The most sustainable system that has been observed and understood till today is the ecological system that has evolved on earth. I believe our economic systems, if it has to be sustainable for a long time, have to be modeled on ecological systems.
In an ecological system, there are providers and consumers. Providers are those who consume natural resources that are available and provide the ‘food’ or ‘energy’ for those above in the chain. They contribute ‘directly’. Consumers are those who consume the ‘energy’ produced by providers and evolve further on intelligence. Consumers also ‘feed’ the producers, but mostly after their ‘life’, while ‘providers’ feed consumers during their ‘life’. Thus consumers contribute ‘indirectly’.
It is well known that ecological balance and sustainability would be maintained as long as there are a large number of producers at the bottom and ‘smaller’ number of consumers at the top, as in a triangle. The moment this triangle gets inverted, ecological systems become unsustainable.
As in a ecological system, in our economic system too, there are providers and consumers
In the economic parlance the providers are those who ‘manufacture’ goods and services as their ‘direct’ contribution to economic society. Consumers are those who use them for their day to day living. Consumers earn their living either by ‘indirect’ contribution to the providers or ‘alms/subsistence’ provided by a group of well-endowed consumers and providers.
As in an ecological balance, if this economic system has to be sustainable, there needs to be a large number of providers (who provide direct contribution to society by manufacturing/providing goods and services) and lesser number of consumers (who provide indirect contribution). The providers are the businesses or corporates and consumers are the employed ones.
But that is not the case with our current economic models, which work directly the opposite and cause all the economic imbalances of society.
From an economic view-point as above, both Communism and Capitalism are one and same. They are the same thing in different clothes or two sides of the same coin. How..?
Communism as it was implemented in the Soviets, tend to centralized production in huge factories making small number of large providers and large number of small consumers. Being a ‘planned’ system, ‘foolishness’ of few people’s planning tends to destroy the whole society.
Capitalism, in comparison, is supposed to be a ‘free system’, that let’s the intelligence of multiple people to act. But capitalism, as implemented in the modern age with stock markets et al, ‘tends’ to centralize production (be it goods or services including modern technologies) by stressing on competition and growth. In particular with the stock market system, where in the trading of ‘value of a provider’ happens purely based on growth, it is either ‘grow’ or ‘perish’ for any provider. So there is no other way for a corporate except to grow huge or perish.
Thus both these systems result in huge enterprises that produce a thing for everyone’s needs, thereby making a large number of people ‘docile’ consumers. If the enterprise is state-owned it is ‘socialistic’. If it is a person or group owned it is ‘capitalistic’. From an ordinary person’s viewpoint, it does not matter. We are simple consumers of the system.
Who cares if ‘VSNL’ is owned by Government or ‘Tatas’?. Who cares if Reliance Petrochemicals is owned by Ambani or Government..? They are one and the same. They are large. They do not let anybody come up close to challenge them due to their size. If anybody ‘dares’ to grow they consume and digest them.
For us, both of them capture some strategic resources of society and due to the size they have grown by fair and unfair means, do not let or incentivize anybody into their sector to grow, thereby making most of us docile consumers of what they have to sell.
Thus both systems create a small number of large providers and large number of small consumers, which is highly imbalanced and a recipe for un-sustainability and disaster.
Actually this is the ‘slavery’ model of economics that has always flourished in our planet. Any civilization that was known as ‘rich’ would have been built on ‘slaves’ or huge number of ‘slave labor’. But with higher intelligence levels being achieved in the planet, the slavery model cannot continue.
In the modern age, with current economic models, large sized providers can make a large number of consumers redundant to society, thereby enslaving them.
In other words the current economic model is exactly the inverted triangle (with few providers at the base with large number of consumers) that indicates the problem in our economic balance.
As the inverted triangle indicates that we need to stop the growth of consumers (human population), there needs to be an inverted triangle symbol to our economic model to alert the economic experts of impending disaster that our current models provide.
What is the danger that the ‘inverted triangle’ indicate for both ecological balance and economical balance..?
It indicates that hungry consumers, who have become docile and lost all capabilities to produce anything themselves can ravage the system and destroy the whole planet.
This system of ‘centralization’ is what is causing environmental effects such as ‘global warming’. As the size of the providers are large and capabilities huge, they have a huge propensity and power to destroy the nature at their will recklessly without any controls.
Yes Centralization provides efficiency and makes goods and services cost effective. But it also makes a huge population docile consumers and redundant slaves, so that being cost-effective is of no use to them anyway.
What happened when the dinasours became large for the land..? They developed wings and roamed the planet for their food. And that’s what is happening today in our economic systems. Large corporate entities prowl the planet for food using globalization.
These are some points I could think of to make some course corrections in the current economic models to make them sustainable. Some are outlandish, but yet, I make them here.
- In the current economic model, I would say that the ‘Stock markets’ are the ones that feed this frenzy to grow or perish. The ‘continuous and imaginary’ valuation of stocks puts pressure on corporate to grow, which uses this frenzy to create monsters out of themselves, by feeding not on their business proceeds, but from the public funds they garner.
- My suggestion is while stock markets can be there as a way for ordinary people to invest in corporates, the trading in stock market should be either eliminated or highly restricted. People can invest in stocks and if corporate really performs, they get a higher return than other investments. But then no trading should be feasible.
- By eliminating stock market, the frenzy created by stock markets on corporates to grow or perish can be controlled. It would be a bit cooler environment for corporates and can help decelerate the destruction rate.
- Rules of the game need to change to accommodate growth of smaller players (small businesses) and limit the size of bigger players at the cost of some efficiency in production. ‘Effectiveness’ and not ‘efficiency’ is the key.
- Tough environmental laws need to be brought into place with bigger players bearing the costs more.
The dinasaurian system was hit by a meteor and got destroyed with ice age as they could not sustain their size. Are we waiting for a economic meteor and ice-age to hit for returning to a more balanced, sustainable economic system..?