An inherent problem of the free market is the creation of individual, social, and economic dependency on industries that might no longer be needed due to resource constraints or lack of necessity. The best examples are the future of fossil fuel power plants and the automobile industry of the late 2000s. The latter had to be propped up to maintain a cornerstone of our economy and the countless jobs associated with it, despite superior vehicles being produced by foreign competitors. Instead of more cars, America desperately needed an infusion of public transport infrastructure, but instead, we were forced to keep American auto manufacturers afloat in order to avoid putting people out of work and crippling a huge portion of the economy.
The market had created a dependency between the employee and the auto industry, as well as a dependency between the auto industry and the economy.
The fossil fuel industry is something that will eventually have to be scaled down in the very near future (due to climate concerns and resource constraints), and during that process, we will be presented with a situation similar to that of the auto industry. Do we start closing coal, gas, and oil power plants and putting people out of work? Or do we let them stay open and contribute to rising carbon dioxide levels? We will not have the option of keeping those power plants operational if we’re going to avoid environmental collapse.
We’ve known that we’ve needed to move to alternative energy sources for decades, yet the dictates of the market have kept fossil fuel prices low and alternative energy subdued, leaving us with a tremendous problem: worldwide dependency on fossil fuels that contribute to climate change when burned in excess, and countless millions of workers completely dependent on those fossil fuels for income.
The free market cannot compensate for these incredible problems since fossil fuels will continue to be preferred well past the point of no return since they serve as the backbone of our entire world’s economy, infrastructure, and energy production. Even if fossil fuels become scarce and expensive, we will have already gone beyond the tipping point (we are already at that point), and the richest countries in the world will continue to use them because they can afford it.
The prevailing notion among advocates of the market approach is that as fossil fuels become more scarce, prices will rise, demand will fall, and investment in alternatives will increase. This is true of goods we buy at the store – if beans are more expensive than potatoes, all things being held equal, I will purchase potatoes. That same logic does not apply to fossil fuels. Why? Because there aren’t trillions of dollars of sunk costs and decades of infrastructure invested in my decision to eat beans, and I don’t have to stop eating beans because they’re poisoning me irrevocably.
Some advocates of the market approach claim that a strong judicial system would help address the climate crisis. If people were concerned about pollution or global warming, it would be up to those people to sue the companies that are polluting and hope that any levied fines and penalties (or injunctions, if they’re even enforceable) would account for the problem.
Of course, that assertion completely ignores the fact that if a private, fossil fuel power plant were to be sued for a huge sum, that plant would be given even more incentive to produce as much profit as they can, as cheaply as they can, leading to cost cutting and greater exploitation of employees.
It also fails to address the question of how private companies would have their practices and pollutants monitored in the absence of a publicly funded entity like the EPA. Who would monitor everything? For-profit companies? Would companies self-monitor and report? Those options involve an incredible conflict of interest. Would the judicial system somehow monitor them? Non-profit companies functioning on donations? Neither seem like they would have the resources or the scale to address the issue at hand.
All of that aside, this type of system shifts even more of the burden onto individuals than what is already upon them – individuals who, even when their resources and knowledge are pooled, cannot hope to match the capabilities of an entire industry. And even if they could, there is no guarantee that what would need to be done would be done in a timely fashion – and the overwhelming consensus among scientists is that what needs to be done involves, ultimately, closing down the vast majority of power plants that burn fossil fuels, regardless of whether or not they are profitable.
So if that’s the case, and power plants are shut down, then what is to happen to those who work in them? Leave them at the whim of the market and hope that they can find a new income source? It’s not their fault that our elected officials and forefathers planned so poorly, so why place the weight of unemployment on their shoulders?
Ultimately, the free market cannot resolve the problems it creates, and if we wish to live in an egalitarian society that doesn’t let people just fall through the cracks, the free market cannot hope to address the problem itself. It must always be augmented, and those augmentations are only temporary stop-gap measures until the next problem is created.
Of course, if one doesn’t think it’s important to help those who are falling, then one probably won’t have a problem with the free market.
Andrew
June 24, 2012
Third, climate change. It is called a theory for a reason. Though proponents have been wise to drop off the word theory when discussing it, it gives the illusion of fact. I also enjoyed the name change, you know in the 60′s and 70′s, Mr. Gore and the “climate change” crowd, whose made millions on the theory of “climate change” were proposing that the industrial revolution and burning of fossil fuels was creating sun blocking clouds that would cause the earth to slip into a deep ice age freeze. They called this “Global Cooling Theory.” It was very popular, even had videos in school about it. If we didn’t switch to alternate energies, we’d all freeze was the mantra. Why the 180 just 10 years later? The theory was disproven, and it’s followers discredited. So what then about “Climate Change Theorists?” One only needs look at the name change, from “Global Warming Theory” to “Climate Change Theory” to realize something isn’t quite right.
