Michael Jacobs, an ex-SpAd to Gordon Brown, has recently written in the New Satesman that ‘green social democracy can save capitalism’. Well, not everyone agrees. For some, the ‘green social democracy’ experiment has, thus far, not worked, and indeed, might be running out of time.

And as for capitalism – or at least capitalism1.0, it’s no longer heresy to question its infallibility. Since we last blogged about capitalism, a host of mainstreamers like the BBC’s Stephanie Flanders, the FT’s Martin Wolf, UBS’s George Magnus, Joseph Stiglitz and Nouriel Roubini, have started questioning our growth-obsessed, capitalist economics and calling up Karl Marx from his grave.

And, as a search of Amazon will show you, there’s no shortage of recent books both questioning capitalism and laying out ideas for its updating or replacement.

But why might we have to consider alternatives to capitalism and what might an alternative look like?

Limits to growth

As we’ve mentioned often on this site, people like Professors Tim Jackson and Herman Daly has shown that, due to the scale and urgency required to tackle things like climate change, technological solutions to ‘decoupling’ growth from carbon emissions are nothing short of delusional.

So its becoming clear that continued growth of the macro economy would push us into climate meltdown and commit the world’s poorest and our children to unthinkable trauma. As someone I’m now working with, IPCC scientist and Deputy Director of the Tyndall Centre Professor Kevin Anderson, recently said, “we can either deal with climate change or have a growth economy – not both.”

Economist Kenneth Boulding famously said pretty much the same thing, now being repeated by finance brokers Tullet Prebon, “to believe in infinite growth on a finite planet you have to either be an economist or a madman.” In any case, whether we want to keep growing or not may be out of our hands, as writer Richard Heinberg points out “growth is over, like it or not.”

The good news is that emerging macro-economic modelling from the New Economics Foundation (Nef) and by Professors Peter Victor and Tim Jackson is showing that an end to global economic expansion needn’t stop us delivering high employment, high wellbeing and fiscal balance.

In other words, there is hope that the rich world can well afford to find a quantitative reverse gear so that the poor world can hopefully continue to develop qualitatively.

But what are the implications for our current economic-incumbent capitalism?

Some would argue that capitalism has played a role, along with other forms of market and non-market socio-economics, in historic improvements in material and non-material wellbeing. But capitalism brings with it endless ‘externalities’, as historian Mike Davis argues in the fascinating Late Victorian Holocausts, “Millions died in the golden age of Liberal Capitalism; indeed, many were murdered … by the theological application of the sacred principles of Smith, Bentham and Mill.”

For todays ‘full-world’ challenges, a new, or radically updated system is needed. This new economics will need to deliver two key things. It will need to deliver wellbeing to all, current and future generations. And it will need to do that sustainably. Call it ‘sustainable wellbeing economics’.

The problem for capitalism, as it jockeys for position as our preferred economic model for the next 300 years, is that it relies on continued and exponential economic growth to support the dynamic of profit maximisation and the ‘treadmill of accumulation’.

Attempts at incremental reform of capitalism – Michael Jacobs’ ‘green social democracy’ and other models such as ‘market ecology’, ‘natural capitalism’ and ‘capitalism-as-if-the-earth-matters’ have failed. Eco-socialists will say they were always doomed to fail. Others that they might have worked if given more time.

But time is something we don’t have. NASAs climatologist James Hansen says “we may already be too late’. Kevin Anderson that, without urgent change we’re locked into 4 degrees of warming . As we blogged recently, that’s scientist-speak for apocalypse.

As our current economics continues to unravel towards ‘peak money’ and social unrest, with the pain of real austerity hitting Greek citizens, and with the Red Cross giving out food parcels in Spain, where there are now 2.3m ‘vulnerable’ people, many are asking ‘are we next?’

There are of course alternatives to pure free-market capitalism. Red-in-tooth-and-claw Anglo-Saxon capitalism is just a more extreme version of variants such as European Social Democracy, Asian mixed economy and Keiretsu capitalism. But no form of capitalism has ever been able to sustainably provide ‘good lives’ for all. And certainly never been able to, nor could ever, operate without growth.

In part two of this blog we look at what might replace or update capitalism 1.0.

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