Academic journal article NACTA Journal

Sustainable Capitalism: A Matter of Common Sense

Academic journal article NACTA Journal

Sustainable Capitalism: A Matter of Common Sense

Article excerpt

Sustainable Capitalism: A Matter of Common Sense By John E. Ikerd, Kumarian Press, 2005, paper, $21.95

Sustainable Capitalism should be read by all non-economists who are concerned about long-term development. In a clear and relatively jargon-free exposé of the failures of neoclassical economics, author John Ikerd provides an accessible and interesting narrative that describes the foundation of modern economics and outlines the well-meaning intentions of giants in the history of the field. Adam Smith, Thomas Malthus, John Stuart Mill and others. In fact they were right for their time. He expands on the theme that times have changed, resources are no longer non-limiting, and conventional economic analyses fail to measure the well being of all members of society. It is easy for the reader to understand and accept his analysis.

Sustainable Capitalism should be read by all thoughtful economists who are sincerely interested in the future of food systems and society. John Ikerd points out that the well-known founders of modern economics were right on track in describing the importance of individual incentives, operation of the free market economy, and an economic system designed to better the situation or well-being of everyone in society. A logical consequence of social evolution from hunting and gathering through agriculture to manufacturing to service economies involved different levels of specialization, standardization, and consolidation. When this process resulted in more efficient use of natural resources and labor to the benefit of all, the neoclassical economic model worked well. When resources became more limiting, and free markets were distorted by monopolies and control by a few, large corporate players, then the distribution of benefits became skewed and the system no long served a growing fraction of the population. The process of concentration continues today, with immense and growing discrepancies between salaries of corporate CEOs and their laborers who cannot afford health insurance and must feed their children using federal food stamps.

Dr. Ikerd explains in detail the foundation of contemporary economic theory, the gradual change from an economic order that emerged from near-total control by rich landowners to the organization of guilds, and on to the present system that is dominated by multinational corporations. He describes how the founding principles became neglected as economics became quantitative and began to ignore such important factors as general well being and happiness - factors that were hard to describe in rational economic terms. Free markets, free trade and capitalism gradually disappeared with bureaucracy, controls, and domination on the global level by a small number of large players. The system evolved to serve well a few members of an economic elite, while ignoring the needs of most, and the author argues that this is not a sustainable situation.

Common sense is infused throughout the book, as the author challenges us to step back from accepted theory and see if things "make sense" in our own realities. He points out that relationships among people and the ethics that guide a culture are central to how a society works. There are serious shortcomings in a theory that equates personal wealth with happiness and well being, and in analyses that externalize all the factors in people's decision making if they cannot be quantified. Enlightened self-interest is useful as a stimulus to economic activity, but only to the point that it does not limit others also achieving their legitimate self-interests.

Sustainable development is seen as the key to a viable future, especially when defined as a development pattern that "means enduring progress, supportable advancement, or livable evolution. …

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