Olivia Barnett
This is adapted from a paper written in 2013 but still remains relevant to the current climate change negotiations. Some of the academic references have been left in for those who are interested.
Why a capitalist system cannot provide the solution to a capitalist problem.
The impacts of climate change are not felt by the wealthiest first; this may explain why global attempts to make the system more ecologically sustainable have so far lacked clout. It is also explained in part by the interaction of contemporary capitalism with nature. I will show why these cannot be reconciled and attempts to do so have in fact increased led to an increase in fictitious markets, which benefit the already wealthy nations.
As Karl Polanyi predicted in the Great Transformation (1944), “to allow market mechanisms to be the sole director of the fate of human beings and their natural environment would result in the demolition of society”. The result of neoliberal policies enforced by countries in the North and International Financial Institutions has been increasing deregulation of national markets and liberalised trade flows on a global scale (Harvey 2005). Many argue this form of free-market capitalism has increased global competition and enabled the dominance of private sector investment over people and nature (Foster 2009). Global market expansion has increased the consumption of goods from all over the world, requiring huge amounts of energy. But the use of fossil fuels to provide this is not without a cost, as Engels wisely commented in 1883 “let us not, however flatter ourselves overmuch on account of our human conquest over nature. For each such conquest takes its revenge on us”. Climate change is one such revenge.
Capitalism can be identified by its market mechanisms and a competitive drive for profit maximisation from the owners of the means of production (Harvey 2010). This mechanism necessitates continuous market expansion and intensification of resource extraction in order for consumption and production to continue. As the Earth’s resource are implicated in this process (as are workers exploited along the way), those which are finite inevitably deplete (Foster 2009; Redclift 1984). The unsustainable exploitation of nature’s resources is a fundamental component of capitalism. Workers and their labour power are put together with what is directly provided by nature in a metabolic interaction that creates exchange values or commodities that ultimately lead to profit for those who own the means of production (Marx 1990). Whilst previous modes of production have also required nature’s resources, capitalism requires new markets in order for the accumulation process to continue, making those who own the means of production increasingly wealthy and able to invest and create more wealth (Li 2009). But there is little care for the use of finite resources or the damaging emissions that are created in the process, greenhouse gases being the most severe (Storm 2008).
Oil and coal are the main sources of energy used to sustain modern consumer lifestyles in the global North and increasingly the urbanizing global South. But the extraction of raw materials for continuous consumption by modern capitalist societies cannot be sustained and is having severe impacts on the earth’s climate, as was predicted two centuries ago by a biologist named Arrhenius (1895). This is leading to a process of global warming due to greenhouse gases getting trapped in the atmosphere and disturbing climatic cycles; intensified desertification, rising sea levels, flooding and earthquakes are just some of the natural disasters that result (Martinez-Alier 2012; Jackson 2012; Storm 2008; Chivers 2011).
Therefore the consumption within contemporary capitalism has serious implications for the future of humanity. But most importantly, it affects those living in poorer regions first where they are most vulnerable to changes in climate and have fewer resources to adapt.
Capitalist Solutions to Climate Change
There are attempts, by actors such as the World Bank, to address issues of ecological sustainability within a capitalist paradigm (otherwise known as ‘market environmentalism’) which conveniently also provides new avenues of capital accumulation (Bernstein & Woodhouse 2006; Lohman 2009). Markets and prices dictate how natural resources are used more sustainably through a sort of “decoupling” of fossil fuel consumption and economic production (Newell 2009; Bumpus & Liverman 2011). This ‘efficient markets’ perspective sees global warming as a mere ‘market externality’ , because the producer of carbon emissions does not suffer the costs but has impacts on the welfare of others. The global initiative to resolve this issue is to internalise the costs by making polluters pay, not through taxation, but by using markets to trade privatised units of “hemmed in” carbon (Harvey 2003; Martinez-Alier 2012).
Carbon Markets
Carbon markets were established under the ‘Clean Development Mechanism’ (CDM) of the Kyoto Protocol (1997) (Bumpus & Liverman 2011). The idea is based upon economic rationale for the preservation of resources through private property rights, based upon Hardin’s (1968) idea of a ‘tragedy of the commons’ where resources are overused if they are under common ownership (Bernstein & Woodhouse 2006). But this idea can be disproved through many other societies uses of common resources.
