Chapter 1
1.7 Economic Goals, Economic Stability
last revised/edited 11/2010, minor editing 4/2017
1.7.1 The drive towards supremacy of large corporations
1.7.2 Quality spare time versus high material living standard; the role of bank loans
1.7.3 Focusing on primary goals in economic developments
1.7.1 The drive towards supremacy of large corporations
Capitalism, as Robert Heilbroner beautifully explains in Visions of the Future, is, by nature, unstable. Expansion is part of the system’s nature: while increasing capital, it must increase production and expand markets, seek low wage labor in any part of the world and maintain unemployment to reduce pressure towards higher salaries. Individuals and societies have opposite goals: full employment and stability. Only significant scientific-technological advances should gradually change workplaces, products, and services. Cultures still look at any changes and so-called progress with suspicion. This is partly a heritage of old cultures, but it appears partly justified since most economic-technological changes came with a heavy human toll, which, with careful planning, could have been avoided.
In pure capitalism, there are two basic trends:
1. Competition should drive profits down until there is no capital for improvements and all enterprises simply keep producing the same items with the same machinery and the same number of workers.
2. Corporations which do better than their competitors can save and invest, and they are more likely to receive capital from investors, leading to oligopolies and monopolies (markets are controlled by few or one producer).
This second trend is now dominant in most industries. Transnational corporations form very powerful global oligopolies.
As markets fulfill most “needs” of people and it became harder to invent new “needs” that could be fulfilled with very profitable products, “planned obsolescence” became a new principle of maintaining profits. Rather than building good products that last, development is stopped prematurely so that products can easily be improved, and many goods are designed to have a limited lifespan. Rather than people working less and using safe, reliable products, people are enticed to buy fancy products with many flaws, superfluous features and limited lifespan, soon to be replaced by newer models.
With large corporations as the driving force in modern societies, many legislative actions are designed to support individual corporations and/or industry groups. Capitalism has become not only the economically dominant system, it drives cultures, politics and the legal system. While people previously tried to control the environment with science and technology, capitalism now drives people, with science and technologies being merely tools: scientists became servants of transnational corporations.
1.7.2 Quality spare time versus high material living standard; the role of bank loans
“Primitive” cultures valued leisure time and social interactions. In modern times, labor saving technologies lead to a disproportionate increase in consumption, largely due to pressures that are continuously exerted on all individuals. While costs of goods and services dropped, media and advertisements lead people to expect a high material living standard. What previously was considered a luxury is now considered a necessity. In many families both parents have full-time jobs and “spare time” is filled driving children to places and improving their home. Drops in the costs of clothing and the introduction of washing machines led to higher and higher standards in average clothing. Lower food production costs led to much waste, more costly convenience and fast foods, and the widespread consumption of expensive, exotic food. There has been a change from primarily locally grown vegetables and fruits, grains and legumes, to large assortments of meats, milk products, fruits and vegetables, which were mostly grown and processed in distant parts of the world. Decreased relative costs of construction lead to remarkable increases in housing standards. The area of climatized space per person and the quantity and quality of plumbing and other installations all rose dramatically. As technologies progressed, transportation became rapid, convenient and extremely luxurious compared with earlier standards. Consequently it has become “normal” for people to commute daily over distances previously considered a rare excursion.
While advertisements and media depictions of “normal living” greatly influence people, there is usually also much peer pressure and competition between neighbors, friends and acquaintances. However, the main problem is ready access to bank loans that people can hardly afford: access to loans ruins traditional values. Many people, whose cultures condemn borrowing, became trapped in spiraling debts and increased work hours.
Particularly in Europe, leisure and social times have been more valued, but conflicts with international capitalist institutions create problems. Global capitalism with hardly restricted moves of goods and financial resources makes it hard for different societies to follow separate paths. Particularly the worldwide reach of powerful media is rightly perceived as dangerous to cultures. Political and cultural tensions are a direct effect of a globalized economy. To pursue the development goal of raising quality of life within diverse cultures, the world’s economic functions have to be decentralized again. Countries and regions need to find their own ways of creating humane institutions while shielding themselves from destructive influences.
1.7.3 Focusing on primary goals in economic developments
The primary economic goals must incorporate a goal of humane institutions and high quality of life for all. For multiple reasons, decentralized organization is preferable to centralized institutions. Diverse cultures should flourish, encouraging economic development, while promoting global or natural ethics and eradicating culture specific human rights violations, including cruelty to animals.
Ideally, economies consist of many small, interacting enterprises, producing equally good products with a stable work force and a reasonable budget for innovations (research and devlopment). The provision of services should be similarly organized1. Public universities and private laboratories, in cooperation with grant-supported industry researchers, would carry out research and development work that is accessible to all enterprises. Allocation of capital should be handled in a democratic manner. University researchers should serve as valuable consultants in all economic decision-making.
For a stable economy, society must educate all people and produce important and desired goods and services. Rather than many people working long hours while others are unemployed, all people have meaningful work but also appropriate time for family, pleasure, art, and travel.
Taxation, besides having the functions of redistribution and funding governments, must be used to give people and enterprises incentives to behave ethically and pursue what is most beneficial for society and ecology.
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1 The model of good medical services may be applied. Universities do basic and applied research and develop new technologies. These may be studied in multi-center trials, typically with government grants. They may then be applied by practitioners all over the world, with additional research data being shared. Teams of medical professionals work largely independently, providing good services in all areas for fair salaries. They may be paid privately, by local insurances, by a single-payer public insurance or by decentralized public institutions, but they should not be employees of profit-hungry enterprises. Medications should be generically available or governments bargain with brand name manufacturers for low prices throughout their country; patent laws must be reviewed.