The roots of capitalism and fair economics – in fair play everybody wins

Bhopal, India On December 3, 1984, Union Carbide’s insecticide factory, owned by the US giant Dow Chemicals, releases huge amounts of toxic methylisocyanate into the air and water bodies in a short period of time. 3,500 people die from terrible poisoning symptoms, tens of thousands are injured, and later another 50,000 locals die from diseases caused by methyl isocyanate. People are still getting sick. About 570,000 people have fallen ill over the years due to the accident, for example from cancer. Deformed children are born in the area. Bhopal is the worst industrial accident in history, comparable to the Chernobyl nuclear power plant accident. This illustrates how the externalities of capitalist business often tragically fall on the necks of poor people, especially in the global south. Mines, factories and other polluting activities are usually located precisely on the lands of poor people and, for example, indigenous peoples. As the economy and middle class grow and legislation and human rights improve in the West, this often means modern colonialism, the transfer of exploitation and oppression to developing countries. This blog post of mine is about the fair economy. The current economic system is not fair. Children in China assemble iPhones in dangerous conditions, unfairly produced coffee is sold to rich countries from plantations, as has been done for hundreds of years, first slaves and now modern wage slaves. In Africa, absolute poverty is increasing in some places, people are dying of hunger, and big companies are mercilessly polluting people’s living conditions. The accident at the Bhopal chemical plant in 1984 and, for example, Royal Dutch Shell’s oil drilling in Nigeria, which has led to millions falling ill due to air pollution, clearly describe how the external effects of capitalism are often paid for by the environment and poor people, often with their lives and health. Traditionally, trading has seen two parties, a seller and a buyer, one of whom gives money and the other gives goods or services. Employees, on the other hand, do work and receive monetary compensation for it. However, there are many effects that business causes on nature, employees and society, for example environmental damage, poverty, etc. A company striving for sustainable operations takes these into account in its operations and strives to minimize negative effects and promote sustainable development. However, many companies, especially large multinational corporations, are greedy and only seek to maximize their profits and benefit to shareholders. A company is often just like a financial machine, which mainly only strives to make a profit for its owners, and does not voluntarily invest in anything that causes extra expenses. ”We donate 1% of profits to a children’s hospital” is also usually just a business move under the guise of charity.

Often, companies engage in blatant greenwashing and try to raise their social image with hypocritical campaigns. Nestlé is a large Swiss food company. It became famous e.g. for the sale to Africa of a batch of infant formula that was found to be defective and was banned in Europe. Nestlé’s CEO has stated in an interview, e.g. that ”clean water is not a human right” and that ”it is desirable for Nestlé to own all the world’s fresh water resources”. Responsibility is often just lip service. The documentarians went to investigate Nestlé’s school project in Africa and the end result was that there wasn’t even a school. Finnish company Neste Oil has long marketed palm oil-based biodiesel as an environmentally friendly and climate-friendly alternative. However, palm oil production is anything but environmentally friendly. First of all, carbon emissions are up to twenty times higher compared to regular petroleum-based diesel. Production in Borneo and Sumatra and transport to Finland from Indonesia take a lot of fuel. Palm oil production destroys rainforests at a tremendous rate and e.g. the orangutan and the sumatran rhinoceros are in danger of disappearing completely within ten years. Neste Oil’s subcontractors have even paid criminal gangs to burn the forest to make way for oil palm plantations. Economists and marketers are often only interested in ethical issues when they get money through them, and even then they often only pretend to care about ethics. It should be noted that there are also companies that operate honestly and responsibly, but they are a minority.

