Here is a word that risks deterring you from reading on much further, even though it may hold the key to understanding why we are in such a terrible political, economic and social mess. That word is \u201cexternalities\u201d.<\/p>\n
It sounds like a piece of economic jargon. It is<\/em> a piece of economic jargon. But it is also the foundation stone on which the west\u2019s current economic and ideological system has been built. Focusing on how externalities work and how they have come to dominate every sphere of our lives is to understand how we are destroying our planet \u2013 and offer at the same time the waypost to a better future.<\/p>\n In economics, “externalities” are usually defined indifferently as the effects of a commercial or industrial process on a third party that are not costed into that process.<\/p>\n Here is what should be a familiar example. For decades, cigarette manufacturers made enormous profits by concealing scientific evidence that over time their product could prove lethal to customers. The firms profited by externalising the costs associated with cigarettes \u2013 of death and disease \u2013 on to those buying their cigarettes and wider society. People gave Philip Morris and British American Tobacco their money as these companies made those smoking Marlboros and Lucky Strikes progressively unhealthier.<\/p>\n The externalised cost was paid \u2013 is still paid \u2013 by the customers themselves, by grieving families, by local and national health services, and by the taxpayer. Had the firms been required to pick up these various tabs, it would have proved entirely unprofitable to manufacture cigarettes.<\/p>\n Externalities are not incidental to the way capitalist economies run. They are integral to them. After all, it is a legal obligation on private companies to maximise profits for their shareholders \u2013 in addition, of course, to the personal incentive bosses have to enrich themselves, and each company\u2019s need to avoid making themselves vulnerable to more profitable and predatory competitors in the marketplace.<\/p>\n Companies are therefore motivated to offload as many costs as possible on to others. As we shall see, externalities mean someone other than the company itself pays the true cost behind its profits, either because those others are too weak or ignorant to fight back or because the bill comes due further down the line. And for that reason, externalities \u2013 and capitalism \u2013 are inherently violent.<\/p>\nInherently violent<\/h3>\n