“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” These are the words of Adam Smith from his 1776 book “The Wealth of Nations,” where he proposed his “invisible hand” theory, which promotes the idea that, in a free market, there is an unobservable force that helps create equilibrium among the demand and supply of goods and services . This force would come into play in a free market scenario where everyone will work toward their own personal wealth development and freely compete in the production of value for others.
Smith’s theory has been very influential on modern economics , propelling humanity forward through innovations that have transformed our way of life. Through the 20th Century, these transformations dramatically increased the longevity and the quality of life for many people throughout the modern world. However, in line with the needs of the present, without modification of direction these very same principles may spell the demise of the human race. This is because unfettered competition rapidly degrades and depletes our planet’s resources when there is a lack of accountability for the externalities produced while trying to serve a global population exponentially larger than several centuries ago.
Smith’s theory of 1776 seemed more pragmatic when humanity’s population was a lot smaller. Back then there were 821 million people  on the planet; 2.5 million of which comprised the citizen population of the United States . At that time, consumption patterns were much lower, and ecosystems were able to better contend with the stresses and strains that we placed upon them. However, things have definitely changed. For example, the citizen population of the United States today is now 130 times larger, meaning there are 130 consumers for every one consumer that existed in 1776 . Moreover, the world population is more than 7.5 billion , which is roughly nine times larger than it was estimated to be back then. Another billion are projected to be added over the next 12 years , increasing that to ten consumers worldwide for every one consumer 250 years prior. To give you an additional sense of scale, scientists claim that the carrying capacity of the planet, given our current practices, is between 9 and 10 billion people . This level may be achieved in less than 18 years (by 2037) .
It should go without saying that the more people we have, the more we consume. It should also be obvious that Earth does not have limitless space nor resources. But by-and-large one wouldn’t be able to tell that from our actions. In our selfish pursuit of wealth, we are building economies through unfettered consumption, with little regard for the massive resource depletion and environmental degradation we are causing.
In effect, we have created a society in which the consumer is generally treated as a means to selfish ends and not as dignified beings entitled to being treated justly and fairly. Due to this, it is no wonder that 9 out of 10 people in our world’s major cities breathe unhealthy air , our oceans are contaminated with five trillion pieces of plastic , 55% of the monitored waterways in the United States are impaired for any use , and a third of our arable land (land used for growing crops) has been lost (just in the past 40 years) .
We can no longer ignore our impacts on resource depletion and environmental degradation. We must increase our sustainability awareness and our comprehension of resource availability. Then, we must carefully determine sustainable capacities and responsibly coordinate with the parties that utilize those resources, both individuals and organizations, by challenging them to change the nature of the value they provide by strategically incorporating capacity restrictions with value production, thereby aligning production with planetary wellness. This includes refraining from practices that include
- Excessive waste production,
- planned obsolescence,
- Disposable conveniences
In effect, as businesses and consumers, we must acknowledge the true scope of resources used (both public and private), and look to minimize resource use in value production while, at the same time, ensuring reuse based in the design of our products. This including a strategy that minimizes packaging and encourages recycling, composting and planned reuse where possible. Additionally, not producing nor purchasing products that are designed to become obsolete or that can be easily discarded with a single use. Moreover, making the products that we produce upgradable rather than immediately replaceable (In effect, causing consumers to knowingly buy products that are only temporarily going to satisfy a need in anticipation for their complete replacement in the near future).
The most complicated components in this change is evaluating the sustainable quantity of resources within nature that must be preserved, so as to determine the limitations on the deployment of those resources in commerce. Then, determining who will have access to those resources and in what quantities. However, I am confident that as human beings, we have the ingenuity to figure out how to do this without compromising our ability to achieve individual and collective prosperity.
Adam Smith’s philosophy has served a very important purpose. However, the world has outgrown this philosophy’s usefulness in its original form. Today, we must deploy a new economic innovation model that will result in changes to the status quo towards a new, sustainable, path that will propel human progress forward in value production while preserving this precious world and the dignity of humanity for the foreseeable future. This is one that requires awareness of the totality of impacts of value production, rational resource use, and the reformulation of practical socioeconomic priorities given current population trends.
We must rethink our priorities and establish a new path forward.
The time to act is now.
- 1776, Adam Smith, “Nature and Causes of the Wealth of Nations,” W. Strahan and T. Cadell, London
- February 3, 2019, Rakesh Sharma, “Adam Smith: The Father of Economics” Investopedia https://www.investopedia.com/updates/adam-smith-economics/
- January 12, 2008, Scott Manning, “Year-by-year World Population Estimates: 10,000 B.C. to 2007 A.D.” Historian on the Warpath (extensively researched with spreadsheet estimates from a variety of reputable sources and then averaged)
- August 3, 2010, J.N. Kish, “U.S. Population 1776 to Present” Fusion Tables https://fusiontables.google.com/DataSource?dsrcid=225439#rows:id=1
- February 4, 2019, United States Census Bureau, www.census.gov
- 2019, “World Population by Year” Worldometers, http://www.worldometers.info/world-population/world-population-by-year/
- May 2, 2018, “9 out of 10 people worldwide breathe polluted air, but more countries are taking action,” World Health Organization, https://www.who.int/news-room/detail/02-05-2018-9-out-of-10-people-worldwide-breathe-polluted-air-but-more-countries-are-taking-action
- 2018, www.theoceancleanup.com, “The Largest Cleanup in History,” The Ocean Cleanup Foundation
- April 11, 2013, Trip van Noppen, “Dirt Water; Can the US Clean Up Its Act?” Live Science
- December, 2015, Milman, “The Earth has Lost a Third of Its Arable Land in the Past 40 Years, Scientists Say,” The Guardian
- October 11, 2011, Natalie Wolchover, “How Many People Can Earth Support,” Live Science. Harvard sociobiologist Edward O. Wilson bases his estimate on calculations of the Earth’s available resources. Represented in his book, “The Future of Life” 2002, Knopf).
- 2019, “World Population Projections,” Worldometers, http://www.worldometers.info/world-population/world-population-projections/