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Climate Change

Capitalism Unable to Deal with Climate Change

Unless leaders act promptly, climate change and environmental degradation will only worsen and cause greater global problems, scientists warn. Credit: Crustmania/CC by 2.0

WASHINGTON, May 2 2014 (IPS) - It is time to craft new politics and economic policies to address the sustainability crisis, according to the latest edition of a flagship report by the Worldwatch Institute, a think tank here.

The global community has delayed addressing the issues associated with rapid climate change and environmental degradation for too long, according to the 294-page report, “Governing for Sustainability”.

“Markets can be excellent tools for certain purposes, but they do not have a social conscience, environmental ethic or long-term vision." -- Michael Renner

And it is this failure in governance that has resulted in the most alarming environmental challenges that we face today, the institute warns, from water shortages to climate change.

The report, which marks the Worldwatch Institute’s 40th anniversary, highlights the challenges imposed by the existing economic and political order. For instance, it criticises neoliberalism for undermining democratic processes by granting a strong political voice to corporations, whose profit-maximising nature traditionally takes little account of environmental health and sustainability.

“The unrestrained flow of money into the political process essentially undermines democracy,” Michael Renner, co-director of the report, told IPS.

“We need to rethink many of our basic economic assumptions and mechanisms, and aim not only for a better and wiser distribution of resources, but also a better sharing of available work. This can’t be accomplished via conventional forms of capitalism.”

In part, the report promotes so-called B corps – or benefit corporations – that “aim not only at doing well but also doing good”. B corps are new forms of for-profit entities designed to benefit their social and environmental stakeholders – those affected by the business’s operations – as well as their profit-seeking shareholders.

“This emerging movement is still a small phenomenon relative to the total global economy, but it continues to expand, led by mostly small and medium-sized companies in the United States,” Colleen Cordes, director of outreach and development for The Nature Institute, a research and advocacy organisation, told IPS.

Still, Worldwatch’s Renner expresses some scepticism that even B corps will be able to meet sustainability goals in the long term.

“Many of the companies subscribing to these principles are still quite small, and a big question is what will happen when these firms grow larger,” he says. “Can they remain anchored to the public interest within a broader system that remains ruled by the tenets of capitalism?”

The traditional ways in which democratic societies have made important decisions, he says, have been upended.

“Markets can be excellent tools for certain purposes, but they do not have a social conscience, environmental ethic or long-term vision,” Renner notes.

“It’s difficult to know what can successfully change this situation, but it would appear that a mass grassroots mobilisation is needed to provide some sort of counterweight to the money-driven politics that is now in command.”

Drastic measures?

Of course, the drive to maximise profit is not exclusive to corporations. Developing countries often voice discontent about the environmental regulations that industrialised countries impose on trade, for instance, as these regulations are make it more difficult for them to attain higher economic development and growth, at least in the short term.

Renner believes that it is possible to develop and yet avoid the environmental degradation that often follows economic growth – for instance, as widely seen throughout today’s China.

“We need to facilitate a process of ‘leap-frogging’ that allows developing countries to move to much-cleaner alternatives right away,” he says, giving the example of renewable energy.

“A poor country like Bangladesh succeeded in installing 2.8 million solar home systems in rural areas, generating some 100,000 jobs in the process. That’s much better than continuing to subsidise coal and kerosene, and that’s the kind of success story that’s worth learning from and emulating.”

Still, multiple counter-examples to the Bangladesh experience could be more affluent countries that have made little to no meaningful progress in combating the sustainability crisis. The report lists several countries that have seen rollbacks in this progress.

For instance, while Australia had previously pledged to reduce greenhouse gas emissions by five percent under 2000 levels, it has now reversed course and could cause national emissions to increase 12 percent by 2020. Japan, too, has abandoned its 2020 target for cutting national emission to 25 percent below 1990 levels.

And Canada is investing heavily in developing carbon-intensive tar sands deposits, an issue that has become a political hot potato here in the U.S.

Meanwhile, with little agreement on what global steps should be taken to address climate change, it is perhaps not surprising that the concentration of carbon dioxide in the Earth’s atmosphere is now at an all-time high. In fact, over the past decade, carbon dioxide emissions have steadily increased at around 2.7 percent annually – in the process, tripling the carbon emission rate from the previous decade.

Such statistics reinforce the sense that only a drastic change in the global economic and political governance will be able to change course.

“There is a chance we can prevent the worst disruption in climate change, as well as other sustainability challenges such as erosion or fresh water access. But these need to be addressed now,” Tom Prugh, another co-director of the report, told IPS. “The more we delay, the more irreversible our imprint on the environment will be.”

Purposeful ineffectiveness

Many other observers have connected these delays directly to a political and economic ineffectiveness brought about purposefully over the past several decades.

“Long before the climate crisis was the greatest market failure the world has ever seen, it was a massive political and governmental failure,” David Orr, a professor of environmental studies and an adviser to President Barack Obama, at Oberlin College, told IPS.

According to Orr, the U.S. and U.K. administrations of Ronald Reagan and Margaret Thatcher, buttressed by conservative economists such as Friedrich Hayek and Milton Friedman, strongly undermined the role of the government. The effect was particularly potent in those parts of the government dedicated to public welfare, health, education and environment.

“The public capacity to solve public problems has diminished sharply,” Orr says, “and the power of the private sector, banks, financial institutions and corporations has risen.”

Yet for The Nature Institute’s Cordes, a key answer to this situation will come down to the day-to-day role individuals and families.

“We need to focus our attention on urgent issue of how to govern our countries, but also our families and ourselves,” she says. “It’s time for us to think critically before we make decisions with regard to what we buy, where we work, and evaluate our footprints.”

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  • Syricide

    Capitalism at its atomic level requires to exploit. To sell resources for more debt than was incurred to acquire it. The organisation of social systems function on the velocity of debt (the speed with which money or debt tokens are circulated within a given geography). Capitalism nurture’s the financial conflict of competing interests, the winner is the king of the profit margin, the one who can shed most costs. The retail automaton who has no labour expenditure prevails. But there is a blind spot all economists and governments either deny or cannot see.
    Growth = transaction velocity = consumer base. But profit = destroying labour = destroying consumer base = destroying growth.
    Its an ever decreasing circle and there is no way out of it .., but is there?

    The problem is so large and yet so simple. To understand the radical step that we need to make we need to fully realise the irreproachable fact of what is unfolding. It is arithmetically impossible for our world of commerce and the exchange of debt to continue. The solution is to realize that what we use to represent value is a fallacy. The solution is to understand that we have no choice but to re-organise societies to exist collectively in a way that utilises energy and resources efficiently for the functioning of the society itself and not the individual.

    I don’t care if you read and this and roll your eyes. It doesn’t matter what you think or disbelieve. The reality of that artefact we know as “money” will lose context because that thing we call “wealth” is the product of being able to sell. The flawed ideology of capitalism can only move in one direction, the elimination of production cost is elimination of the labour force is the elimination of the consumer.

    Bye bye money system, my only wish would be alive to see what comes after.

  • Michael Kosak

    Whenever you see the code word “sustainability” think Agenda 21

  • mzm

    then again don’t think at all

the pre referral intervention manual