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Why the Free Market Can't Save Us

The Political Economy of Climate Change


By reports, 2012 was the  warmest year in recorded history in the U.S. The last decade was the warmest on record globally. Even for those arguing other hypotheses also fit the warming climate, the consistency of warming, the joint probability in statistical terms, must give pause because the consequences are (1) very far along already and (2) potentially catastrophic in excess of previous human experience. Alternative hypotheses not only need to be plausible in a general sense, they require specific explanations of how consistently the climate has warmed. In fact, there are no other plausible explanations of both the direction and consistency of climate change.

The ‘man-made’ warming hypothesis fits the timeline of the growth of industrial capitalism reasonably well. Non-capitalist industry, more recent in history but existent nonetheless, has accompanied capitalist imperialism- the spread of global capitalism as a system of domination, control and expropriation. To some extent the growth of non-capitalist industry has been a reaction to the threat of capitalist imperialism. It poses both an internal and external threat to non-capitalist economies, to the extent they still exist. In fact, capitalism was conceived to bring about an alternative political order and it appears to have done so quite successfully.

Capitalism is put forward as a mode of social organization that creates vast wealth. Capitalist imperialism has managed to expropriate vast wealth–that much is evident. If the catastrophic consequences of global warming come to pass even this wealth will have proved an illusion. In a philosophical sense, it seems a metaphor—we enter this world with nothing and leave it with nothing, why then would the devotion of entire lives to material acquisition constitute a plausible explanation of existence as capitalists have it? And why would a system based on local rationalities, personal economic striving, such as Adam Smith’s petite bourgeois shopkeeps organized into global corporations, be expected to lead to global rationalities—positive collective outcomes, outside of the internal logic of capitalist ideology?

A wee bit of arithmetic helps explain a lot. Revenues – Costs = Profits. Profits rise if costs borne by producers fall. The profit motive in capitalist production guarantees costs of production will be forced onto others unless the capitalist is forced to bear them. And unless one wishes to argue the world’s creatures need no place to live, no food to eat and no clean water to drink, the destruction of these in capitalist production is a cost to either be borne by the producer or to be borne by others. Even the most radical ‘free-market’ capitalist economists agree that this set of relations is a prerequisite for capitalism to in any sense ‘work.’ And production that threatens to end the world, as global warming does, means ‘profits’ from said production would not exist if capitalists were forced to bear their true costs.

Those who have even casually passed through regions of capitalist extraction and / or industrial production have seen that capitalists have almost never been forced to bear the costs of capitalist production. From the coal regions of Pennsylvania to the abandoned industrial sites of the ‘rust belt’ to the poisoned resource extraction sites in the West to mountain top removal in West Virginia to the ‘tar sands’ regions of Canada to coal mines in Mongolia, costs in terms of subsequent un-inhabitability of the land and destruction of the planet’s bounty remain while profits accrue. After depleting resources and causing ancillary destruction capitalists have historically simply moved on to as yet un-depleted and un-destroyed territories. The ‘tragedy of the commons’ used in capitalist property theory would be a minor inconvenience next to the ‘tragedy of private property’ perpetrated by capitalism, even if it weren’t already a cynical lie (see the last fifth of Marx’s Capital, Vol. I for context).

But this isn’t a morality tale. Nor is global warming an accident of history for which none bear responsibility. It is the epic social struggle of our time. Capitalism is a form of economic imperialism from which specific people have benefited and continue to benefit from the destruction of the planet. The ‘rational individuals’ of capitalist theory have aggregated to collective insanity. And as history is in the process of demonstrating, Adam Smith’s ‘invisible hand’ is an illusion—a world of people acting in their own narrow economic interests has resulted in a world where people act in their own narrow economic interests to collective suicide.

Long before global warming was identified, the problem of ‘externalities,’ or the tendency of capitalists to force their costs of production onto people who see no benefit from it, was identified and remedies were sought. Before he became a bought-and-paid-for tool of Papa Koch, father of the infamous ‘Koch Brothers’ and founder of the John Birch Society, Austrian economist Friedrich Hayek argued the legitimate role of government was to correct ‘market failures’ such as environmental destruction. Later in his life, when he was fully a bought-and-paid-for tool of Papa Koch, he conveniently (for Papa Koch’s sake) argued capitalism was such a blessing to humankind that ‘market-based’ solutions to externalities were preferred.

