Tag: consumerism

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Human Economics

Throughout all of history, humanity has never lived in an era of such intimate globalization, as we do today… Never has any one country’s economy been so dependent upon the economy of other countries, and never has the fate of people in any one country been so dependent upon the fate of people in other countries. Indeed, the current crisis is affecting everyone, everywhere.

It is with good reason that journalist, Thomas Friedman, argued in the midst of the crisis that it was “Time to Reboot America.” The laws that define relationships among individuals in society have changed dramatically, hence economy—which reflects those interconnections—must follow suit.

Yet, this cannot happen by means of restrictions and regulations, since it is evident that our desire to enjoy is only growing through the years. Therefore, even if we truly want it, we will never be able to turn back time. As we develop, we constantly devise new ways to “beat the system.” Instead of wasting taxpayers’ money trying to reverse an irreversible situation, we must change our approach toward economy and business from the root level.

The solution is to start from the place where the crisis began—the lost trust in human relationships. What has become clear is that we no longer trust one another: people don’t trust banks; banks don’t trust the rating firms, who don’t trust company shareholders, who have no trust in financial advisors, who have no trust in traders, who have zero trust in governments, who simply trust no one. Period. Nevertheless, despite the mistrust, we find that we are still dependent upon each other. And the more aware of it we become, the less we will want to harm one another. Many people already realize it; now we must turn this realization into action.

 

Step One: Restore Trust

Alongside the offering of aid to ailing economies, countries must explain to their citizens that we are now living in a new world. Thus, the first step in the bailout plan is to make people understand and feel how interdependent we are. When people realize that their personal well-being depends on their relation to others, they will become the natural regulators that policy makers are looking for.

In fact, when a strong enough public opinion promotes values of collaboration, it will affect even those who initially want to continue living by the old self-centered rules. An illustration of this principle was shown when a week after it became known that AIG, which received hundreds of billions in bailout money, gave out fat bonuses to its executives, the majority of them gave it back. They couldn’t face the mounting public criticism. Hence, awareness of the detrimental nature of our egotistical approach will naturally make us want to restrict our self-centered attitudes, and this will facilitate the beginning of a crisis-free era.

 

Step Two: Rethinking Consumption

Consumerism causes us to want products we have no real need for, simply to improve social status. Conveying information about the rules of the new world will help us understand which values should prevail in our society, so that we can create a more balanced way of life. As a result, products that will remain on the shelves will be the ones that are truly necessary, and the advertising of product causing us to make yet another redundant purchase will be condemned. Applying this necessary shift in priorities will greatly free resources and time, and will allow us to invest in the currently neglected realms of our lives, such as friends and family, thereby significantly enhancing the overall quality of our lives.

 

Step Three: Social-Capitalism

In the January–February 2011 edition of Harvard Business Review, Profs. Michael Porter and Mark Kramer published a revolutionary concept. Traditional capitalism belongs to history, they wrote. Now is the moment for “a new conception of capitalism,” such that will move “social responsibility from the periphery to the core of the companies’ mind-set.”

Companies should still endeavor to produce profit and create economic value, yet not for the shareholders and their owners, but rather for the good of society “by addressing its needs and challenges. Businesses must reconnect company success with social progress,” otherwise, conclude Porter and Kramer, businesses will never escape the vicious cycle in which they are trapped today and their situation will only worsen over time.

Indeed, there is much truth to the words of Porter and Kramer. Today, when a company releases a new product to the market, it wishes to “broaden its market share,” or in simpler words “to steal” clients from other companies in the marketplace. But this is exactly the approach that led to the financial crisis to begin with! Rather than trying to gain profit at the expense of others, companies should compete to create the greatest benefit to the whole of society.

When signing a contract, a company owner should ponder: “Does everyone gain from the deal I am closing now?” If the contract truly benefits everyone, then everyone, including the owner of the company, will gain from it. After all, in today’s world, we are all interconnected, and each individual action makes an impact on us all.

