000000 - Murad Mordukhay Econ 116 860463505 The...

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Murad Mordukhay Econ 116 860463505 3/18/2007 The Relationship between Capitalism and the Economy There is a very close relationship between the way a capitalist economy functions and the adverse affects it creates for the environment in which it exists. Most people believe that if we continue to advance our technology we can constantly produce things that will counter any negative externalities our industrialized capitalist economy produces on the environment. However, there is no proof that rising material wealth and standards of consumption are associated with higher overall levels of happiness. The constant expansion of production will likely become unsustainable because the world we live in has finite resources. Our environment can also only absorb a finite amount of waste. In order for life on this planet to continue as we know it, methods must be conceived with which we would be able to sustain absolute growth. Basically, there is a serious contradiction between capitalisms internal dynamic for expansion and the finite capacity of the natural environment to sustain this expansion. It is obvious that we as a species cannot expand indefinitely in a limited environment. However, the basis of capitalism requires constant expansion
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like, “ a bicyclist must keep going forward to maintain his/her balance,” (Lippit 130). The expansion of capitalism is driven by a constant search of profit, which is maximized when the cost to produce goods or services is minimized. Since the cost to produce goods cannot fall below zero, max profit can be increased by the expansion of sales volume which depends on the expansion of production. In order to facilitate this process, new technology emerges to create a more eclectic amount of good faster. There is continuously more discomfort created by the negative externalities generated by the capitalistic economy. Capitalism naturally will produce products which help alleviate the discomfort it creates for itself. This in turn creates the need for more consumption and the capitalistic society falls into a self perpetuating cycle. This concept could actually work and continue forever if the environment we lived in was unlimited in its resources and pollution absorbing ability. However, it does not. This contradiction is apparent in a great deal of examples we can see occurring in the present world environment. Pollution and CFCs released into the earths atmosphere are slowly causing the ozone layer to deplete. The ozone layer is the atmospheric layer of the earth that is responsible for filtering out most of the harmful radiation transmitted to the earth by the suns light. This causes people to develop skin diseases such as skin cancer (negative externality) which then require treatment (consumption). Also, the constant burning of fossil fuels which are used in production all across the globe causes the increase of carbon dioxide in the
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atmosphere. This increase of carbon dioxide causes the earth to retain a lot more of
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