Thread by @ArashKolahi

The Achilles Heel of a capitalism’s market system is in what economists call externalities: the human, societal & environmental costs of economic activity completely externalized from both buyers & sellers.

Externalities are killing us & the planet. Here’s how. 1/18

When you & I decide whether or not to buy something, an important (and often the only available) piece of information we have to consider when making that decision is the price of that good or service. 2/18

Prices are *supposed* to convey what economists call the True Social Cost: the true human, societal & environmental cost of that item so that we can properly determine if the item is ‘worth’ it.

But one fatal flaw of capitalism is that markets ALWAYS misprice EVERYTHING. 3/18

For example, say Item X costs $1 per unit to manufacture. But manufacturing Item X spews toxic byproducts into the local water supply causing $100 per unit of environmental, health & societal damage. The price of Item X *should* reflect the True Social Cost of $101 per unit. 4/18

But that doesn’t happen with markets. Markets are an allocation system where only the effect on the immediate buyer & seller is taken into consideration. The effects & costs on all other parties (i.e., the local community in the above example) become externalized. 5/18

So, when consumers decide whether or not to buy Item X, rather than making that decision based on its True cost ($101), instead it’s based on the wrong cost of $1 because $100 of the cost is externalized. This causes far more Item Xs to be produced & consumed than should be. 6/18

In fact, many times, if goods & services were actually based on their True Social Cost, they would no longer be viable products. And instead, we would have to (and be incentivized to) find alternative products & services that do not so negatively harm us & our environment. 7/18

But with capitalism, there are no accounting for the human, societal & environmental effects of our activities. In other words, capitalism is inherently incapable of considering the effects of our economic activities on ourselves, our societies, or our environment. 8/18

When the “lungs of the planet” are burned by agribusiness, take a look at their Balance Sheet. Under Assets, you won’t find a single line for life, ecosystems, biodiversity, or sustainability.

A ‘viable planet’ doesn’t even register as an asset. 9/18

There are no accounting codes for the poisoning of our air & water. With capitalism, you won’t find a single journal entry for ‘contribution to global climate change.’ 10/18

Look through millions of QuickBooks entries, and you won’t find a single entry for dignity or alienation. When gears crank every last drop out of workers, you won’t find a single line item for stress, anxiety, or deteriorating mental health. 11/18

No accountant keeps track of drops of tears in the parking lot or drops of blood on the factory floor.

You won’t find one damn entry for the warehouse worker who dies of exhaustion.

And when corners are cut, you won’t find any entries for broken bones or broken spirits. 12/18

NIMBY, “Not in My Backyard,” means that the poorest, the blackest & the brownest communities bear disproportionate brunt of environmental degradation.

Look at Cash Flow Statements: You won’t find any entries for asthma or cancer of the most vulnerable. Not 1 fucking cent. 13/18

Look through the Annual Shareholder’s Report of any publicly-traded company and you won’t find any mention of the company’s toll on workers or society or the environment because capitalism has no accounting for externalities. 14/18

So, how could an economic system that excludes everything that matters most, everything we hold dear, that inherently doesn’t take into consideration its effects on neighborhoods, communities & the planet ever properly allocate goods & services?

The answer is it can’t. 15/18

And to make matters much worse, markets have built-in incentives to externalize ever more costs.

The more of the human, societal & environmental costs that can be externalized, the more costs are shifted away from sellers, the greater the profits. 16/18

This creates the wrong incentives.

Rather than incentivize more sustainable, more humane & more socially beneficial ways producing, consuming & allocating goods & services, capitalism incentivizes destroying everything that matters. 17/18

Capitalism is inherently & by-definition inefficient & environmentally destructive.

Learn the REAL economics of markets & arm yourself against capitalist propaganda: 18/18

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