Karl Marx spoke of a class struggle in which first freemen and slaves, then nobles and serfs, and workers and bourgeois were opposed. Now, through modern colonialism, rich people in Western countries and poor people in developing countries are facing each other in the class struggle. China has become a huge factory where most of the world’s goods are manufactured in miserable conditions. In the eyes of Western countries, developing countries in Africa and Asia are warehouses of raw materials. The Middle East provides oil to fuel the global economy. This is accompanied by blatant repression and also military interventions by Western countries. Europeans once enlightened the whole world with their voyages of discovery, at the Berlin conference in 1884 the rich industrialized countries of Europe divided Africa with a ruler. For a long time since the 16th century, Europe’s prosperity was based on a system based on the slave trade (especially from Africa) and plantations. The ancient Roman system was very similar. Luxury products of the time, such as coffee, tobacco, cocoa and sugar cane, were cultivated on the plantations from the 16th century onwards. Gems, spices, dyes and ivory were also obtained from the colonies. The trade of these luxury goods started World Trade and also capitalism. One of the world’s first joint stock companies was the East India Trading Company, which brought goods from India to Britain. The ships etc. were a big investment, which required large amounts of capital and therefore several financiers, who received their share of the company’s ownership in the form of shares. Max Weber, in his work Protestant ethics and the spirit of capitalism from 1905, suggests that the success theology and work ethics of Calvinist Christianity and the elimination of the poverty ideal that prevailed in the Middle Ages were significant reasons for the birth of capitalism. The Scotsman Adam Smith, on the other hand, created a broad theory of how capitalism and the free market economy work and presented it in his work The Wealth of Nations in 1776. Many ideas had actually been presented a little earlier by the Finn Anders Chydenius. Smith assumed that an ”invisible hand” through supply and demand controls the market and leads to the prosperity of the nation. However, many do not know that Adam Smith was primarily a moral philosopher who called for a fair and just economy. He would not have accepted today’s exploitation, oppression, tax evasion and dishonesty. Smith proposed that there must be strict and fair rules of the game in trade and economic life, which the state prepares and supervises. Neolibertarians such as the Tea Party Movement have not understood Smith’s theory correctly. No matter what kind of game it is, such as football, we need jointly defined boundaries, concepts, ”language” and rules of the game, otherwise we end up in full chaos, conflicts and the power of the strongest and thus the oppression of the weak. This is in no one’s interest. In this way, rules and regulation as well as international agreements are also needed in the economy. Smith’s idea was not complete freedom to do whatever, but clear rules and fair trade. Common rules protect the rights of all, the well-being of employees, capital owners, consumers, society and third parties, and nature.

A good economic system is based on sustainable development, economically, socially and ecologically, and strives to create lasting well-being and happiness without destroying nature. Economic growth has a clear connection with the growth of energy production. With the introduction of fossil fuels, the economy grew exponentially, this was followed by extensive environmental damage and overuse of natural resources. It is an ecological fact that if, for example, the nutritional situation of the eagle population improves and they get more energy as a result, the population will also grow. The same applies to humans. When energy production increases, so do the economy and the population. Along with these, there is always also environmental damage, at least until now. However, harnessing renewable energy can lead to an unprecedented disconnect between economic growth and environmental damage. Another important thing in disconnection is information. Education and scientific knowledge enable even wiser use of natural resources and cleaner technology. These explain the so-called Kutznets Curve hypothesis. We can also question whether the economy needs to grow, or whether less is enough, whether prosperous and happy people and a fair and more equal distribution of resources is enough? One way to do this would be a global basic income, and in addition to the basic income, there could also be a basic account from which money could be withdrawn if needed, for example when studying or starting a company. These can be justified by the fact that every human being is valuable and also deserves a share or dividend from society’s economic output. It can be thought that the planet Earth is shared and we have the right to its shared capital and resources and the income that accrues from them. The ownership rights of the earth must be completely redefined, as presented in Ronald Coase’s economic theory. Many resources also belong to joint management, as Elinor Ostrom suggests. In this way, people would have the right to, for example, a clean living environment, drinking water and breathing air. This would prevent new accidents like Bhopal and other environmental damage caused by big companies. Economic growth often only means debt growth. Every time money is printed, new debt is created for the central bank. Economic growth is often just an illusion, based on the growth of production and sales of luxury goods. Gross domestic product is a bad measure of development, because it does not take human rights, democracy, economic equality, etc. into account. Development and progress are not the same thing as growth. The Dalai Lama has stated: ”The goal of the economy should be the happiness of all, not the pursuit of selfish profit.” The best development is when happiness increases and nature and people are doing well.

Daniel Elkama

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