Step Four: The New Kind of Companies and Businesses

It’s time to redefine business and financial success. A successful firm should be one that sells products to customers, pays decent wages to its employees (including pension, insurance, and vacations), and is founded on a balanced operation. A balanced operation means that the profits of a business cover all of its investments and expenses, but it does not profit beyond that.

In this way, the owners of such companies could afford to reduce the prices of their products to make the product affordable to many more people. If some profit still remains, it could be donated to a fund that helps guarantee that all people in the world have a good basic standard of living. To be sure, we are not talking about abstention or austerity. Quite the opposite, if all of the players change their financial mindset from maximum profit for themselves regardless of consequences, to earning as much as is required to live respectably, we will discover that the planet has many more resources to offer than we can actually use, and together all of us will prosper.

 

Much More Motivation and Satisfaction

How will owners of companies and their employees draw motivation to wake up in the morning and excel when no financial stimulus is involved? The answer is simple: The stimulus will stem from the new social standard—people and companies are appreciated according to their contribution to society. In this case, our natural urge to compete—with the benefit of society as our goal—will cause us to create a more just and equal society.

Let us clarify. Try to answer the following question: What do company owners gain by having additional zeros in their bank accounts? Do they actually use all the millions they have? Do they truly enjoy those added “zeros”? The satisfaction they draw from the zeros is purely conditional, dependent upon the sense of power and mainly respect that comes with wealth.

But what if company owners were to sense the same satisfaction they derive from excessive wealth, out of actions to benefit society? If society respected people who contribute to society and condemned people who exploited it, powerful people would naturally use their power to contribute to society, because we are all social beings and all of us, including company owners, are influenced by society. While this proposal may seem utopian, it can materialize if our environment begins to appreciate pro-social values.

The bottom line is that capitalism should remain capitalism, but instead of trampling each other, we should compete in contributing the most to society and creating the best and most qualitative products for the best price, so that as many people as possible can enjoy them. Sir Richard Layard’s article titled “Now is the time for a less selfish capitalism,” published March 11, 2009 in The Financial Times, summed up quite well the new approach we have suggested here, where he writes, “We do need a more humane brand of capitalism, based not only on better regulation but on better value. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.”

 

 

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Game Over

Imagine you turn on your TV and hear a news man say: “Congratulations, fellow Americans: the era of rampant consumption has come to an end!”  The comments would probably be diverse: “No way, we are getting back in the game!”, “I didn’t expect it to be today…”, “Somebody finally said it straight!” But if I were you, I’d stop watching TV altogether.

So, is the game over? Yes, it is.  Why is the truth always so daunting? Why is it so difficult for us to acknowledge something that has been staring us in the face for a while now? We may be legally blind, but even they can see elephants.

The World Wildlife Fund scientists, who work with governments, businesses and communities around the world, based on their practical experience, knowledge and credibility, claim that today humans are consuming over 25% more natural resources on a global scale than the earth can support and that this rampant consumption is stretching ecological boundaries, leading to unsustainable living.

WWF-UK’s Head of Research, Stuart Bond, said humanity has been living off its “ecological credit card” and “liquidating the planet’s natural resources. While this can be done for a short while, ecological debt ultimately leads to the depletion of resources, such as forests, oceans and agricultural land, upon which our economy depends.”

The economy is in crisis and is worsening as I type. The media is making a desperate attempt to convince us that everything is under control and things are getting better. While they are carrying out their orders, we faithfully “eat” their feed and remain loyal to our so-called life styles. We browse the malls, dine in fine restaurants, pay high bucks to watch a new movie, lease luxury cars, sweat in spas and casinos, and look forward to the gilded age that they tell us is coming soon.

The “relentless search for novelty and status locks us into an iron cage of consumerism,” writes Tim Jackson, the author of Prosperity without Growth. Consumerism is a game we can’t seem to stop playing: TiVo says buy, and we happily comply!  Wide-eyed, we run to the store and start a chain reaction that swallows us in the end.  So we are building a heap that will eventually bury us under.

