Towards a new capitalism

Decades ago the European countries, facing the sudden windfall of oil production of their very own and within easy reach -in the North Sea- made the choice of pricing it high, tagging on hefty taxes to put a high price on energy consumption. In the long run the increased revenue on the one hand allowed the governments to invest heavily in costly public ground transportation: high speed trains, urban subways. With smaller cars on the roads, the European per capita energy consumption is half of what it is in the USA.

In the United States abundant domestic oil production and the aversion to letting government intervene in the pricing of energy has led to wasteful use of resources. The deliberate dereliction of public investment in communal transportation and cheap oil have encouraged spread out development of bedroom communities, with the concurrent perverse effects of traffic congestion and pollution.

The oil companies’ need for private profit has denied the government the resources to implement rational policies and undertake investments conducive to energy efficiency. The quest for easy growth encourages more consumption instead of smart consumption. As long as the pricing power remains in the exclusive hands of the private economy, we may be sure that the outcomes will never benefit the consumer. The interest of the large corporations will always be to defend their profits at the expense of the final user.

People have been redefined, and diminished, as consumers. Paul Krugman in the New York Times of April 21st, points to the semantic change that has happened also in the health care industry: people are no longer in need of health care, but mere consumers of health services.

The invisible hand of the market, when it reigns supreme -even Adam Smith warned against this outcome- does no longer intervene, at the present stage of capitalism, to produce the results most beneficial to the population at large. Industrial and commercial behemoths dominate the market, and can co-opt any emerging competition. They can absorb technological developments and manipulate its price until the competitor cannot survive. If that fails the large corporations can buy up any competition that they feel might threaten their dominance.

The world-wide crisis that we are living through is a fundamental crisis of capitalism as we practice it.

Capitalism is a resilient beast and will no doubt survive, but in its present form has reached its boundaries. Let us hope that in the next iteration it will root in humanism and democracy. Capitalism for the people as we practiced it in the mid-twentieth century.