden among them are those that choose not to take care of themselves.

To take care of people other than ourselves, we must make sacrifices. These can be in the form of time and effort, or as donations of money. These sacrifices are a drain on our own economic well-being, and of the entire state’s well-being. How altruistic are we and our governing bodies?
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Why Does Unemployment Match Consumer Confidence Index?

The Influence of Tax Rates

In a previous post I investigated the variables that influence unemployment. The first variable was tax rates. Many people, including very influential people and even candidates for the President of the United States, make the statement that lowering taxes will increase the number of available jobs. Their rationale is that lowered taxes will make it easier to compete in the market so production will be up and hence jobs will rise and unemployment will fall. What actually happens is often the exact opposite and instead of the extra money going to increased productivity, it goes to increased profitability. In fact, if you examine the history of the US in recent years, increasing taxes (not lowered taxes) were almost uniformly followed by lowered unemployment. Another worry expressed by many is that the tax rate in the US is too high. In fact, as a percentage of GDP, the US has one of the lowest tax rates in the world. Corporate tax rates in the US are currently fairly high compared to other developed countries. But a comparison of countries with high and low corporate taxes shows that unemployment is unrelated to the corporate tax rate.

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False hope? Do Lower Corporate Taxes Really Mean More Jobs?

The Claim

At least in Europe and North America, we hear politicians equating lower taxes to an abundance of jobs. Some politicians even go so far as to suggest that free market capitalism is a panacea for the unemployment problem, that if rules, regulations, and taxes are reduced or eliminated, businesses will mushroom in productivity and jobs will be created in record numbers. But what are the actual observations to back up this claim?

Some Background

Recall that the reason capitalism evolved (and it was a spontaneous evolution, not a designed development) was to increase the power of a business to control the production and distribution of products so that the profit could be maximized. The trick to accomplish this is to combine the assets of a number of people (capitalists) into a corporation so it can more effectively achieve control, sometimes by competition, sometimes by acquisition, and sometimes by merger. The profit is then split amongst the capitalists. Where do the rest of the people fit? They are the employed and unemployed. The capitalist corporation views both employees and unemployed people as resource packages of energy and skills to be used at the lowest possible cost to improve the profit level. If the local employees are too expensive, the labour is either transported to an offshore, cheaper location, or replaced by machinery. So there is no inherent reason why capitalism needs “people”, it needs energy and skills at the lowest possible cost.
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Sustained Growth in Ecosystems and Econosystems

Sustained Growth is Not a Stable Econosystem

Sustained growth in current capitalistic econosystems is seen to be a necessity to maintain a stable economy. Now am I crazy or is that just plain ridiculous? How can constant growth imply stability? Constant growth is by definition not stable, it is constantly changing, and often in an unpredictable fashion. Constant growth is by definition also just not physically possible. The world will not sustain constant increase in anything except age, and even that has its ultimate limits.
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Natural Justice, Fair Play, Empathy, and Personality in a Capitalistic Society

Capitalism like ecology is an implacable system of selection based on how well an individual or a corporation is able to adapt to the current ecological or economic conditions. Sometimes this is a competitive process, but just as likely it is simply how well an individual of a species can make a living using its characteristics and abilities to extract and modify the resources available to generate energy and build bodies or products. In still other cases it is how well the individuals of one species get along with each other in complex societies such as ants, bees, and humans.

We know that in both ecosystems and economies (even capitalism) individuals within the system exhibit greater or lesser degrees of natural justice, fair play, and empathy. Research in many different species and groups of mammals show all of these characteristics exist in animals other than humans. Personality and individual recognition is now known and documented in many social animals, even insects such as ants, wasps and bees. We also know that in both systems individuals who know the rules nonetheless cheat in an attempt to increase the return on their investment of work at extracting resources or producing bodies or products by short-cutting the processes. If caught they get punished. But in a capitalist system, the only legal obligation of a corporation is to make more profits. The capitalist culture expects short-term profits and rewards handsomely. Based on behavior, if corporations were real people, many would likely be diagnosed as pathological. But they are not people, they are economic entities responding in an amoral fashion to the adaptive and competitive pressures driven by a need to maximize profits.
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Managing Free Market Capitalism from Within?

