Building a new sustainable capitalism model before it is too late

by John Perkins

From the book "Hoodwinked",

'Only about 3% of people are sociopaths of which about 1% has a college education and a tinier fraction understands how business works. Thus, there is a shortage of such talents who can run modern monopolistic, destructive companies that shareholders have to pay them millions in salaries. And being sociopaths, they gladly take the money without any thoughts of its social consequences.'

Examples he quotes include Jack Welch, the Fortune 500 magazine celebrity who happened to get to the top of General Electric in mid-70s because he negotiated a mere $3m in liability for GE who polluted the Hudson River with toxic PCB where it cost the government $460m to clean up. Also known as Neutron Jack for the way he ruthlessly reduce his staff from 410,000 to 299,000, while his own income and bonus soared.

Is this current form of capitalism sustainable [where the top management get paid millions while the workers get laid]? Let's study a bit of history before we answer this question.

The roots of capitalism started when the British & Dutch trading companies were granted monopolistic powers to go global to buy cheap goods to sell to Europe at high profits. This form of capitalism is called mercantilism. Then Adam Smith during the Industrial Revolution expounded the benefits of a free market as the most efficient method of maximising benefits. However, in reality, exploitation of workers with long hours, low pay & sometimes dangerous work were the norm. Such abuses prompted Ka rl Ma rx to advocate a classless socioeconomic structure based on common state ownership of property and production. The struggle between Ma rx ideas as practised by Sovi et Unnion and capitalism as practised by USA followed and ended with Reagan trumping with the Union colapse. Today's form of capitalism came from Milton Friedman who favored deregulations and privatisation of government assets as he believed that the private sector serve the public interests better than government. Reagan and Magaret Thatcher in UK and some Asian countries practise Friedman ideas to the letter and there were large transfer of public to private ownership, dissolution of laws that protect consumers and investors. Looking back at the 1990s to the great recession of 2008, this era was characterised by greed, obsession with materialism, excessive debts, large conglomerates, and the type of corruptions as symbolised by Enron and Wall Street banks and rating agencies and the housing bubbles and collaterlised debt obligation (CDO), which Warren Buffet called weapons of mass destruction. In this form of capitalism, just 5% of the global people consume 25% of the globe resources, and half the people are still starving......billionaires run corporations whose sales are larger than the GDP of most countries.

This mutated form of capitalism is clearly not sustainable. For example, big American agribusiness use lots of fertilisers in Nicaragua, maximising profits for themselves at the expense of the country's environment. The soil becomes infertile and water polluted. This form of farming were not allowed in USA. After decades of abuse by American businesses through the help of their allies like the CIA and powerful locals, South Americans have awoken with a new form of wisdom. They have elected governments who now recognise the value of their resources and now seek responsible ways to save them for future generations. These leaders encourage companies to change their profit maximising goals and change to something that is more sustainable for future generations and the environment. Some NGOs have sprung up to encourage companies to mend their destructive ways. For example, Rainforest Action Network has convinced companies like Bank of America, Home Depot, Staples to change their policies to save from over-cutting trees.

Hopefully, a sustainable form of capitalism can eventually evolve and this will require enlighten citizens to lobby local businesses and politicians to wake up before it is too late. More work needs to be done. Already, human being have put record amounts of CO2 into the atmosphere and global warming is now widely accepted and the trend is that we humans might be the ones to go extinct due to our own actions.