Sustainable Capitalism vs American Capitalism – What's the Difference?

An op-ed piece in The Wall Street Journal this week talks about ”sustainable capitalism” and long term value creation.  It appears that the authors believe by integrating environmental, social and governance factors into business strategy, metrics, and assessments of risks/opportunities, long term value creation can be achieved, possibly maximized.  It also appears that the authors think considering such factors can also influence business incentives and public policy formulation.  So, what’s the difference between so-called “sustainable capitalism” and good old, American Capitalism that has produced the greatest, most productive, most generous nation in the history of the world?  Plus, what really sustains capitalism?  Hint – It’s not high taxes and complex government regulations.  Let’s talk about it now.

Sustainable capitalism appears to me to be a pleasant-sounding marketing brand name for a highly regulated and government-controlled form of capitalism that includes such things as tough environmental domination of the market.  I expect that it includes among other things some strict form of cap-and-trade regulations that seek to ration energy usage through pricing and other mechanisms.  I also believe it would include more intrusive restraints placed on corporate boards.  Sustainable capitalism can probably be summed up as government control of the economy in the name of radical environmentalism.

A better and more descriptive brand name for sustainable capitalism might be environmental socialism.

On to the next question.  What really sustains American Capitalism?  That’s easy.  American Capitalism requires such things as the Rule of Law, Contract Law in which courts enforce contracts, economic freedom to make business decisions that most cost-effectively utilize scarce economic resources, and private property (that’s not confiscated or controlled by burdensome taxes, excessive regulations, or inappropriate use of eminent domain).

Sustainable capitalism is supposed to enhance long term value creation.  Look at Europe.  Has it worked there?  True value creation and wealth creation, both in the short term and the long term, are the product of American Capitalism.

If you want to read more about the Architecture of American Capitalism and its superior effectiveness, I suggest you read my book, America’s Economic War.

Citizen Economics Blog – News, Analysis, Insight, Practical Knowledge by Gerard Francis Lameiro, Ph.D.  For more information, please visit: http://GerardLameiro.com .

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