Carbon markets were the brainchild of the US Clinton administration and allow developed countries to reduce their emissions whilst promoting sustainable development in the global South when purchasing ‘carbon credits’ (Lohman 2009). Carbon trading uses the logic of a market where price incentives motivate self-interested, rational actors (countries) to reduce their carbon emissions by being rewarded credits for doing so (Storm 2008; Lohman 2009). Carbon credits are equal to a tonne of carbon that would have been emitted in a ‘business as usual’ scenario by ‘offsetting’: paying for an environmental project in the global South that reduces emissions, or investing in renewable energy (Bumpus & Liverman 2011). Reductions in greenhouse gas emissions are converted into a “measurable and marketable commodity” via a process of project approval by international carbon experts (Bumpus & Liverman 2011).
The carbon trading scheme does not prevent industries from polluting the earth’s atmosphere, it merely allows them to continue whilst investing in renewable energy or protecting forestry elsewhere.
Carbon trading depends on a socially constructed system, based on the knowledge and expertise of mechanisms funded by the North and embodied in projects in the global South (Bernstein & Woodhouse 2011; Pelling et al 2012). The allocation of a carbon credit is a subjective judgement by ‘carbon experts’, it is not a real ‘thing’ that can be measured but the measurement of ‘what would have been’. The allocation of this unit value is essential to the stability and authenticity of the market and has created multiple roles in a new carbon trading industry. This industry requires procedures, documentation, experts and a range of consultants which discipline and dominate creating a “neoliberal environmentality” (Fletcher 2010). Government authorities are responsible for setting credit supplies and allocation, aligning with capital-interests in this market-based approach (Lohman 2009).
Capitalism requires a profit incentive to encourage agents to continue investing and developing their opportunities for accumulation, “accumulation for the sake of accumulation” as stated by David Harvey (2010). This system of carbon markets is supposed to take advantage of this logic by rewarding green energy or conservation; however the invention of this ‘fictitious commodity’ does not escape from the bigger capitalist structure that continues to behave in the same way, depleting resources and threatening biodiversity and indigenous communities in the process (Pelling et al 2012). Carbon markets have been heavily criticised for enabling industrialised countries to continue using fossil fuels and serving as a distraction from the real change that is needed (Newell 2008).
Governments in the North have favoured carbon markets because they do not impact on national economic growth; in fact these markets require an alignment of the state and capital to function. This new market has also been extremely lucrative, estimated to be worth $9 billion (Lohman 2009).
In this case Marxist ecologists are right to say “Capitalism is incapable of answering ecological problems” (Vlachou 2004: 3). But it is very good at finding new means of accumulation whilst appearing to acknowledge the concerns of society.
References
- Bernstein, H. & Woodhouse, P (2006) “Africa: eco-populist utopias and (micro)capitalist
- realities” in Leo Panitch and Colin Leys (eds) The Socialist Register London: Merlin.
- Bumpus, A. G & Liverman, D. M (2011) Global Political Ecology edited by R. Peet, P. Robbins and M. Watts London: Routledge
- Burkett, P. (1999) Marx and Nature: A red and green perspective New York: St Martin’s Press.
- Chivers, D. (2011) No-Nonsense Guide to Climate Change Oxford: New Internationalist. Dale, G. (2010) Karl Polanyi: The Limits of the Market Cambridge: Polity Press.
- Foster, J. B (2009) Marx’s Ecology: Materialism and Nature Monthly Review
- Hardin, G (1968) “Tragedy of the Commons” Science 162:1243-1248
- Harvey, D. (2005) A Brief history of Neoliberalism Oxford: Oxford University Press. Harvey, D (2010) The Enigma of Capital London: Profile Books.
- Lohman, L. (2009) “Uncertainty markets and Carbon Markets: Variations on Polanyian
- Themes” New Political Economy
- Marx, K. (1990) Capital Vol 1 2nd edition, translated by Ben Fowkes, forward by Ernest Mendel London: Penguin Books.
- O’ Connor, J. (1993) “Is Sustainable Capitalism possible?” in Food for the Future: Conditions and Contradictions of Sustainability edited by Patricia Allen New York: John Wiley & Sons.
- Pelling et al (2012) Climate Change and the Crisis of Capitalism edited by Pelling, M. manuel Navarrete, M and Redclift M. London: Routledge.
- Storm, S (2009). “Capitalism and climate change: Can the invisible hand adjust the natural thermostat?” Development and Change 40(6):1011-1038
- Vlachou, A. (2004) “Capitalism and ecological sustainability: the shaping of environmental justice” Review of International Political Economy Vol 11: 5: 926 – 952.
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