Chapters

While capitalism is often assumed to be a readily identifiable economic system, this chapter argues that, when more accurately understood as set of economic, social, and political characteristics that appear in varying degrees in actual economies, “capitalism” is a fundamentally incomplete concept. After examining multiple popular and scholarly definitions of capitalism, this chapter ultimately concludes that capitalist economies are actively managed through legal and regulatory structures to achieve desirable outcomes, and therefore always reflect the assumptions and beliefs of those in power about what those outcomes should be. 

Capitalism often creates inequality of income and wealth; inequality not only undermines economic growth but also creates inequality of political influence that often prevents democratic governments from taking the actions necessary to buffer the unequal economic and social impacts of capitalism. This chapter describes this vicious cycle, and explains how it prevents both democracy and capitalism from achieving their potential. 

This chapter examines differences in the socio-economic systems of the United States, (Continental) Europe, and Japan. It discusses how legal, political, and societal structures have supported the development of more sustainable capitalist economies in these regions, while the United States has been lagging. The corporate governance paradigm, examined in depth in other chapters of this book, is approached from a distinctively comparative perspective. As it analyzes the interdependence between stakeholder thinking, governance, and sustainability, it considers other aspects of the political and regulatory business environment that may explain why, even in an era of international convergence of corporate governance regimes, more sustainable economies have developed in European capitalist countries than in the United States.

This chapter examines the history of slavery as a racialized institution that precedes and evolves alongside capitalism. It then considers the laws, institutions, and policies that reinforced racial oppression long after emancipation. This critical legal lens helps us identify the historical roots of structural barriers to equity and justice. At every point in capitalism’s development, Black, Indigenous, and other peoples of color have resisted the economic, social, and political systems that sought to exploit and extinguish their existence. While a comprehensive discussion of the relationship between race and capitalism must include all people of color along intersectional axes of oppression, this chapter focuses on the Black wealth gap. It proposes a system of reparations and the Black radical tradition of collective resistance and cooperative economics as a viable and sustainable path forward.

The responsibilities of business for the negative human rights impacts in their global value chains is a continuing challenge. The potential problems include human rights violations related to the sourcing of raw materials, the labor involved in manufacturing the product, the use of company products to commit human rights abuses, and many other negative impacts.  This chapter argues that, although a global consensus is starting to emerge on the general responsibilities of business to respect human rights, the implementation of those responsibilities is subject to much debate. Beyond implementation challenges, this chapter describes how these regulatory approaches may not only improve corporations’ human rights performance, but might actually forestall more meaningful consideration and potential reform of the business models that are a cause or substantial contributing factor of these problems.

​Is a sustainable variant of capitalism possible? This chapter attempts to answer the question first by pinpointing what exactly defines a “capitalist” economy, and second by identifying what parameters would allow that structure to be environmentally sustainable. It argues that a sustainable variant of capitalism is possible in theory, but unlikely in practice, and perhaps not even desirable. There are a number of key features of a capitalist economy – including private property rights, wage labour, commoditization, and a growth imperative. Of these features it is the latter which – in the long-run – poses the most significant challenge to a sustainable capitalism, for it effectively requires that the process of capital accumulation must become entirely decoupled from material throughput. This absolute decoupling could be achieved in theory through the formation of a fully regenerative mode of production, wherein waste streams are fully integrated into re-production, and ecosystems recovery is built-in to any processes of material withdrawal or environmental damage. In practice, however, this would be very difficult to achieve in a truly capitalist system, because it would require near-monopolistic levels of control over systems of production and impose severe limitations on consumer choice – both of which are anathema to capitalism. The chapter concludes by discussing how a corporate oligopoly might provide the necessary structure for a regenerative, growth-based political economy (that is, a form of “sustainable capitalism”), however it is worth considering whether such a thing would be desirable in the first place.

Corporate social responsibility (CSR) is an essential pillar of sustainable capitalism. However,  the dominant neoliberal form of CSR that considers financial return on CSR as the primary criteria for deciding whether the corporation should or should not espouse CSR often negates the possibility that CSR can generate desired societal outcomes. This Chapter highlights the importance of eschewing the long-held dichotomy between regulations and self-regulatory CSR and demonstrates that the emergent form of CSR is essentially based on a hybrid structure wherein the corporation has the dieceration of devising its CSR activities but the State provides regulatory stipulations to guide those activities. This novel blended arrangement allows to simultaneously leverage the power of regulations and competitive markets. The Chapter argues that the hybrid form of CSR is a key to make CSR effective in addressing gnawing social and environmental problems.

​Our human economic structures are no less complex than the ecosystems on which we depend. This chapter explores an analogy: Is capitalism like an ecosystem, exhibiting characteristics of decentralization, flexibility, adaptation, and even democracy such that the right conditions lead to sustainable outcomes? This chapter traces the history of US environmental law through inextricably intertwined legal, economic, political, and social forces that create the U.S. version of a capitalist economy. In the U.S. context, environmental damages arise from market failures such as externalized costs, under provision of public goods, incomplete or asymmetric information, and others. Human institutions may then respond with legal, social, technological, and economic innovations to orient the market toward more sustainable outcomes. Ultimately, this chapter argues that, If capitalism is like an ecosystem, the conditions for sustainability must come from the legal and social governance systems that create the conditions for its evolution and maintenance. 

