The Battle of Capitalism: A Struggle Between Profits and Welfare

One of the key driving forces of our economy is profit. The central goal of companies in a capitalist economy is to make the most profit, whether that is economically efficient or not. Large companies find many ways in which they can increase profits. Unfortunately, a lot of the strategies that result in the largest increases are the ones that push large prices onto other peoples and societies. These prices are called externalized costs, meaning they are costs to other people, governments or the environment. The externalized costs of a profit motivated economy have significant impacts on the environment, both directly and indirectly. This blog will focus on how these costs affect the environment specifically through threats to biodiversity (variance of life in the world, particular habitats, or ecosystems).

President Trump recently addressed the United Nations and claimed that the US has the “fastest growing economy in the world”, as seen in this New York Times article. While this is an exaggeration, we do have one of the fastest growing, and many people rarely stop to ask the cost from which this growth is coming. Efforts to increase profits and boost the economy for one company or entity leads to a lessened quality of life for others. By this I mean, to increase profits, companies either directly or indirectly contribute to the destruction and harm to our environment.

These externalized costs can be shown in many ways. For example, the world’s population of vertebrates has decreased rapidly since globalization became popularized. The main threats to biodiversity are also debated, but the ones generally agreed upon are habitat loss, pollution, invasive species, and overharvesting or overexploitation. These contribute the profit motive of our economy because they are the least expensive ways of attaining or disposing of resources. An example would be companies dumping waste into rivers. Because they are not economically responsible for the damage they are causing to the environment, this is the cheapest disposal of waste they have.

Large companies from core (powerful) countries use globalization as a way to externalize costs by continually extracting raw materials from periphery (weaker) countries. In many cases, this leads to deforestation and the collapse of smaller ecosystems. The picture below is an example of this deforestation in the Amazon Rainforest from an article by multiple professors and students at Penn State University.

These cases of deforestation result in losses of habitats. Other causes of these losses of habitats are mining, agriculture, industrial activities, and water extraction. The type of habitat loss demonstrated by the visual above is called Habitat Fragmentation, or large losses of a habitat but not an all-around loss.

Pollution is another externalized cost of capitalism and the need it creates to make the highest profits possible. Toxic substances and chemicals are released into the environment as waste from production processes and can have fatal impacts on entire species. Even natural substances can become toxic in large amounts or high concentrations in small areas. Bioaccumulation is a process through which pollutants become more and more condensed in animals’ tissue and then these pollutants travel through the food chain and contaminate other animals. For example, when a killer whale consumes fish that have received these chemicals, the whale also takes them on in high concentrations. Any animal high up on the food chain is at risk for these contaminants, including humans.

The issue of invasive species occurs when animals and plants move into new areas. This can effect the occupying species in harmful ways. The new species can be parasitic to the resident ones or can be predators upon them. They can also bring new diseases and microbes which could cause depletion of the species and modify habitats. An example of this could be, the frim borders between countries interrupting migratory patterns of wildlife. The wall that president Trump continually refers to and the fence that is currently on the border between Mexico and the US are not only impractical but harmful to the ecosystem. The animals that attempt to cross the border while following typical migration patterns are derailed by these barricades          and are forced into new areas which can cause an invasive species issue.

Over-exploitation is another cost of capitalism externalized onto other places and species. Examples of over-exploitation are “targeted hunting, gathering, or fishing for a particular species as well as incidental harvesting” as shown in this article. Especially with species that are delicately balanced, slight over-exploitation could lead to the breakdown of that population. Also, if the species that collapsed is a primary predator to those lower on the food chain, it can lead to an overpopulation of prey in the ecosystem.

All of the cases explained above are consequences of capitalism and the push on companies to drive prices down and profits up. More often than not, multiple of these side effects occur at once, attacking ecosystems from many sides and resulting in increased or expedited destruction.

Some organizations have attempted to curb this product of capitalism by devoting time, energy, and money into biodiversity conservation efforts. In this report by the Overseas Development Institute, the arguments for conservation are summarized, but the specific economic argument is that profits would increase because the “output from land is greater when biodiversity is conserved”. Also, through the destruction of biodiversity, “unknown biochemical and genetic resources” that could be beneficial and of value are being destroyed.

However, some believe that threats to biodiversity are not valid and the efforts to counteract these losses are a waste of time and money. Their argument is that, while protection for the environment is necessary, it is not enough to make a difference. The main cause of threats to biodiversity, as stated in this BBC article, is that human consumption is exceedingly high for the resources this planet has to offer. Their primary issue with the conservation efforts is that they focus too much on protected areas and not on the root cause of over consumption.

Capitalism, and the influence it has on our society, have brought along with them many costs that are then externalized in order to drive prices down and increase profits. In many cases, these costs are imposed on the environment. While this may not immediately affect the welfare of humans, habitat loss, pollution, invasive species, and over-exploitation have serious consequences. These factors are limiting resources and are leading to collapses of ecosystems and species. If this loss is not stifled, eventually it will lead to a mass extinction which humans might not be able to survive.


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