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The Crisis in Capitalism: What are we going to do about it?

Updated: Jan 8, 2021

By D.A. Holdsworth

David Attenborough has pointed to the question about capitalism that really matters – so what’s

the answer?

Splashed everywhere across the media recently was news of Sir David Attenborough’s latest podcast for the BBC. His basic message: capitalism needs to be reined in if we’re going to save the planet and– surprise, surprise – it’s just possible we might actually live slightly happier lives as a result. Implicit in Sir David’s comments is a question: how do we get there? “Capitalism needs to curbed somehow,” he said. It’s the word ‘somehow’ that I want to pick up on and truncate into a simple ‘How?’ As in…

How is capitalism going to be curbed?

That’s a big question to ask, and an even tougher one to answer. Sometimes if you want to figure

out how to change something, it pays to figure out how you ended up with it in the first place. After

all, humanity never intentionally set out to have the current (destructive) form of capitalism. So why

are we wedded to a destructive form of capitalism? Put differently: what are the goals of our society anyway?

Readers of my novel, How to Buy a Planet, will know that – beneath the fun and japes – it satirises

modern capitalism from a few different angles. In a couple of places, it takes a swipe at GDP (Gross Domestic Product) and the concept of infinite economic growth. Somehow, at some point, constant economic growth seemed to become Western societies’ main goal, and GDP the main mechanism for measuring it. At election time, it’s the issue that dominates the debates (“It’s the economy, stupid”) and it’s the yardstick by which almost every policy is measured. “Will the new policy help generate growth?” Even environmental policies have to justify their place according to whether they will provide ‘green growth’.

This belief that we can achieve infinite economic growth, even while living on a planet with finite

resources, seems to be the nub of the problem. Society’s main goal is eternal economic growth,

which has created our current (destructive) form of capitalism.

How did we end up with this destructive form of capitalism?

Actually, the modern obsession with economic growth has, arguably, noble roots. The current

paradigm seems to have emerged out of the ashes of two world wars: sick of bloodshed and shocked by Hiroshima, the old era of romantic nationalism died, and was replaced by a new focus on peace and prosperity. It made sense. The world had impoverished itself through war; it was time to give peace and commerce a chance. This new world view was, in a sense, a reversion to the old forgotten values of the Enlightenment. The world that emerged in the 1950s is one that I suspect Adam Smith and Immanuel Kant, would have been very comfortable with. As the post-war decades rolled by, peace between the major powers started to entrench itself and ever-increasing prosperity became the major focus. Nothing embodied this more than the quest for ever-growing GDP. Mindsets change slowly, but nations were starting to compete to see who had the largest GDP, not the most tanks.

Economic growth, as the main goal of society, and GDP as the mains means for measuring it, became the axis around which everything turned. They reinforced each other wonderfully. Here was a simple, easy-to-grasp goal that everyone could understand, and here was a robust means of

measuring it. The upshot is, this pairing became the most successful double-act in economic history,

perhaps in world history. When else had so many different peoples united together so peacefully in

pursuit of a shared goal?

What no-one envisaged, either in the 1950s or in the 1750s, was the environmental degradation that this goal would ultimately lead to. When you’re a growing teenager, you don’t think ahead much to adulthood, to the state of maturity where growth stops. Arguably, this is the point Western nations have reached: the great benefits of the modern era (running water, mains sewerage, electricity, gas, refrigeration, washing machines, cheap transport, internet access) have reached almost every household and the great gains have already been won. True, the ‘knowledge economy’ may yet bring more economic growth, and possibly even carbon-neutral growth, but does this need to be the sole focus of our collective societal efforts? Has the time not arrived to broaden our focus a little and ask whether society can now have a wider, more nuanced set of goals than economic growth?

What is it that we want as a society and how can we balance those wants?

As one looks at the landscape of competing goals, it seems so cluttered. We have environmental

goals: we want to reach carbon neutrality, we want to regenerate the forests and protect the

oceans. We have social goals too: we want to see crime reduced, healthcare improved, and greater cohesion between the races. And of course, we still have our economic goals: we want to see national income grow, and we want to see all income groups benefit from that growth, we want low debt and high employment.

That’s a lot of competing goals. But maybe the apparent weakness in this situation is actually a

strength? If we have social goals, environmental goals and economic goals, why on Earth don’t we

have an index that measures all three? Instead of an obsessive focus on GDP only, why not have a

broader index? What’s needed now is what might be called a ‘prosperity index’. I use the word

‘prosperity’ in its widest sense, of course: not joyless riches, but true prosperity – health, wealth and


We’ve arrived back at the original question: How is capitalism going to be curbed? And this time we have the bones of an answer:

Is it time to change our goals as a society and change the way we measure progress?

A useful image here is the hot air balloon. Imagine we’re all in a basket pulled upwards not by one

but by three balloons: a healthy society, a healthy economy and a healthy environment. If one

balloon is pulling harder than the others, the basket is destabilised. For example, if a society is too

focussed on its economy, it risks being destabilised by environmental degradation and social unrest

– a situation that many developed countries are in right now. Conversely, if a society is too narrowly focussed on social issues at the expense of the environment and the economy, you end up where communist Eastern Europe reached in the 1970s: a very equal society with good education and healthcare systems, but financially and environmentally impoverished.

So if all three dimensions – social, economic and environmental issues – are essential to a healthy

society, then let’s measure all three. Let’s have a dashboard of indicators across these three main

areas that show us how well society is progressing, alongside a single summary indicator. What you measure matters. The moment the UK Government adopts a more all-encompassing prosperity

index as its central barometer of success, is the moment that we all gain greater transparency about

the trade-off’s that society needs to make.

As I write, the government is keen to press ahead with changes to the planning system that will

allow an acceleration of housebuilding and road building in the South East of England. This has an

easily quantifiable (positive) impact on GDP. But it also has a negative impact on the ecology of the area and on North-South cohesion (concentrating population and wealth in one region of the

country). Thus in the current paradigm – where only GDP is measured and valued – the inclination is to proceed. But, by contrast, if you have a combined prosperity index, we can attempt to calculate in a rounded way whether such plans lead to a net gain overall (allowing for economic, social and environmental factors) or a net loss. Better informed decisions can be made.

This is not pie-in-the-sky thinking. Such an approach has already been tried. To take one example:

Maryland in the US adopted the GPI (Genuine Progress Indicator) around ten years ago, which

precisely includes environmental, social as well as economic indicators. Among the various

improvements to state-level decision-making was the hard-nosed calculation that urban sprawl

created more costs than benefits: loss of leisure time (through commuting) and environmental

destruction offset the economic benefits.

There are lots of if’s and but’s around adopting an alternative to GDP, which belong to a different

blogpost. And when I get to it I’ll make sure to balance all the obvious criticisms (“Won’t any new

index be based on an arbitrary selection of indicators?”) with a reminder of all the flaws and

problems with GDP (which is itself a wholly arbitrary heap of survey data, that manages to include

prostitution and drug dealing alongside farming and automobile manufacture, while somehow

keeping a straight face). But that’s for another time. For now, I’m going to hand back to Sir David

Attenborough for the final words:

"That doesn't mean to say that capitalism is dead and I'm not an economist and I don't know. But I

believe the nations of the world, ordinary people worldwide, are beginning to realise that greed

does not actually lead to joy."

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1 Comment

Ooh, now that was a good little read - gives much pause for thought.

I very much like the '3 balloons' analogy - it is a strong visualisation tool which even enables muppets like me to easily grap the problem at a high level. Having got there, the need to balance the loads in the ballon baskets suddenly seems blindingly obvious... even if the 'how to get there' bit is not.

Very well said!

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