Lester Thurow: Why good capitalist decisions mean ecological suicide

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[Quotes and Insights #17]

This quote is particularly telling because the author is trying save capitalism from itself.

Nowhere is capitalism’s time horizon problem more acute than in the area of global environmentalism …

What should a capitalistic society do about longrun environmental problems such as global warming or ozone depletion? …

Using capitalist decision rules, the answer to what should be done today to prevent such problems is very clear-do nothing. However large the negative effects fifty to one hundred years from now might be, their current discounted net present value is zero.

If the current value of the future negative consequences are zero, then nothing should be spent today to prevent those distant problems from emerging. But if the negative effects are very large fifty to one hundred years from now, by then it will be too late to do anything to make the situation any better, since anything done at that time could only improve the situation another fifty to one hundred years into the future. So being good capitalists, those who live in the future, no matter how bad their problems are, will also decide to do nothing.

Eventually a generation will arrive which cannot survive in the earth’s altered environment, but by then it will be too late for them to do anything to prevent their own extinction. Each generation makes good capitalist decisions, yet the net effect is collective social suicide.

From The Future of Capitalism, by Lester Thurow


  • Just watched Bill Rees on you tube, thanks for the link Frank, been reading this blog for four or five months and never been nearly so convinced of the necessity and plausibility of transformation! now how can we get this footage as a single clip so as we can pass it on easily ??????

  • In his 1996 paper, “Complexity, Problem Solving, and Sustainable Societies”, (http://www.oilcrash.com/articles/complex.htm), the US anthropologist and historian Joseph Tainter explains why most proposed solutions to contemporary problems paradoxically end up making matters worse.

    The problem, he says, is that “If macroeconomic patterns develop over periods of generations or centuries, it is not possible to comprehend our current conditions unless we understand [historically] where we are in this process.”

    The challenge is to recognize the point in time when our proposed solutions yield ever-diminishing returns.

    Ignorance of this “tipping point” will contribute to increased socioeconomic complexity, which adds to our energy costs to sustain ineffective systems, thus exacerbating the problem.

    Tainter concludes: “One might expect that in a rational, problem-solving society, we would eagerly seek to understand historical experiences. In actuality, our approaches to education and our impatience for innovation have made us averse to historical knowledge. In ignorance, policy makers tend to look for the causes of events only in the recent past. As a result, while we have a greater opportunity than the people of any previous era to understand the long-term reasons for our problems, that opportunity is largely ignored. Not only do we not know where we are in history, most of our citizens and policy makers are not aware that we ought to.”

    Can Tainter save us from ourselves? Based on his analysis, it looks doubtful.

    UBC biology/ecology professor, William Rees reached the same bleak prospects for humanity in a 2010 presentation, “Is Humanity Inherently Unsustainable?”. It’s available as a set of videos on YouTube (search his name) or get the transcript here http://www.ecoshock.org/transcripts/Rees_100415_transcript.htm