The Five Capitals

There are five types of sustainable capital from where we derive the goods and services we need to improve the quality of our lives.

Natural Capital is any stock or flow of energy and material that produces goods and services. It includes:

  • Resources – renewable and non-renewable materials
  • Sinks – that absorb, neutralise or recycle wastes
  • Processes – such as climate regulation

Natural capital is the basis not only of production but of life itself!

Human Capital consists of people’s health, knowledge, skills and motivation. All these things are needed for productive work.

Enhancing human capital through education and training is central to a flourishing economy.

Social Capital concerns the institutions that help us maintain and develop human capital in partnership with others; e.g. families, communities, businesses, trade unions, schools, and voluntary organisations.

Manufactured Capital comprises material goods or fixed assets which contribute to the production process rather than being the output itself – e.g. tools, machines and buildings.

Financial Capital plays an important role in our economy, enabling the other types of Capital to be owned and traded. But unlike the other types, it has no real value itself but is representative of natural, human, social or manufactured capital; e.g. shares, bonds or banknotes.

American Capitalism Is Fine, Thank You

The real debate is whether to accept the creative destruction at the heart of the free-market system.

Today, American Democrats have a more positive view of socialism than capitalism, and less than half of young adults have a positive view of capitalism. But the debate isn’t merely between left-wing socialists and right-wing capitalists. Even President Trump argues that capitalism generates prosperity abroad at the expense of American workers. Years of wage stagnation and diminished economic prospects have soured many Americans on the system that made the U.S. the world’s largest economy.

Compared with faster-growing economies in the developing world, America feels older, and not only because the elderly will soon outnumber children. Important parts of the economy, from smartphones and cellular carriers to airlines, resemble sluggish oligopolies more than dynamic marketplaces. Ever more sectors of the economy look like heavily regulated utilities that are at reduced risk of disruption or innovation. In health care, hospitals, physician groups and insurance companies are getting bigger and in some cases driving out competitors.

Republicans Need to Save Capitalism

Democrats have gone left, so they’re not going to do it. The GOP needs a renewed seriousness.

.. Pew Research sees the party lurching to the left since 2009; Gallup says the percentage of Democrats calling themselves liberal has jumped 23 points since 2000. But you don’t need polls. More than 70 Democrats in the House, and a dozen in the Senate, have signed on to the Green New Deal, an extreme-to-the-point-of-absurdist plan that is yet serious

Millennials, the biggest voting-age bloc in America, are to the left of the generations before them. Moderates are aging out. The progressives are young and will give their lives to politics: It’s all they’ve ever known. It is a mistake to dismiss their leaders as goofballs who’ll soon fall off the stage. They may or may not, but those who support and surround them are serious ideologues who mean to own the future.

None of this feels like a passing phase. It feels like the outline of a great political struggle that will be fought over the next 10 years or more.

.. The American establishment had to come to look very, very bad. Two long unwon wars destroyed the GOP’s reputation for sobriety in foreign affairs, and the 2008 crash cratered its reputation for economic probity. Both disasters gave those inclined to turn from the status quo inspiration and arguments. Culturally, 2008 was especially resonant: The government bailed out its buddies and threw no one in jail, and the capitalists failed to defend the system that made them rich. They dummied up, hunkered down and waited for it to pass.

Americans have long sort of accepted a kind of deal regarding leadership by various elites and establishments. The agreement was that if the elites more or less play by the rules, protect the integrity of the system, and care about the people, they can have their mansions. But when you begin to perceive that the great and mighty are not necessarily on your side, when they show no particular sense of responsibility to their fellow citizens, all bets are off. The compact is broken: They no longer get to have their mansions. They no longer get to be “the rich.”

For most of the 20th century the poor in America didn’t hate the rich for their mansions; they wanted a mansion and thought they could get one if things turned their way. When you think the system’s rigged, your attitude changes.

On the right the same wars, the same crash, and a different aspect. In the great issue of the 2016 campaign it became unmistakably clear that the GOP elite did not care in the least how the working class experienced immigration. The party already worried too much about border security—that’s the lesson the elites took from Mitt Romney’s loss in 2012, according to their famous autopsy. They appeared to look after their own needs, their own reputations: We’re not racist like people who worry about the border! They were, as I’ve written, the protected, who looked down on those with rougher lives. The unprotected noticed, and began to sunder their relationship with establishments and elites.

Donald Trump came of that sundering. He was the perfect insult thrown in the establishment’s face. You’re such losers we’re hiring a reality-TV star to take your place. He’ll be better than you.

Conservatives regularly attend symposia to discuss the future of conservatism. Republicans in Washington stumble around trying to figure what to stand for beyond capitalizing on whatever zany thing some socialist said today.

But isn’t their historical purpose clear? Their job—now and in the coming decade—is, in a supple, clever and concerted way, to save the free-market system from those who would dismantle it. It is to preserve and defend the capitalism that made America a great thing in the world and that, for all its flaws and inequities, created and spread stupendous wealth. The natural job of conservatives is to conserve, in this case that great system.

I’ll go whole hog here. We need a cleaned-up capitalism, not a weary, sighing, acceptance-of-man’s-fallen-nature capitalism. Republicans and conservatives need a more capacious sense of what is needed in America now, including what their own voters need. The party needs a tax-and-spending reality that takes into account an understandable and prevalent mood of great need. They need to be moderate, peaceable and tactful on social issues, but firm, too. This is where the left really is insane: As the earnest, dimwitted governor of Virginia thoughtfully pointed out, they do allow the full-term baby to be born, then make it comfortable as they debate whether it should be allowed to take its first breath or quietly expire on the table. A party that can’t stand up against that doesn’t deserve to exist.

All this must be done with a sense of how Americans on the ground are seeing things. What they see all around them cultural catastrophe—drugs, the decline of faith, the splintering of all norms by which they’d lived, schools that don’t teach and that leave their kids with a generalized anxiety. They want more help to deal with this. If you said, “We’re going to have a national program to help our boys become good men,” they would be for it, they would cheer. If you said, “We’re going to get serious and apply brains and money to what we all know is a mental-health crisis in America,” they wouldn’t care about the cost—and they’d be right not to care. They think as a people we’ve changed, our character has changed, and this dims our future. Make things better on the ground now and we’ll figure out the rest later.