Yesterday I found out that I was called out by @BadEconTakes on my claim that market capitalism is inherently environmentally destructive precisely because it is undemocratic.
That’s an odd thing to rebuke, considering it’s so easy to prove using STANDARD ECONOMIC MODELS. 1/19
That’s an odd thing to rebuke, considering it’s so easy to prove using STANDARD ECONOMIC MODELS. 1/19
@BadEconTakes In fact, in this thread, not only will I prove my original claim to be true, but I will also prove that increasing economic democracy *increases* efficiency & environmental sustainability using standard economic models you may recall from Econ 101. 2/19
@BadEconTakes First, let’s start with some context. I have written several threads where I discuss the various flaws of market-based allocation.
In this thread, I show why markets are inherently inefficient & environmentally destructive. 3/19
In this thread, I show why markets are inherently inefficient & environmentally destructive. 3/19
@BadEconTakes In this thread, I elaborate on how human, societal & environmental externalities created by market-based allocation are harmful. 4/19
@BadEconTakes Democracy means those affected by decisions have a fair say in those decisions.
Here I show why capitalism, including markets, are inherently undemocratic: they exclude all those affected by transactions other than the immediate buyer & seller. 5/19
Here I show why capitalism, including markets, are inherently undemocratic: they exclude all those affected by transactions other than the immediate buyer & seller. 5/19
@BadEconTakes Okay, so let’s start.
In mainstream economics, there is a commonly used efficiency model based on the Pareto Principle that provides some insight as to the optimal/efficient quantity of goods & services that *should* be produced & consumed by an economy. 6/19
In mainstream economics, there is a commonly used efficiency model based on the Pareto Principle that provides some insight as to the optimal/efficient quantity of goods & services that *should* be produced & consumed by an economy. 6/19
@BadEconTakes Like all models, this model isn’t perfect. But it does provide some good insights in showing:
1) that externalities create inefficiencies &
2) the greater the externalities, the greater the inefficiencies 7/19
1) that externalities create inefficiencies &
2) the greater the externalities, the greater the inefficiencies 7/19
@BadEconTakes The basis of the model is the observation that the most optimal/efficient quantity of producing & consuming a good or service is when the Marginal Social Cost (MSC) is equal to the Marginal Social Benefit (MSB). 8/19
@BadEconTakes The Marginal Social Cost is the *entire* cost to society of producing that good or service. This includes the Marginal Private Cost (MPC) plus all the externalities (MEC) incurred by society, but not the seller. 9/19
@BadEconTakes The Marginal Social Benefit is the *entire* benefit to society of consuming that good or service. This includes the Marginal Private Benefit (MPB) plus all the externalities (MPB) incurred by society, but not the buyer. 10/19
@BadEconTakes In a graphical representation, we see that when there are negative externalities (yellow), the privately incurred costs & benefits (black) deviate from the optimal/efficient amounts (white), creating an over-production & over-consumption resulting in inefficiencies (red). 11/19 
@BadEconTakes The problem, of course, is that everyone affected by this transaction, i.e., the neighborhood experiencing pollution, or the community affected by the waste generated by the production & consumption of this product, had no say! 12/19
@BadEconTakes But real democracy means those affected by decisions get to have a say in those decisions proportionate to the degree the decision affects them. 13/19
@BadEconTakes As we increase real democracy & give workers, neighborhoods & communities a fair say in the decisions that affect them, we correct the error created by markets & move MPC & MPB closer to their true social costs & benefits (MSC & MSB). 14/19
@BadEconTakes This results in a more optimal/efficient number of goods & services to be created. Ideally, if each person effected had a say proportionate to the degree they were affected, the private & social costs & benefits would converge, creating the most optimal outcome. 15/19
@BadEconTakes One striking conclusion is that the more democratic we are, the more efficiently we allocate goods & services and the more inherently environmentally sustainable we would be! 16/19
@BadEconTakes As we have shown, using basic econ models, my original claim is true: market capitalism is inherently environmentally destructive precisely because it is undemocratic. Markets exclude those affected by decisions, resulting in inefficiencies. 17/19
@BadEconTakes Furthermore, we have shown that increasing participatory democracy radically improves environmental sustainability & efficiency. 18/19
@BadEconTakes Oh, and by the way, @BadEconTakes next time please properly tag me so that I can more promptly drag your pea-brained ass. Thank you. 19/19
