Capitalism, Externalities and Social Institutions

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Capitalism, Externalities and Social Institutions

Professor Craig Calhoun

27 November 2015

5.30pm - 7.00pm

SMU Admin Function Room

Singapore

According to capitalist thinking, the main aim of corporations is to maximise profits. In the case of agricultural production, environmental damage arising from a corporation's operations in a forest is borne by innocent third parties. An example of this issue is the prolonged transboundary haze originating from Indonesia's peatland fires that had been affecting much of Southeast Asia resulting in high socio-economic costs for people who became ill due to the air pollution, absenteeism from work, the closure of schools and cancellation of outdoor events, among others. Despite international assistance to help fight the fires, the fires - and the haze - persisted.

Are corporations responsible for peatland fires that lead to poor air quality making profits at the expense of people’s health? To what extent do they have to be responsible for their actions? In this lecture, Craig Calhoun, former Director of the London School of Economics and Political Science (LSE), discussed the interlinked relationship between capitalism and the costs to society as a whole.

Capital investment decisions are not just made by markets, but also by the State and other organisations. Redeployment is key in capitalism.
Capitalism-driven growth can be a destabilising factor, as seen in the replacement of jobs by technology and externalities like pollution.
Capitalism should be viewed as a political-economic system that relies on the State to stabilise the context of capitalist work.

Speaker

Professor Craig Calhoun

Director and President
London School of Economics and Political Science (LSE)

On the tension between capitalism and the state

A byproduct of capitalist success has been to undermine state capacity. This has been true, particularly in Western liberal capitalist countries. This is not the same story in Singapore. It is not the same story everywhere, and that's actually an important part of what I want to get at.

A byproduct of capitalist success has been to undermine state capacity. This has been true, particularly in Western liberal capitalist countries. This is not the same story in Singapore. It is not the same story everywhere, and that's actually an important part of what I want to get at.

Craig Calhoun
Director and President
London School of Economics and Political Science (LSE)

Undermining state capacity should not be seen as a liberation for capitalism, even though some capitalists think that way. It's potentially a threat. States still matter. States are the primary means for dealing with the problem of externalities. Capitalism depends on externalising some costs.