​Capitalism is usually described from the following four perspectives, surveyed in this chapter: 1) a purely economic version that covers both the Marxian version of capitalist accumulation based on the  surplus value of unpaid labor as well as the neoliberal vision of self-regulating markets, and the decentralized, localized version of microfinancing; 2) capitalism as the political economy of governance; 3) capitalism informed by technological development; and 4) capitalism as a complex system with a legal, economic, political, and social facets. This chapter examines each of these essential perspectives, while endorsing the role of sociology as well as political science, law, and economics to inquire about the viability of sustainable capitalism.

As we seek solutions to the negative impacts of climate change, a lack of access to medicines, environmentally friendly sources of energy that will permit continued economic progress and sufficient food to feed a world of ten billion people stand as significant challenges. Many say that a conservation-based approach that restores humanity to a more natural state is the best path forward. But to others, the only way out of our predicament is the way we got in: technology. A “techno-optimist” mindset views sustainability issues largely as problems that can be solved through invention and investment. But is techno-optimism a realistic strategy for creating a more sustainable world? This chapter will first explore the connection between technology incentives and capitalism, looking particularly to increasingly harmonized legal systems that have created an ever-broader base for innovation. It will also discuss the contrast in a mindset that pushes technology versus one that focuses on conservation and reduction. And finally, it will consider evidence that technology-based solutions are more than a distraction or palliative in the contexts of disease, food security, climate change and energy production.

The current model of capitalism that the world finds itself engaged in, which is responsible for many economic and environmental crises that impact people and communities adversely all over the world, has been accelerated at a rapid pace by the global economic system advanced by the United States after World War II. While it may be unfair to place the weight of responsibility for this model solely on the United States, we must acknowledge the U.S. has been the primary proponent and cheerleader for a globalization movement that has brought significant economic growth, but also tremendous social and environmental costs. This chapter traces the history of the U.S. role in promoting this form of global capitalism, and asks what the costs have been to a sustainable global economy.

This chapter explores the history and evolution of American capitalism through the development of the corporation as a business form and the creation of corporate governance tools. First, it examines the origin and evolution of the corporation as a form of business organization. Next, it examines the corporation’s internal relationships, specifically the relationship between the corporation and its shareholders. At its heart, the story of American capitalism reveals the tension between notions of capitalism for shareholders and capitalism for stakeholders, as well as the fundamental question of the appropriate role of business in society. 

When we think of capitalism, particularly with regard to sustainability, we tend to think of large, investor-owned corporations such as Walmart and Amazon. This is reasonable, since these companies dominate not only the economy itself but also our thinking about the economy. However, “capitalism” can take different forms depending on the governance structure through which capital is controlled. This chapter discusses a well-known alternative model for enterprise governance that has been in operation for nearly 200 years—the cooperative. Worldwide, cooperatives represent the largest alternative model to traditional capitalism, with over a billion members in over 100 countries worldwide, including an extensive presence in the U.S. In this way, they represent a kind of low-hanging fruit for reorienting the economy toward a more sustainable model.

Sustainable capitalism depends in large part on a sustainable labor force. In varying ways, the business world has been undervaluing and exploiting many of the people who create the goods and services on which capitalism depends for centuries. This chapter will briefly recap the ways in which capitalism has been able to avoid confronting the problem of making labor more sustainable in the past. Factors such as the legal expansion of worker rights, the technological automation of basic functions once assigned to low-level workers, and the increased global competition for talent now make it imperative for businesses to develop a more sustainable approach to the labor market. The chapter will then examine four basic concepts regarding labor that will help support sustainable capitalism in the future. The first concept is the expansion of worker voice. A second structural change would focus on making capitalism more sustainable for women workers in particular. A third complementary approach to making labor more sustainable is increasing private investment in education. The fourth concept that will help create a more sustainable labor force requires legislative actions. Increasing the federal minimum wage to at least the amount needed for the head of a household to work 40 hours a week and stay above the poverty line will help ensure that workers can maintain a sufficient standard of living. Furthermore, a federal mandate requiring certain employers to invest their 401K plans in ESG funds will help sustain not only the labor force but the planet as well.

One of the myths surrounding capitalism is that it is in tension with government regulation. But far from being interferences with capitalism, government regulation and law are in fact central to its operation and success. Well-designed, smart regulation supports the creation of wealth even as it discourages undesirable behavior, including cheating, lying, and illicitly preying upon vulnerable members of society. This chapter traces the early development of capitalism and the legal foundations that it required. It then discusses the myth that deregulation will always lead to greater economic development and offers specific instances where a lack of regulation undermined economic growth and progress. It concludes by arguing that capitalism—and particularly sustainable capitalism—will only thrive when paired with smart regulation.