Capitalism is sailing poorly, in the winds of past glories. Beyond ideologies, it is time we get down to what works.

(Ladislau Dowbor)

It is immoral for oil and gas companies to be making record profits from this energy crisis on the backs of the poorest people and communities, at a massive cost to the climate.

(António Guterres, UN Secretary-General1 )

The world has changed too much for us to continue to rely on ideological simplifications, with public bureaucracies as opposed to corporate efficiency, resulting in often ridiculous polarizations and growing political hatred. Finding whom to blame for the mess we are facing has been more attractive than thinking about what really works. What works is an adequate mix in the social decision process, with private companies, public services and civil society organizations actively participating. With so much technological change, our capacity to update institutions and the overall social decision-making process have lagged. Technologies run fast, while cultural change is much slower, not to speak of institutions and legal frameworks.

A simple example is the financial chaos. In the age of the internet and worldwide connectivity, with virtual money (just computer notations) finance moves in the global space (high-frequency trading), while the financial policy is in the fragmented national space of our roughly 200 countries. We have a global economy but no global government. We have global costs, in particular the huge environmental overhead, but no global tax system to reduce destruction and finance the externalities. Making big money, the really big money has migrated from profit on the production of goods and services to financial drains, based on debt, dividends, commodity intermediation and drain of natural resources, basically unproductive rent. The result is the global crisis, with economic stagnation, explosive inequality, environmental catastrophe, financial chaos and erosion of democracy2.

The free-for-all corporate chaos and international economic mess cannot be called a market economy. Markets do work when there is a level of competition, which means many companies trying to satisfy many clients, trying to improve the goods or services they provide. This is certainly still in some areas, particularly for small businesses, local production and local markets. In a way, at this level things can care for themselves. But the magic “invisible hand” has been ripped off in the global markets. If we look at the base of the food system, for example, four corporations, Archer-Daniels-Midland (ADM), Bunge, Cargill and Dreyfus, also known as ABCD, control roughly 80% of grain production and commercialization. They are powerful enough to disregard government regulation, while Panama, Liberia and other tax havens allow them to avoid taxes. There is no significant competition if they raise prices and appropriate monopoly rent. No government has been able to make them pay for environmental disasters, like for example the destruction of the Amazon forest3.

We call them “markets”, but this is corporate power, controlled by financial giants. They have huge political clout, particularly since the 2010 decision that allowed corporations to fund elections in the US. But they have also disregarded any attempts at regulation in developing countries, funding corrupt political oligarchies, bringing governments down and managing image-building campaigns. Governments are simply outsized. BlackRock, an asset management corporation, controls US$10 trillion, while the federal government budget in the US is about US$6 trillion. Three major asset management corporations, BlackRock, State Street and Vanguard, manage close to US$20 trillion, practically the same as the American GDP. The huge hi-tech corporations, GAFAM (Google, Apple, Facebook, Amazon and Microsoft), control our communication and information. These are not “markets”, but “demand monopolies”: I use Microsoft Word because I have to use what others use, no choice. Alternatives have been bought out. According to the 2021 UNCTAD Digital Economy Report, we must ”recognize that current global institutions were built for a different world, that the new digital world is dominated by intangibles, and that new governance structures are needed."4

When people make money, huge money, we call them capitalists. But is this capitalism? Slave owners made fortunes, but we did not call them capitalists. On the other hand, they used slaves to produce cotton, sold to British manufacturers who produced cloth and earned profits in what we distinctly called capital accumulation, run by capitalists. The slave trade and slave plantations were run by very visible hands. Where is the limit? The luxury of Versailles was based on serfdom, but we would not call these wealth-holders “capitalists”. They did not generate a social surplus, they extracted it from society. From peasants in France, from whole enslaved populations in so many colonies. Brazil and the US were important actors in the process. Capitalism was solidly linked to primitive social systems of exploitation. For so many countries in the world, this has hardly changed. Brazil is one of the major world food exporters, and 57% of its population is in food insecurity. Police killed an average of 17 persons per day in 2021, mostly black, young males.

The present gigantic financial fortunes are based on intermediation, monopoly, financial and real estate speculation, natural resources appropriation and other extractive activities with a very little productive contribution. Is this capitalism? Capitalism used to generate capital accumulation. Producing shoes generated profits and wealth, but also jobs, shoes, and taxes that permitted the government to build infrastructure and ensure social policies such as health, education, security and other public goods and services. This system did work, particularly in the New Deal and Welfare State modalities, where a reasonable balance was found between profits that funded more investments, and better salaries that ensured goods could be purchased. Freeze the picture: this is capitalism. Move forward, and the global mess we presently face is still proclaimed as capitalism. This certainly is something else, but it loves to sail on the legitimacy of yore. It is borrowed legitimacy.

