Capitalism, like socialism and communism, relieson industrial development strategies. They are not the only factor of capitalism success, as otherwise, socialism could succeed either. Capitalism emphasizes on individual self-interests being uniquely complementary to specialization, consolidation, and standardization of industrial control strategies. Industrialism, combined with capitalism, led the world economy to the most significant increase in terms of material wealth that human history ever witnessed and to the worst environmental situation during the whole world’s history.
In 1994, the British management consultant John Elkington, also known as sustainability guru, measured corporate America’s performance by the so-called “triple bottom line” (TBL) (Elkington, 1994). According to his theory, corporates should work simultaneously on profit, people, and the planet. If these interrelated elements are focused on, TBL reporting could indeed become one of the most efficient tools in sustainability goals support. Along with measuring its profit utilizing P&Ls, a company should also evaluate the extent to which it is socially responsible throughout its operation and how environmentally responsible it is (Çoşkun and Kısacık, 2017). Although it looks idealistic, TBL theory faced specific challenges making it unable to address sustainability in practice.
The first challenge is measuring the triple bottom lines. Profitability is quantitative, whereas the environmental and social lines are difficult to be evaluated. Therefore, these measures are more subjective than realistic. For example, what should the way of an oil spill or, even more complicated, its prevention be expressed in the dollar equivalent be. The second challenge is mixing diverse elements in triple bottom line. Many companies do not see alternatives to favoring one bottom line at the expense of others. They find it impossible to maximize their profit, meeting all the demands of society simultaneously. Finally, the third challenge is in the aftermath of the TBL Framework, ignoring for profit’s sake. The most vivid examples of this are the exploitation of labor, rainforests destruction, ozone layer damage, and others.
In the 21st century, the social and ecological impacts of capitalism are so negative that the severe sustainability questions are raised. Current records of productivity are impressive, but there is no guarantee that a capitalistic economy is socially, ecologically, and even economically sustainable over time (Gough, 2017). The world is watching instant growth of soil erosion, global warming, air and water pollution, ozone depletion, acid rains, biological diversity loss, atomic radiation, and other ecological abuses. Social sustainability is also under threat as a logical consequence of industrial capitalism due to wars, confrontations, terrorism, social isolation, injustice, depression, destruction, inequity, litigation, and other factors.
The main issue of capitalism is in its perfect ability to extract energy with the full absence of consideration of using truly renewable energy resources. Therefore, capitalism prioritizes the short-term individual self-interests and economic advantage, accelerating the tendency of closed systems to depletion and dissipation of energy. Whereas using a closed-loop system and reusing the same materials over again to create new products for sale is the best way to divert waste from the globe and converse natural resources (“Recycling: open-loop”, n.d.). A huge amount of energy needed to make new products from the raw materials can be saved, either. For instance, recycling aluminum cans provides 95% economy of such energy; recycling steel cans – around 60%; paper – again 60%; plastic – over 70%, glass – from 20% to 35% (“Recycling: open-loop”, n.d.). Recycling is the best way not only to reduce litter. Ideally, it should lead the planet to a zero-waste strategy. As a result, a zero-waste strategy leads to zero water pollution and zero-emission.
Currently, these targets require a thorough life cycle analysis and sustainable investments. There are no resource renewal investments in frames of capitalism, as it is a long-term project for the benefit of future generations. Accordingly, a capitalist is not likely to invest in resources reuse and recycle and waste and pollution decrease if there is his potential profit. Unless its efficiency, capitalism inevitably leads to physical entropy in today’s realities.
At the moment, people involved in business do not have a good reputation in terms of moral conscience. The challenge faced by society is reflected in many factors like pharmaceutical price ungrounded increase, fraudulent customer accounts, car companies emission tests cheating, and others. Hence, business schools also face the challenge of providing future leaders with a full-fledged set of moral and ethical values. The complexity is in the age of the business schools graduates age – they are older, and, therefore, it is onerously to teach them ethics bypassing or on top of their already formed values and judgments.
Kaler made two crucial assumptions regarding morality, approaching it as a social phenomenon. The first one is that it is benefits and harm that define morality. Secondly, he claimed that efficient business decision-making is impossible without the development of decencies people might face. Kaler’s theory of harm and benefits is often used in the modern business sphere when it comes to evaluating benefits and costs, for example (Kaler, 1999). He might be called an ethical-skeptic, as he did not believe that the ethic theory might be applied to today’s business reality. Moreover, he supposes that the more is the distance between ethics and business decisions, the better result is. Otherwise, he suggests, the business will turn into meeting one’s pleasure and happiness.
Nevertheless, future business leaders should be able to be ethical themselves and bring ethics to the workplace. Business schools should teach ethics, as otherwise, the only thing that future business leaders will be able to do is earn money regardless of the internal and external company’s environment and, therefore, its impact on the global climate. Such an approach is a direct path to the prosperity of consumerism and, hence, unavoidable global environmental disaster.
For environmental sustainability, socialism significantly wins against capitalism. Carl Marx called for the equal allocation of public resources and equality in access to them with compensation based on the expended labor amount (Gao, Y., Xiao, Y., and Gao, H., 2020). Therefore, society considered all public resources as their own. The attitude towards resources as appropriate: in the USSR, for example, the government legislatively controlled the environmental pollution, resources use and recycling, and others, as all the enterprises were state-owned. For instance, according to the law, after deforestation for industrial purposes, the enterprise was obliged to plant the equivalent number of trees. concern about the access of future generations to a sufficient amount of resources was paramount.
On the other hand, none of the different economic systems can rival capitalism in frames of efficient resource allocation. Moreover, the financial decisions mostly do not deprive individuals of their social rights, and ethical or fundamental society principals are not violated. It is an individual private economy that owns these decisions. Other economies like socialism, communism, and others were not able to meet the material, physical, social needs. To be sustainable, capitalism should support and invest in the sustainability of its ecological and social capital. A sustainable society should manage its living systems, for instance, capturing and storing solar energy. This approach will both maintain productivity and reduce the non-living system’s tendency towards entropy. Sustainability requires the integration of life politics, life culture, and life economics based on the life paradigm.
- Çoşkun A. M., and Kısacık, H. (2017). The corporate sustainability solution: triple bottom line, The Journal of Accounting and Finance. Web.
- Elkington, J. (1994). Towards the sustainable corporation: win-win-win business strategies for sustainable developm, California Management Review, 36, pp. 90-100. Web.
- Gao, Y., Xiao, Y., and Gao, H. (2020). On the necessity of sinicizing Marxism from the perspective of actual needs, Open Journal of Social Sciences, 8, pp. 566-573.
- Gough, I. (2017). Heat, greed, andhumans need climate change, capitalism, and sustainable wellbeing. Web.
- Kaler, J. (1999). What’s the good of ethical theory? Business Ethics European Review, 8(4), pp. 206-213.
- Recycling: open-loop versus closed-loop thinking (no date) Web.