As China develops further in a capitalist direction, however, it needs stronger institutions. The government is indeed expanding education and restructuring health care, not least through introducing a new system of primary care. There are anxieties about what institutions will provide care for the elderly in a rapidly aging society (with family provision undercut not just by changing attitudes but by labor migration and the one-child family policy). One may only speculate on what may develop to provide unemployment protection or social services. The new institutions could be charitable undertakings or mutual benefit societies, though so far the government has been reluctant to allow either much autonomy. It seems clearly to be following a capitalist path but it is unclear how much this will involve a replication of Western institutions, an emulation of the Western neoliberalism that tries to minimize such institutions, or some variety of state capitalism (“with Chinese characteristics”).
State capitalism has been an exception during the last 450 years, but one possible transformation of capitalism would be for it to grow more common. Arguably Soviet communism already involved something like state capitalism. Certainly fascism did. Where governments today use reactionary nationalism to shore up their legitimacy, state capitalism seems more likely. The key point is that future capitalism need not be an extension of the “liberal capitalism” dominant in the last two centuries of Western history. The widely remarked link between capitalism and liberal democracy may turn out to have been only one way of relating capitalism to politics, shaped by particular historical conditions and struggles.
Of course domestic neoliberalism was closely related to the international promotion of “free trade.” Reduction of tariffs and other trade regulation is in a sense similar to reducing restrictions on internal mobility and government efforts to shape markets. Providing military security (or advantage) and delivering social security converge with the perceived advantages of state-dominated capital investment and buffers against global markets to make it a plausible model. This is particularly likely in countries with little experience of liberal democracy. Of course, Western states have also run business ventures—especially in transportation, communication, and power industries—but these have seldom been organized for purposes of capital accumulation as distinct from compensating for market failures. It was a hallmark of neoliberalism to demand their privatization, and this has been extensive—not only in old core economies like Britain but in a number of developing countries, notably in Latin America. In any case, it remains an open question whether the characteristic institutional structure for capitalism moving forward will distinguish government, business institutions, and civil society from each other as sharply as has been the case in the West.
SCARCE RESOURCES AND DEGRADED NATURE
Continued capital accumulation is limited not only by capitalism’s internal economic difficulties and problems in the reproduction of its social and political support systems, but also by destruction of its “natural” environment. Capitalism depends on raw materials, on the sustenance of a human population, and on the willingness of humans organized in different societies to tolerate the externalization of the costs of environmental degradation from corporate accounts to public ones—either in the form of government payments or socially distributed human suffering.
Addressing ecological and climate challenges is made harder by the ways in which “nature” has come to be understood. It has long been seen, especially but not only in the West, as the other to human society, often an obstacle to be overcome—thus obscuring the extent to which we too are natural beings and live only as a part of nature. More specific to the rise and flourishing of capitalism has been the construction of “nature” as resources. For capitalism, nature has existed to be used, exploited. Examples are familiar, from forests to water. Taking just the latter, global freshwater use tripled during the second half of the twentieth century (while population doubled). Technological advances let farmers and other water users pump groundwater from greater depths, potentially draining aquifers and lowering water tables. Building more and larger dams generated electrical power and sometimes controlled flooding, but it also displaced people, flooded farms, and killed fish. Rivers are literally running dry and lakes disappearing. Attempting to manage by price calculations almost always radically underestimates the costs contemporary use imposes on future generations.
Because nature-as-resources always appears limited and capitalism is organized as a system of perpetual expansion, capitalism also nurtures efforts to transcend the limits of nature. The combination of modern science with business and government backing has been remarkably productive of new technologies. These include engineered resources to augment natural ones, such as improvements in agriculture, new materials, and new ways of extracting energy. Capitalism thus has been basic to increased capacity to support human life, complementing “natural” potential with intensified agriculture based on fertilizers, mechanization, drainage and irrigation, and new crops produced on the basis of research. It has also brought science-based medicine with its own range of new technologies from pharmaceuticals to equipment-intensive hospitals. These have extended “natural” human life and also enabled more people to live full lifespans. New technologies also include production processes and equipment that vastly alter and largely reduce the role of living labor in creating new commodities. They include transportation and communication technologies that overcome obstacles of distance and geography, and other infrastructural technologies that make possible urban life on an unprecedented scale. Along with enormous infrastructural investments, these have allowed for dramatic expansion in human population, massive urbanization, and a huge increase in geographic mobility.
But the new organization of social life has also multiplied demands for energy, met especially by carbon sources from coal to petroleum but also by nuclear and other forms of power. New technologies have increased demand for a range of minerals. And not only does the great expansion in the scale of human life depend on scarce inputs, it comes with the cost of large-scale environmental damage, including potentially catastrophic climate change. The very intensification of agriculture that boosts food production commonly leads to soil erosion and other damage. Newly engineered materials are often less biodegradable. Carbon-based energy sources pollute. And a wide range of activities that expand with capitalist growth bring global warming. This is, indeed, one of the central reasons why from Rio to Kyoto to Doha it has proved so hard to find an international consensus supporting serious action on climate change.
More generally, in an era of financialization, efforts to tackle environmental degradation themselves become objects of trading. Proposals to manage polluting carbon emissions by carbon trading offer a prime example. Such “cap and trade” schemes mean setting a limit on emissions but letting those who don’t pollute as much as that notional limit sell their alleged “savings” to polluters to allow them to pollute more. That such schemes gained traction owed more to the fact that rights to pollute could be profitably bundled into securities and traded by investment bankers than to their actual efficacy in reducing emissions.
The extent to which nature is used up or irretrievably damaged is a problem for the future of capitalism (as well as life generally). It is a problem that exceeds the categories of economic analysis. This is partly because natural resources are extremely hard to price appropriately (especially with attention to long-term sustainability). It is also because thinking of nature only as resources severely limits understanding of the true character of human participation in nature and dependence on the rest of nature.