One important aspect of capitalism is the requirement to reward those with capital. This means that a system must always be growing to fulfill this purpose. Yet there is a single issue in the way of this occurring…
Resources on Earth are limited.
The Law of Conservation of Energy states that energy can neither be created nor destroyed. This indicates that the usage of any material on Earth is immutable unless its waste can be recycled. Furthermore, the definition of a “renewable” resource isn’t that it can be created in an infinite capacity, but that it can be replenished faster than it is used.
So how does the Law of Conservation of Energy affect a capitalistic society?
Humans are running out of oil. As oil decreases in its supply, the Law of Supply and Demand predicts that the price of oil will rise in order to fulfill its constant demand; notwithstanding other factors. A higher oil price causes the demand for oil to decline (in favor of cheaper alternatives). This results in less output as consumers find oil too expensive, while producers produce products that are more profitable. Therefore, capitalist societies address the Law of Conservation of Energy by using profitability to incentivize the production of efficient products.
Similar logic is applied to the issue of Climate Change: Capitalists may argue that climate change isn’t a problem until the market has deemed it as such. In other words, solving climate change must be profitable in order for a company to justify the effort in its solution. This occurs when the demand for a direct solution to climate change is high from consumers. Otherwise, preference for global warming products follows the same behavior described above regarding oil.
Critics of capitalists may argue that the time at which demand is high enough to incentivize a solution to climate change will occur AFTER it’s too late to reverse the damage from global warming.
Certain resources only exist by the definition of a human. Money is an abstract resource, since it only exists as a concept of the human mind. In modern times, the process of creating money — in a centralized manner — is as simple as entering numbers into a database. In theory, this allows a society to adhere to the tenants of capitalism since “infinite growth” can be achieved. However, the reality is that humans only value the resources that money can buy: Printing more money lowers its value.
The significance of abstract resources is that they can NOT be used to bypass the Law of Conservation of Energy. Money is used colloquially to refer to capital, but Capital — within the context of Capitalism — actually refers to anything that provides value to its owners. Abstract resources do NOT provide value on their own accord, nor do they represent a non-negligible amount of energy.
Non-negligible implying that abstracted resources take up as much energy as the neurons required to store them.
“Land” is a human construct that represents — in the context of a resource — the ownership of an area (on Earth). “Land” cannot be used, but the resources it contains can. Furthermore, these resources may influence the value and respective price of said land. When you purchase “land” in a coastal area, it may be valuable due to its proximity to water (that humans need to survive). As time moves forward, coastal land may be devalued when the ocean tide grows, which results in the amount of usable land decreasing.
In this example, changes to Earth’s physical state do NOT affect the quality or quantity of “land”; notwithstanding human intervention. Instead, “land” exists as an abstract resource whose value is based on the physical resources it contains. Land as a concept represents the ownership of a given space, such that it can be created through imagination (i.e airspace, virtual reality). In a similar manner to money, creating more “land” only provides the illusion of more value.
The Capitalistic Solution
As a reminder, capitalism addresses the Law of Conservation of Energy — which results in limited resources — by incentivizing the production of efficient products. However, incentivizing people to create efficient products will NOT prevent a lack of growth. What happens when cheaper alternatives cannot be created? Zero Marginal Cost is when the cost to produce a product approaches zero.
In the context of capitalism, Zero Marginal Cost is a double-edged sword. On one hand, a Zero Marginal Cost implies that people are able to produce their needs — such as food and energy — on their own (for free). On the other hand, a Zero Marginal Cost may imply the end of capitalism since certain pillars become invalidated. Speculation aside, zero marginal cost represents the actual end goal of capitalism.
How can humans achieve Zero Marginal Cost? That is a question we are living in the modern day. The problem is that — it seems as if — the limits of usable energy on Earth will be relevant before we achieve Zero Marginal Cost in the energy market. Therefore, there is a demand for alternatives.
The Capitalistic Problem
If growth is limited, those with capital will be unable to be rewarded. In the context of Capitalism, this is bad news: Recessions. Rising income inequality. More crime (as a result of that income inequality). More setbacks.
The reality is that Capitalism is a relatively new system. It emerged in the 1600s, took precedent in the 1800s, and took advantage of the industrial revolution and the discovery of oil. In the words of others, Capitalism is addicted to fossil fuels. Losing access to them limits growth, and that is a major problem.
If not renewables, where can one find a near-infinite amount of resources? Oh! I know… SPACE! The idea is simple.
- Go to space.
- Extract its resources (mine asteroids, moons, planets, etc).
Once space has been colonized, a capitalist utopia where everyone is able to experience growth will be achieved. This is why we need to go to space right now. The entire objective of space exploration is achieving unlimited growth. Will expansion and growth actually solve the problems in our society? We will see. Who else is an overt capitalist with the idea to go to Space?
Maybe Bezos Is Right.