Externalities 2

Historically, capitalist externalities refer to costs that could not be counted because they were assumed to be minimal and thus ignored. This is similar to what occurs in calculus. In estimating volumes of round objects, the technique creates a situation in which the inaccuracies can be ignored–though present. The problem is economics ignores our new abilities to count and maintains the intent to ignore for less flattering reasons.
Also historically there have been a number of schools of capitalism (more on this later). Today I like to refer to “ideological” capitalism which uses externalities to generate profits by offloading costs to society. Thus where ecological costs were once ignored because it was assumed that nature had the ability to endlessly absorb pollution, we now this is not true but insist corporations simply cannot absorb these costs and be profitable. It is interesting to note this same claim ignores the implications of this claim and also calls for a minimalist government and regulation. This is not the capitalism of Adam Smith.



Capitalism uses the concept of externalities to ignore and/or hide the actual costs of any business project.  This posits those costs onto an outside (unstated) agent–usually to be discovered as costs to be born by the rest of the world.  It is time to stop this practice and require actual costs to be accounted for by the people who create them.  Environmental costs, health costs, stolen profits, political costs, job losses:  all are dismissed with impunity.  They are not minimal and thus ought not to be ignored.  They are not actually external to anything but the limited liability of the corporation that creates them.

How many blogs can one person have?

I am starting this blog not because the world is in desperate need of another, but because it may force me to write on this topic.

Some years ago I worked for a convenience store chain.  In the course of my duties there I had occasion to come in contact with the concept of cost accounting.  I was particularly taken with the differences between retail accounting and cost accounting.  I came to greatly respect this latter approach and began to apply its concepts to a great many disparate areas.  This blog will hopefully explain some of that thinking.