Expanding the Draconian Hypothesis

The goal is to drive an econosystem currently in place (anywhere) towards a highly diverse economy solidly founded in primary production and primary consumption (more-or-less the same as secondary producers in economic terminology), with a very elaborate infrastructure functioning to distribute the raw materials, products, information about the end products, and wealth. The infrastructure itself will spontaneously develop and support allied and dependent businesses. These infrastructures include physical structures such as roads, rail, airports, as well as communication systems such as mail, telecommunications, information transfer systems including the various satellite and digital infrastructure elements used to support Internet services.
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Capitalism Can Leak Empathy and Wealth

Natural Justice, Fair Play, and Empathy in Nature

Injecting moral values into capitalism is not an easy task. Capitalism is a wealth-driven, competitive system in which there are no built-in internal mechanisms for requiring responsible behaviour with regard to people other than the capitalists themselves.

A sense of natural justice is deep seated in our evolutionary past. We are not the only animals that understand what’s fair and what’s not fair. Nor are we alone in having empathy for each other. Experiments with a wide range of animals including primates, parrots, crows, elephants, whales, wolves, rats and others suggest that these feelings of justice and empathy we have are very instinctive. If you have ever played a game with your dog, you can see that he trusts you to play by the rules — and yes dogs understand the rules of a game and of interrelationships. But some dogs play by the rules and others know how and when to break the rules to their own advantage, so cheating is not unique to humans either. What dogs do when another dog cheats? They refuse to play with the cheater. And it takes quite a while for the cheater to be trusted again.
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Sustainable Capitalism? Nice Idea, But …

The Sustainable Thesis

Al Gore and David Blood have proposed developing a sustainable capitalism. I agree completely with the underlying sentiment to create a system that does not over-exploit the planet’s resources nor ignore the people who are not included in the equation governing capitalism. Unfortunately, capitalism is not designable — it is a spontaneous, self-generating process that reacts to external forces operating on individual entrepreneurs or capitalists. It is possible to influence capitalism if you can exert external forces from outside the system. From inside the system one can only react as do other individuals in the system. And we are all inside the system.

I suspect that Gore and Blood share with many of us, the sense that capitalism appears to compete with ruthless (in human terms) strategies. They propose to design a system that is not competitively ruthless. This might be possible, but I doubt it. On the other hand a more appropriate approach might be to examine how econosystems work using a biological metaphor and see if it is possible to make a better analysis and projection of what can actually be achieved by attempting to manage what is a spontaneous self-generated system, with no predetermined end points.
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1983 Fiji Intersecting Economic Cultures

In 1983, I led a research team to Fiji to collect specimens of coral fish. Fiji is an ancient piece of a continent so has a different habitat and different geological history from the coral atolls in other island groups. The assistance of the Royal Ontario Museum, private donors, University at Suva, the Department of Fisheries, and many other organizations made it possible.

Buying bananas from Fiji roadside vendor

The slides shown here were taken in a variety of locations and for anyone who currently lives in Fiji it will probably be a bit difficult to recognize the locations. For the time we were there, we donned local clothing and lived with the local people on the various islands that we visited.

We travelled by van from Nandi to Suva and our first impressions were of interesting people and scenery. One of our first stops was to buy lunch from one of the local roadside vendors. Although we were travelling from Canada, we had lived in the West Indies for a while so were comfortable stopping and chatting to people along the way. Everyone we met was enthusiastic and interested in our little group. Unlike the coral islands of much of the rest of the Pacific this landscape was more like a countryside in South America or Africa with rolling hills dark earth and lush forests. Continue reading