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Capitalism is an insufficient economic model

An extract from the Business Plan for People-Centered Economic Development, a social business.  Published and distributed in May 2004 with paper copies to ICOF and Social Enterprise London.  SWRDA was also approached for funding support. None were able to offer assistance.

The extract refers to a seminal paper which argued the strategic case  for tackling poverty as a matter of enlightened  self-interest.

A few months earlier the author had fasted for US government to adopt the International Covenant on Economic Social and Cultural Rights from a tent in Chapel Hill NC.   I forwarded status reports to the local senator and later this letter, when John Edwards stood for election as Vice President and the author had relocated to Ukraine to join the Orange Revolution.

In 2009 P-CED delivered ‘Economics in Transition‘ in seminars for the international Economics for Ecology conferences.  It would provide a study guide to the origins of the economic crisis a few months earlier.

“People-Centered Economic Development (P-CED) began as a concept in 1996 following a paper for the Committee to Reelect the President (US.)  That paper examined the need to be prepared for the risk of increased national and global poverty as we enter an information economy sufficiently sophisticated by its nature as to exclude and/or displace an increasing number of workers around the world. Main points are reviewed here.

The emerging Information Age will provide an unprecedented opportunity for outreach and communication at local community levels by way of the Internet. Given the opportunity to communicate and research global resources, communities will become able to assess their own needs, identify resources to meet those needs, and procure those resources. In that sense, the information economy can work to the advantage of impoverished people in a way never before possible.

 In order to participate in the information economy, it is essential for local communities in any nation in the world to be able to access common information.  Given that the Internet and world wide web are in their development infancy, physical infrastructure for the Internet on a global basis need to be built: the global information infrastructure, or GII .  So, why not create new companies that not only fulfill this very lucrative and ongoing infrastructure deployment and direct the profit to additional social needs such as poverty and hunger relief?  This would include companies working in:

  • hardware side: enterprises which create the physical infrastructure, via manufacture or installation of components
  • software side: enterprises providing web design and development, including programming and tools associated with web design, development and online communications tools, electronics commerce programs and methods

The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct means. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. Poverty reduction and relief became the overriding principle and fundamental social objective in the emerging P-CED model.

Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.

Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.

Enterprise for the primary objective of poverty relief, localized community economic development, and social support became the business model which guided P-CED’s efforts and development at a time in the US when terms such as ‘social enterprise’ and ‘social capitalism’ had not yet been coined.

Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”


At the International Economics for Ecology Conference in 2009, this point was made in a paper for the opening plenary:

"The prevailing economics systems in the twentieth century were capitalism and communism.  Both systems were hypothetically aimed at creating a means of providing people with comfortable, safe and secure life.

Along the way, in the process of attempting different forms of economics from capitalism to communism, we have managed to pollute and contaminate our own environment to the extent of causing environmental change to the point of quite possible catastrophe for people around the world.  Neither the capitalist system nor the communist system – nor the various fascist systems attempted in such as Germany, Spain and Italy – lived up to their promises.  Communist and fascist systems became infamous for mass murder.  The Western capitalist was less murderous. Overall, capitalism was able to produce a much larger middle class of people between rich and poor, and has gained precedence due to making safe and secure life possible for more people.   But, it's various methods over the past 100 years left millions of people to suffer and die more indirectly than outright murder.  Those people were dismissed as relatively unimportant, mostly left to die from deprivation rather than outright execution.  In all systems, some rationale was created to either dismiss people and leave them to die, or, kill people outright.  In the end, for the victims, the result was identical.

In that context of disposing of people, by all economic systems, and with capitalism having become predominant, financial profit came to rule the day.  Profit, the bottom line, was master of all else.  People and the environment we live in were secondary considerations.  The vehicle of Western capitalism was, and is, corporations.

Corporations are legal structures created as legal entities to carry out the business – financial – objectives.  Under US law, corporations are a legal person.  What sort of person?  According the psychological assessment measures in the Diagnostics and Statistical Manual, Fourth Edition (DSM-IV) used for personality assessment, corporations meet the strict clinical definition of a psychopath.  “Psychopath” is another word for lunatic, or, someone who is legally, criminally insane."

In 2012, in the wake of the UK riots, the warning of someone who considered himself a capitalist, has a  remarkable congruence with the views of a veteran Marxist, who has just publlished his book "How to Change the World"

"One element of production, namely people, have become surplus to requirements"