Now, you don’t have to listen to me, try out a few scientists, see what they have to say. Here’s one. http://blip.tv/jim-karlock/climate-orthodoxy-perpetuates-a-hoax-5924187
Heres some more; http://www.geocraft.com/WVFossils/greenhouse_data.html
Don’t like these scientists, here’s a list of articles you can track down more from; http://www.wnho.net/global_warming.htm, you can ignore many of the articles, I’d focus only on the ones with actual scientists backing up claims with facts, I don’t care much for the political arguments.
I’ve already addressed the use of the free market capitalist system as a scape goat in place of state, corporate and mixed capitalism, so I see no further need to explain it again in it’s application to fossil fuels, the principle remains the same. It is not the free market capitalist system, flawed as it is that is to blame for the use of fossil fuels. You can thank the mixed market capitalist system for that.
Andrew
June 24, 2012
Your article is based on some false premises.
First, you aren’t talking about free market capitalism, your describing problems inherent to corporate capitalism, mixed economy capitalism and state capitalism. Free Market Capitalism has plenty of social flaws, but self regulation of industries is not one of them. Free Market Capitalism, of the capitalist strains is the most neutral of economic systems when it comes to “picking winners and losers” in industry. It’s heavily influenced by supply and demand, while state, mixed and corporate capitalism, all have heavy interference from government or private industry to keep outmoded ideas or products in the market place for the benefit of whomever controls those interests. If one had to make an argument of this type, it is best aimed at these three brands of capitalism, not free market capitalism.
I want to also be clear when I say, I do not support free market capitalism any more than I support mixed, state or corporate capitalism. I’m merely identifying correctly what brand(s) of capitalism your talking about. None of the four are particularly well suited to an equal and balanced society. One might consider looking into the Social Market Economy model for that. There is more than one ideology that uses capitalist economic theory, they are not all the same and do not all have the same flaws and merits.
Second, your operating on the premise that disaster would have struck and the bailouts were required. Or rather, that without action disaster would have befallen the working class. Which, in this case is not true, if GM had gone under, it would have been bought up by it’s competitors bit by bit with those competitors taking what parts of the company or factories they could afford. With those factories and divisions they would have acquired most if not all of the workers as they would still require people to work there, and who better than the experienced people already familiar with the job? Management would have suffered a devastating cut back, but I doubt anyone here would really cry overmuch about a bunch of executives having to find another job. How do I know this would happen? You explained it yourself, obviously, people need cars or they wouldn’t be buying the better cars from OTHER companies, leading to the crisis for GM in the first place who was failing to produce results. Those other companies then, who are producing results, would, as companies do, be looking to expand. GM would be an obstacle in that expansion, so would they invest the money if given the opportunity to purchase some of that companies holdings and take up their experienced workers into their companies? Absolutely, the problem we have is, those same executives at GM who ran it into the ground have been working closely with politicians since the 30′s and 40′s to manipulate the automarket, the other offender, Chrysler was with them the whole way as well. I should note that Ford refused to take money from the federal government both in the 30′s and 40′s as well as the most recent “crisis.” Both companies consequently were bailed out by the federal government and neither company has paid back in full what they were given, however both companies have seen bonuses for executives and I’ll let you look up who they donated money too in the political landscape afterwards and before. I’ll give you a hint, it won’t be very surprising if you know already who pushed their bailouts.
Why is all of this relevant? It is not the case that the capitalist system is at fault here, it is the case that corrupt politicians and crooked individuals are at work here, which are a danger in any economic system, regardless of what it is. This same kind of corruption is what bastardized the communist system of Soviet Russia, led to the tragedy of North Korea and permeates the government of China all of which began as communist movements. If we are picking a target for rage, it does little good to pick a target simply because it isn’t liked. In this case, it is corruption at fault, not capitalism. Strictly speaking, if America were still using a free market capitalist economy, GM and Chrysler would have failed and been bought up by it’s competitors. Instead we have the bastardization of a mixed market capitalist economy that allows for corrupt state and corporate officials to manipulate the market in their favor. The rise of the labor movement brought about the first implementations of the Social Market Economic system, which was then replaced by the Mixed Market Capitalist system and finally leaves us on the path to state capitalism, which is what Russia eventually came to practice and China incorporates.