J500 Media and the Environment


The Other Side of Capitalism by justinlev7

2628417520_db5a2c2ac5You could say Jagroop Singh is succeeding. He has 65 times as many cows as he did just one decade ago. Of course, back then, he only had one cow.

He is now making far more money, though. He receives 15 rupees for every litre of milk — three times what he made just two years ago. The milk, he sells to Nestle India, whose nearby factory blasts it into a powder and sells it abroad.
But Singh, among others, has stopped growing grain. And thanks to droughts and the subsequent rice shortage, grain prices have skyrocketed. 

In a capitalist economy, increased efficiency = increased profit, and increased profit = improved lifestyle. This is the central guiding principle. By that standard, India, whose economy is growing 9% a year, is succeeding.

But in the agricultural sector, India's growth has declined, from 4.7 per cent between 1992-1997 to just 1.5 per cent between 2002-2006. And see, therein lies the rub. In places like India and China, more people have more money. They live in the cities, and naturally, they expect to eat more diverse food, food that is usually imported.
They have no grain, so they live off the grain of others. Americans pulled a similar trick in the housing market, when they bought up sub-prime mortgages using loans that were beyond their means to repay. In both cases, the idea is that future growth will make up the difference.
And in general, it has! US gross domestic product has risen constantly  for years, and along with it, inflation.  The idea that our production might flatten out... or drop... is unthinkable! That's why it's called capitalism, after all- our job is to convert resources into capital, and use that capital to encourage further growth. 
But, can we realistically expect this growth to continue forever? Singh may find himself with 65 bony cows, and not enough grain to feed them!
The wise man, they say, lives within his means. Capitalism pushes for growth at all costs, even if those costs are beyond your means. Can that possibly be wise?  
Justin Leverett no longer sleeps. 🙂
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3 Comments so far
Leave a comment

Justin,
Very interesting post. Tell me, what is the solution if capitalism is such a failure?
My best,
Simran

Comment by j500

Your post reminded me of the saying: don’t count your chickens before they hatch. Capitalism definitely relies on our human desire for bigger, better, and more. We invest, buy beyond our means, and take out loans all in hopes that in the future, it’ll pay off. I wouldn’t say capitalism is a failure, we just need to realize that like any other economic system, it’s not one that is not invincible to collapse.

Comment by janiec52

All of this reminds me of the gilded age– it looks golden, but in actuality, it is wood underneath. I think you are so right about profit– we leap (gold-rush style) for what will make us money, when, in actuality, we are lacking market diversity and self-sustainability. It shows how the numbers can be good (think the 1990’s) when in actuality, we are on a downward path.

Comment by brennad87




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