Actually, if we step back and have a broader look, say two and a half centuries, the world has been transformed in a very short period, after thousands of years of labor on the land, all the primitive societies. What transformed the world and ushered us into modernity is not capitalism, but science. Copernicus waited decades to dare publish that we are not the center of the universe; Galileo was forced to the supposed whisper “eppur si muove”; Newton, Leibniz and so many others gradually shed light into our ignorance, and in fact struggled to move aside the structured power of ignorance. The present climate skeptics are not much different, we still battle with ignorance, and the political use of ignorance.

The steam engine led us into the world of multiplied energy, followed by electricity, oil, the combustion engine, atomic energy, electronics, chemistry, biology, DNA, satellites, communications and so forth. All these transformations are rooted in science. Einstein was not a corporation. Science is at the center of the systemic transformation in the present world, internet and vaccines included. Organized hierarchy in companies, whether the public railway systems in Europe, public health systems in Canada or state heavy industry in China are not less productive or more bureaucratic than Crédit Suisse or Amazon. A huge brand-building industry, spending billions, daily promotes progress as the result of heroic billionaires, the capitalist fighters for progress, who could do much more if it were not for the public bureaucracy and taxes. This is fake window dressing. Do we stop to think about how many brand-promotion messages we get every day, starting as children?

We are not in the Roosevelt or European Welfare State age anymore. The 15% of the world's population belonging to the so-called western civilization, and controlling three-quarters of the world's income, do not represent a model for the rest of the world, but a global drain5.

If capitalism worked, we would not have so much poverty and environmental destruction in the rest of the world. Brazil is a capitalist country. Having discovered huge off-shore oil fields (Pré-Sal), the then-Lula government negotiated an institutional framework that would allow the use of Petrobrás, a public company, to fund R&D, education and infrastructures. Since the coup against the Dilma Rousseff presidency in 2016, Petrobrás is being privatized, and the profits are redirected to pay dividends to international financial investors. What was supposed to finance post-petroleum development in the country has become a financial drain. And hunger is back, after having been taken off the FAO hunger map in 2014.

The basic issue is that some things do work better in private hands, but with ESG and regulation. Others should be in the public sphere, but with strong civil organizations' participation or control. And the overall structure must be related to the results we seek: a society that is economically viable, but also socially fair and environmentally sustainable – the triple bottom line widely accepted as our new “north”, also present in the ESG principles. We do know where we should be headed. But moving ESG from the public relations declarations to the bottom-line decision process is still out of reach. Wall Street still proclaims that Greed is Good. Governments are basically serving corporate interests. So much ink has been spent on how free markets were superior to public planning for progress. Presently, we have neither free markets nor public planning. And we need both.

During the first two years of the pandemic, with a stagnant economy, the fortunes of billionaires exploded, based on the financial drain, not production profits. A basic creed of capitalism, that enriching capitalists would be good for society, is simply wrong. It still works with the bakery classical economists referred to seeking his own profit, not the common good, the baker would produce good bread, or he wouldn’t sell. And in quantity, or the profit would be too small. And if he sold it at high prices, another bakery would show up in the neighborhood. Seeking his own profit, the baker would provide us with good bread, in generous amounts and at reasonable prices. This basic convergence between private profit and the common good still works for bakeries and similar activities – if they are not crushed by debt or ABCD flour prices – but overall it has broken down6.

The corporate world presently generates huge unproductive rent, social inequality and environmental disasters. The European farmer feeding his cattle with Brazilian soy from the Amazon region has no control over the world-scale commodity trading system. This issue, that the private profit and social welfare link has been broken, means that we have to get back to basics. The question is not which of the two is more efficient, the private sector or the public sector, but what works better in what institutional governance systems, including partnerships. The world-scale financial speculation wars have little in common with free competition between productive companies. And with a global economy running free of regulation in the fragmented political landscape, we are getting deeper into social, political and environmental dramas. The welfare of society is not in the sights of the corporate world. António Guterres has it right: this is not about “markets”, it is about greed.


1 Matthew Taylor, Grotesque Greed: immoral fossil fuel fossil profits must be taxed, says UN chief. The Guardian. August 3, 2022.
2 Michael Hudson, Destiny of Civilization: finance capitalism, industrial capitalism or socialism ISLET. Baskerville. 2022.
3 Tereza Campello and Ana Paula Bertoletto (Orgs.) – *Da Fome à Fome8 Ed. Elefante, são Paulo 2022.
4 UNCTAD, Digital Economy Report. 2021.
5 Frank Jacobs. The world is, in fact, the world’s biggest gated community.ThinkBig. October 12, 2019.
6 Ladislau Dowbor. Resgatar a função social da economia: uma questão de dignidade humana. Pré-publicação online.