For thousands of years humanity has developed grounded on the basic necessities.  The majority always has and continues to live without luxuries.  Even clothes used to be passed down from generation to generation, as they still are.  But just a century old feast of highly evolved “cockroaches”—the phenomenon of the modern era— has practically ruined the planet.  Like it or not, we will have to put an end to it.

Kalle Lasn, the co-founder of Adbusters Media Foundation, agrees: “Our headlong plunge into ecological collapse requires a profound shift in the way we see things. Driving hybrid cars and limiting industrial emissions is great, but they are band-aid solutions if we don’t address the core problem: we have to consume less.”

Industry was previously based on the “money-commodity-money” paradigm.  But today, this model has lost the commodity element:  we sell and buy money.  That is what our “trade” has become:  we exchange paper.  The two remaining valuable commodities lie in the area of basic necessity.  We need shelter and sustenance, and a certainty that they won’t be taken from us today or tomorrow.  But one thing we need to understand is that luxuries are being cancelled.

Modern manufacturing hardly produces anything valuable anymore while still continuing to drain natural resources.  We buy and exchange meaningless things that are passing from hands to hands until they reach their ultimate destination – the omnivorous trashcan, and the wastelands are ever expanding. Except for a few staples that we all need, everything else is merely toys. Are we willing to ruin the Earth for them?

The money-printing machine never sleeps, since the owners do not wish consumption to stop. Yet, reality follows its own, specific agenda, and it could care less for what we think we want. Once it hits, it does so with absolute clarity – to get the point across. Remarkably, when we see the hammer raised over our head, we don’t try to catch it – instead, we think how to bribe it and avoid the pain. As if it is something to bargain with.

In fact, we are practicing an “ostrich strategy” – when in fear, stick your head in the sand. It won’t work this time. The problem is not going away, no matter how “ostrich” we get.

We know that most of the existing industry and all legislative and financial institutions are driven by the illusion of ultimate prosperity.  These parasites sustain themselves by sucking the consumer’s  income and claiming ownership to natural resources that are being rapidly drained. And we readily offer our wallets, because we have been trained to believe that wealth equals happiness and material things bring satisfaction. We are addicted to new products, services, brands – more and more stuff.

The planet is on the edge, and it’s is time to ask ourselves – what on earth are we thinking?

Tomas L. Friedman, of the New York Times, agrees:  “You really do have to wonder whether a few years from now we’ll look back at the first decade of the 21st century — when food prices spiked, energy prices soared, world population surged, tornadoes plowed through cities, floods and droughts set records, populations were displaced and governments were threatened by the confluence of it all — and ask ourselves: What were we thinking? How is it that we did we not panic when the evidence was so obvious that we had crossed some growth, climate, natural resource, population redlines all at once?”

The economic-ecological crisis we are living in today is here to demonstrate that we cannot keep taking more than we actually need.  We may not wish to accept this truth, but Nature is forcing us to, and we will, whether we like it or not. “What is certain is that, as a species, we have reached a point at which we no longer have a choice between being radical and being realistic; the two attributes have become one and the same.” (Victor Wallis, Economic/Ecological Crisis and Conversion)

No matter how difficult it is, it’s time to change our view of life. We are destroying vital reserves, consuming our own future.  We exploit natural resources and pollute the earth with our waste to an extent that exceeds the planet’s capacity for self-restoration.

Since we are unable to change ourselves at will and growth of awareness takes time, we will most likely be reformed by the crisis – quickly and radically.  Over the course of the next few decades, we will have completely reformed economy, power and transportation industries.  The vital difference in how we are going to accomplish it lies in whether we’ll do it by conscious choice or forced into consciousness by Nature.

To avoid the latter, we should use all our mental power to make an effort to realize that the “happiness” paradigm aimed at consumption is corrupted and will never fulfill our desires, and that it is time to move on to the paradigm aimed at true happiness, where people will spend less time working and striving for accumulation of things and instead, use that time for something really meaningful—the fulfillment of their inner capacities.

We are facing a choice that the crisis dictates:  we will either end in a total collapse or create a new, stable model of economy.  And we will definitely choose the second, for we may be slow starters, but we are not idiots.