Capitalism and the tragedy of the commons

About six weeks ago I wrote about how a substantial number of Amazon employees, which has grown from 3,000 to 8,000, published an open letter to the company’s management demanding the creation of a serious corporate environmental action plan to include the fight against climate change into its strategy.

The company presented the proposal to its general meeting of shareholders, who rejected it. A ban on the sale of facial recognition technology to governments, another proposal supported by many employees and an issue that triggered concern among civil rights groups, was also rejected by Amazon shareholders.

These are important decisions that define the company and its role in society, and that have been rejected by shareholders whose only focus is increasing the company’s profits, regardless of how that’s done. These people have shares in Amazon and are willing to do anything and accept anything, even if it means the end of civilization, in order to maximize profits.

The case shows how our model of capitalism is now unsustainable: a classic example of the tragedy of the commons whereby a group of individuals, motivated only by personal interest and acting independently but rationally, end up destroying a limited shared resource although none of them, either as individuals or as a whole, consciously want to bring about that destruction.

If companies issue shares to third parties to raise financing, and the objective of those third parties is to maximize the income they obtain from those shares at any cost — and that, in effect, is the behavior encouraged by shareholders, analysts and the markets, — the implication is that there is no solution to the problems facing us, whether we are talking about the drift toward dystopian societies denied basic freedoms or toward an increasingly unequal distribution of resources or the end of humanity. It’s that simple: a distorted alignment of interests are making the system unsustainable and we are like rats racing to the cliff edge.

Everything indicates that companies that deprive their shareholders of voting rights or that choose not to go public and instead distribute their shares among their workforce are right: the market economy drives growth and is the essence of capitalism, but at the same time it generates unsustainable and uncontrollable behavior.

Understanding this is just a first step.

(En espa?ol, aquí)