Capitalism is the dominant economic system essay
Capitalism is the dominant economic system in the modern world. It is characterized by private ownership of capital assets and profit-maximizing goals of economic agents producing goods and services (Nemetz, 2013). Economic policy of most developed countries focuses on reaching stable economic growth, keeping inflation within the 2-3% limits, minimizing unemployment rate and keeping it at the natural level (Foster, 2011). These targets are based on the assumption that absolute and relative characteristics economic growth have no an upper boundaries (Cohen, Brown & Vergragt, 2013). However, research devoted to analyzing the connections between environmental and economic development shows that the Earth is a closed system and there are planetary boundaries which the humanity should not exceed in the chase for economic growth and wealth.
A group of researchers led by Johan Rockstrom explored the causes of ecological change, and found out that the major driver of environmental change nowadays are the actions of the humanity. Rockstrom et al. (2009) have identified that there are several environmental tipping points which, once exceeded, can lead to rapid and irreversible environmental changes threatening the survival of the mankind. Furthermore, Rockstrom group in collaboration with other leading scientists have identified nine planetary boundaries – processes in the Earth’s environmental system – which determine the zone of save development (Hanley, Shogren & White, 2013). These boundaries are climate change, land use, biodiversity loss, freshwater use, ocean acidification, ozone depletion, biogeochemical balance (nitrogen cycle and phosphorus cycle), atmospheric aerosols and chemical pollution (Rockstrom et al., 2009).
Rockstrom et al. (2009) quantified seven of these nine boundaries in their study: the researchers developed control variables characterizing the thresholds, estimated the safe range for the thresholds and selected the lower values of the range as the boundaries (The Worldwatch Institute, 2013). If the boundary is crossed, the mankind enters into the dangerous zone and should adjust its actions in order to improve the situation. Climate change is measured by either the concentration of carbon dioxide in the atmosphere or by the radiative forcing change, biodiversity loss – by the extinction rate (number of species per million species per year), nitrogen cycle – by the amounts of nitrogen removed from the atmosphere for the purposes of human use, phosphorus cycle – by the amount of phosphorus going into the oceans, ozone depletion – by the concentration of ozone in the stratosphere, ocean acidification – by the mean saturation of aragonite in the surface sea water, freshwater use – by the human consumption of fresh water, land use – by the percentage of land used for growing crops, atmospheric loading of aerosols – by the concentration of aerosols in the atmosphere and chemical pollution – by the concentration or emitted amount of organic pollutants, nuclear waste, plastics, etc. (Rockstrom et al., 2009). The thresholds are scientifically determined for all variables except the latter two boundaries – atmospheric aerosols and chemical pollution (Rockstrom et al., 2009).
Currently the humanity has crossed three of nine planetary boundaries: biogeochemical balance (nitrogen cycle), loss of biodiversity and climate change. Current value of carbon dioxide concentration is 387 parts per million by volume, while the proposed boundary is 350; the rate of biodiversity loss reached over 100 species per million species per year, while the boundary is 10, and the volumes of nitrogen removed from the atmosphere for the purposes of human use is currently 121 millions of tons per year, while the boundary is 35 millions of tons per year (Rockstrom et al., 2009). Fig. 1 illustrates planetary boundaries and current status of the relevant control variables.
Planetary boundaries and their thresholds (Rockstrom et al., 2009)
One can see that the humanity in its rapid development and expansion has exceeded three critical thresholds, and is about to cross other boundaries. The concept of planetary boundaries challenges the traditional idea of continuous economic growth and development. From economic point of view, planetary boundaries point out at significant negative externalities which will affect the humanity if current patterns of economic development and consumption persist (Foster & Clark, 2012).
Therefore, instead of targeting the increase of well-being, stable economic growth and moderate inflation, the governments should focus on sustainable development and on maintaining a decent level of well-being while not exceeding the boundaries of resource use (Reischl, 2012). In order to achieve sustainability, it might be necessary to reconsider the standards of economic well-being, to address the boundaries which have already been crossed (Running, 2012) and readjust production and consumption so that the resource use would be in the safe zone.
Along with the shift of economic priorities, there should be a shift of power and political priorities. Currently there is an urgent need for creating a global environmental government and for consolidating the efforts of all countries in order to make the Earth a safe zone of development for the humanity (Galaz, Biermann, Folke, Nilsson & Olsson, 2012). Overall, the concept of planetary boundaries urges the humanity to change priorities and to favor environmental stability and security over increased profits and material well-being. The concept of capitalism should be reconsidered so that the emphasis would be on human and environmental capital, and the main goal of development would be environmental sustainability.
