Capitalism as we know it is coming to an end because it fails to look after people’s long-term needs and focuses on short-term profit, researchers have warned the UN.
Constant economic growth has been fueled for decades by an abundance of cheap resources and energy, but as those dwindle growth will slow, scientists say.
As a result the economy will need to refocus from profit and growth to sustainability and efficiency, which the current system does not promote, they argue.
Constant economic growth driven by abundant resources and cheap energy is coming to a close and will bring our current capitalist model down with it, scientists say
Economic models will also need to change to account for things like energy efficiency and environmental impact, or risk being unable to accurately explain or predict this new future.
The team of scientists was drawn from the BIOS Research Unit in Finland by the UN Secretary-General, Motherboard reports.
They were tasked with providing research to feed into the UN Global Sustainable Development Report, to be published next year.
The paper’s lead author, Dr. Paavo Järvensivu, explains that the crisis is twofold: fossil fuels are becoming increasingly difficult and expensive to extract, while other forms of energy have not caught up.
For the first time in history, whether societies stick with fossil fuels or switch, they are being forced to spend more effort to produce the same amount of energy.
Fossil fuels are becoming increasingly expensive to extract making energy harder to generate, meaning future economies will have to be focused on efficiency, rather than growth
While renewables might some day bring energy costs down they are not ready to take up the slack yet, meaning a shift in the way our world operates
In the past, the availability of cheap oil meant the trend was the other way around.
While renewables might eventually bring costs down again, the technology is still in its infancy and so cannot immediately take up the slack.
That absence of cheap energy will cause the constant economic growth we have experienced in recent decades to slow, putting a strain on politicians who will be held responsible for the slip in living standards.
To remedy the situation, Dr Järvensivu’s team argue we need to be working toward making cities more efficient, curtailing the growth of freight and flying, and restructuring the food system so more is produced locally.
At the same time, energy-intensive industries such as construction need to move away from steel and concrete into more sustainable materials like wood.
‘Capitalism, in that situation, is not like ours now,’ Järvensivu said.
‘Economic activity is driven by meaning – maintaining equal possibilities for the good life while lowering emissions dramatically – rather than profit, and the meaning is politically, collectively constructed.
‘Well, I think this is the best conceivable case in terms of modern state and market institutions. It can’t happen without considerable reframing of economic-political thinking, however.’