Capitalism is a Pyramid Scheme

Early entrants to capitalism and free trade (UK, the US, Western Europe, Japan) accumulated great wealth, but later entrants face huge problems: global warming, pollution, population growth and resource depletion, not problems when the US industrialized. The Economist projected that China will match the US as the largest economy in 2030, a straight line projection of current trends. What is unaccounted for by economists is the wealth-reducing damage to the earth that such unrestrained growth will already have caused.

Capitalism, in order to be a healthy, viable system has to sustain constant growth. A young, growing population is counted as a plus. A capitalist economy that does not grow is in a "depression." And yet, the earth has finite resources, and a finite "carrying capacity." The run up in energy and resource prices are simply indications of what is beginning to happen. Global warming is another, and portends increasing droughts in large parts of the world, reducing the amounts of food available, promoting famine.

For Americans to expect that they can continue their "way of life," when in competition for scarce resources with the huge countries of China and India is simply a fantasy. It is also a fantasy that the Chinese or Indians will someday enjoy affluent lifestyles like Americans. If the over 3 billions of people from those two countries and nearby East Asia consume and pollute even at (lower) European levels, the oceans will become deserts from over-fishing, resources that are not 100% recycled will become prohibitively expensive and global warming will render most agriculture way over-taxed to produce the necessary food (especially if the Chinese and Indians demand diets comparable to Americans). This is why capitalism is a pyramid scheme; it is not sustainable. For Consequences, click on capitalism.

A model for the future is the tiny island nation of Nauru. While its resources of phosphate lasted, Nauru had the highest per capita income of any nation in the world. Now the phosphate is gone, the "topside" of the island is a barren waste, run-off from the strip mining has killed many of the reefs, and Nauruans are left with very little--except for the wrecks of cars, and modern appliances that they bought in better days. That's the picture of a 12-mile island, but it gets worse. That island republic will probably become uninhabitable when the sea rises from global warming; the only habitable parts--not destroyed by the strip mining--are on the coast.

Nauru is an exaggerated case, but as we strip mine, burn down forests, burn up oil, poison ourselves with the chemicals in the air, water and soil, the huge population that is poised to begin to participate in the same destructive system means that all those processes, and global warming, will not just continue, they will escalate. Poisoning from un-breathable air and undrinkable water will become increasingly common; so will starvation and desperation; the latter is the impetus behind most terrorism. Yes, even terrorism is a consequence of the destabilizing effects of global capitalism.

Capitalism is actually worse than a pyramid scheme. In the classic racket, at least the earliest entrants cash in. Ultimately, with dynamic capitalism, i.e. with unrestrained and unlimited growth, no one will. Think Nauru for the whole world.

The selfish class, which currently owns most of the world and controls most of it, will do what it did in the last years of the Roman Empire : ignore all signs and connive in the coming collapse. Imperialism is not a pyramid scheme, however, it is bait and switch: offer great rewards, and then stick people with the bill, like the US's Iraq war.