Perspectives on Saving Capitalism

Ideas from Harvard scholars and alumni include going local; regulating consumer credit; and getting over our aversion to centralized planning.

The cover story of the new issue of Harper's magazine, a series of essays on "How to Save Capitalism," has multiple Harvard links.

Bill McKibben ’82 believes the solution is localization—in our food supply and our lives more broadly. Eating locally saves energy and the environment, he writes, because large-scale farming...

...requires vast machinery, incredible amounts of natural-gas-based fertilizer, and a globe-spanning transportation system that makes sure your dinner arrives marinated in crude oil.

(McKibben, a journalist who has written for the New Yorker, the Atlantic, and National Geographic, among other publications, and is now a scholar in residence at Middlebury College and the director of the Middlebury Fellowships in Environmental Journalism, notes that the 500,000 pigs at one farm in Utah produce more sewage daily than the city of Los Angeles.) A new approach, he writes, will help not only our surroundings but also our psyches. The "cheap-oil economy," he writes...

...has made us the first people on earth who have no need of one another. Everything we buy comes from an anonymous distance. We eat far fewer meals with family and neighbors than we did fifty years ago; we have on average far fewer close friends. The basic premise of the American economy—that the goal was a bigger house farther apart from other people—turns out to be mistaken, both ecologically and psychologically.

In another essay that contributes to the picture of how the United States might weather tough times and emerge improved, James K. Galbraith ’74 writes that the key is planning. He notes Americans' deep suspicion of the notion of government planning—a suspicion rooted in disdain for the planned economies of the Cold War period (and legitimate recognition of that approach's failures). But the fact that the government isn't planning, Galbraith writes, doesn't mean that nobody is:

Without public planning, who is in charge? Lobbyists who represent the private planning of the great corporations.

Galbraith, a professor at the University of Texas-Austin's Lyndon B. Johnson School of Public Affairs (and the son of John Kenneth Galbraith, the long-serving professor of economics at Harvard), writes that a fear of planning has allowed the country to be hijacked by "predators posing as conservatives and mouthing the rhetoric of free markets." But, he writes:

They are not actually interested in free markets. Their goal is to use the government to build monopolies, to control resources, to block regulation, to crush unions, to divert as much as possible from taxpayers into private pockets....What the government needs most today is to regain an independent capacity to think.

Meanwhile, Gottlieb professor of law Elizabeth Warren argues that any solution must involve better regulating consumer credit. Although credit-card issuers and mortgage lenders are required to disclose their terms, their lengthy and legalistic disclosures often serve more to obfuscate than to inform, declare Warren and her daughter, Amelia Warren Tyagi, the authors of All Your Worth: The Ultimate Lifetime Money Plan). They state:

In a Federal Trade Commission study conducted last year, for instance, nine in ten mortgage customers examining relatively straightforward fixed-rate loan agreements could not figure out the up-front costs on the loan; half could not identify the loan amount.

The full text of the set's seven essays is available to subscribers on the Harper's magazine website.

Read a more fully developed version of Warren's argument in "Making Credit Safer," from the May-June 2008 issue of Harvard Magazine.

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