Confronting the climate change crisis

global warming

This is the first of a number of posts on Ian Angus’ seminal “Confronting the Climate Change Crisis” on his blog, Climate and Capitalism.

His primary point is that capitalism, due to its inherent structure, can not and will not be able to solve global warming.

Why? One reason is because greenhouse gas emissions are an externality. They do not affect the businesses that produce them, nor do businesses have to pay for the damage they cause. Instead, that get foisted on the public to pay. Plus, under capitalism, there is little reason for companies to cut down on GHG emission. Worse, especially in the US, a company could conceivably be sued by stockholders for spending money on remediating global warming because it would cut into profits. Short-term greed and self-interest should not be allowed to trump the long-term good, yet under capitalism, that’s precisely what happens – all the time too.

Sure, there are an increasing number of companies trying to do the right thing and be green. But there are also millions of companies that aren’t. They will go to another country that lets them pollute if they need to. Also, to do all this in a coherent manner will require massive planning and the ability to mandate that those changes occur.

That’s why the solutions to global warming need to be worldwide and top down. That can’t happen in the hugely atomized and chaotic system that is capitalism.

  • DJ

    I reiterate that under a capitalist system, the ultimate cost of fossil fuels must be built into the price in the form of taxes imposed by the government. This is not a new concept: it’s been applied to tobacco, soda bottles (at the state level), tires (state and federal taxes & disposal fees), etc.

    However, we labor under a system that is decreasingly capitalist for two reasons, both relating to globalization and the overwhelming of the capitalist nature of the system. First, the companies that produce and sell fossil fuels are larger (and richer) than many governments. Their political influence interferes with the role of government– in other words, they can pay a good deal of money to make sure the cost is obscured.

    Second, both Smith and Keynes envisioned an economy on a national scale, hence both relied on national governments to balance the ill effects of capitalism. However, the economy has become globalized, while government has not. Thus there is no government that can play the role required for a capitalist system to function. This results in economic anarchy– a completely uncontrolled economy. In this anarchy, the rich get richer and the poor get poorer, not on a relative basis within a society, but across international boundaries. The governments that are supposed to implement progressive taxes to recycle that wealth can only do so on a national basis (if at all), so wealthy countries remain wealthy and poor remain poor. Smith never imagined capitalism creating equality in wealth, but he did recognize that the wealth of the rich must be returned to the poor in some way, not only to prevent the abject poverty of feudalism, but also to keep the economy moving.

    In addition, a global capitalist corporation is more powerful than any government, even the U.S. government, because it can relocate anywhere in the world outside that government’s reach if it doesn’t get its way. It doesn’t have to play by the rules if it can find another nation greedy enough (or desperate enough) to change the rules for it. In essence, the global capitalists have governments competing against each other for business, not regulating business as governments are supposed to do.

    THIS IS NOT CAPITALISM! It is anarchy. A capitalist system would have little trouble addressing greenhouse gases– the mechanism is built into the system as the role of government. But we no longer have a capitalist system.

    And here’s something else: I do not believe any other economic system, including socialism or a hybrid of capitalism and socialism, can address the problem of climate change as long as the economy exists outside the control of government. In fact, by definition it will be impossible to do so by economic means, which leaves only diplomacy (inter-governmental negatiation).

    If we expect to solve the climate change using economic tools, we must have a global government that can enforce its will across the entire economy– regardless of the economic theory it uses. The ramifications of that are astounding, unpalatable to many, and world-changing in a way we have not seen since perhaps the Roman Empire.

    Or, we can try to do it through diplomacy. That process is in its infancy, but the results so not appear to be promising.

  • Indeed, what Adam Smith envisioned as capitalism is not at all like the predatory system we have now.

    On Tuesday I will post about carbon credits and on Wednesday on taxing polluters, both being schemes to lessen carbon emissions but capitalist-based, inefficient, and prone to cheating (or, as you mentioned, the company just moving away.)

    Diplomacy is always a good approach, but some of the needed changes will have to be mandated. Unless you think the Exxon-Mobils of the world will magically go green. Or that the coal industry won’t try to exist regardless of the damage they cause.

  • DJ

    While I agree that carbon trading and such are inefficient and prone to abuse, my point is that the necessary changes CANNOT be mandated because there is no government that has the authority to do so on a global basis. Just as CA’s poposed banning of clectricity made from dirty coal will just route such electricity elsewhere where the restrictiosn are not in place, a patchwork of localized legislation does not have the power to change global markets.

  • Well, then we need a world government that can guide and mandate such changes!

  • DJ

    Now you’re getting it!

  • By it’s inablity to address to the environmental issues globalized imperialism or globalized anarchy is imposing several fetters to it’s own devolopment.The alternative forces of broad humanity should evolve models of devolopmnet,organizations and institutions that can oppose the anti ecological charecter of the established ored while preserving the ecosystem and offering sustainable models of devolopment.

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