But market based solutions to externalities are a cynical hoax in several dimensions. In the first, they presuppose environmentally destructive production is eternal fact and the purported goal of ‘solutions’ is to limit growth to a trend level that remains collectively suicidal. In the second, in the face of all historical experience to the contrary, market-based solutions assume the same capitalists who have spent three centuries profiting from forcing their costs onto others will comply with rules they, themselves, have largely written with full knowledge there does not exist, and there are no plans to create, a credible enforcement system. In the third, even if such an enforcement system were conceived and developed, ‘private’ capture of state institutions would neutralize enforcement capability (‘Citizens United’ anyone?). Finally, debt financed production creates both financial and institutional leverage. Creditors benefit when costs of production are shifted to others because it improves their probability of repayment—and creditors control the money in a debt based economy. The contention that more capitalism is the solution to the catastrophes capitalism creates only works in a closed logical system—there is no level of catastrophe that would render ‘more capitalism’ illogical within the internal rules of this logic.

Likewise, the contention individual ‘consumers’ can solve global warming through choosing environmentally ‘friendly’ products begins with the premise that consumers cause externalities through their ‘choice’ of products. In the first, this assumes all consumers know the production processes that go into producing goods and services, are able to quantify the proportion of costs embedded in the price of the products versus those that aren’t, and truly have choices. In the second, it assumes consumers have no material needs. Western agriculture, from whence the food most Westerners eat comes, is a major contributor to greenhouse gases. Shifting to sustainable agricultural practices implausibly assumes consumers both understand the impact of existing practices and can force a shift from below. In the third, it once again assumes capitalism is the solution to the catastrophes capitalism creates—that individuals acting in their own economic self-interest will aggregate to serve the collective interest when they have so spectacularly not done so historically. In fact, the premise of consumers foregoing their own economic self-interest to serve the collective good puts a lie to thefundamental premise of capitalism. In other words, once it is granted that ‘consumers’ could and would act in the collective interest, the internal logic of capitalism quickly fades away.

Capitalist imperialism is destroying the planet, largely for beings that see little benefit (and often great harm) from the system. The only way this won’t constitute mass murder on a scale never before imagined in human history is if global warming isn’t really a threat; capitalist production isn’t behind it, or some combination of the two. Capitalist apparatchiks are pursuing two tracks in response—to replace social discourse around the issue with a commercial response—one that uses all means available to persuade people the problem isn’t real and / or the people responsible for it are not the people responsible for it. The second track is to propose solutions that (1) don’t call into question the nature of the problem—the political economy of capitalism is responsible for global warming and (2), provide the appearance of action toward a solution without effective action taking place.

Those looking to Western governments for an effective response face two challenges. In the first, in the face of global warming, the premise of capitalism, that individuals acting in their individual interests produce good collective outcomes, is demonstrably false. This system has apparently produced the worst of all possible outcomes—catastrophic environmental failure that threatens most life on the planet. If the theory of individual interests accumulating to collective good is false, so is the classical liberal conception of the state. If the state’s role, as imagined in capitalist theory, is the protection of ‘private’ interests and private interests are driving the world toward collective suicide (or rather capitalist homicide), the state must be recovered to serve collective interests. As the private interests currently in control of the state are tightening their grip on power through the build out of the corporate police state, I leave it to readers to propose non-confrontational counter-measures likely to be effective. Otherwise, global warming is the confrontation forced upon us.

Finally—Thomas Malthus was proved a captive of his ideology with his prediction of entropy, mass starvation as a growing population faced a static food supply. Mr. Malthus was writing in the early stages of global capitalism’s expanding reach. The agricultural technologies tied to capitalist production expanded the food supply to feed the growing population. In fact, capitalism re-engineered ‘the world’ to be dependent on capitalist production. Technological solutions to global warming will no doubt be put forward and tried. But technology is inexorably tied to the logic of capitalist production as capitalism is emerging as ‘the problem.’ Only a fundamental shift away from the premises of capitalism will provide workable solutions. And global warming is a gradual problem in a political system that responds to crisis. A politics of crisis around global warming must arise for effective political action to coalesce.

Rob Urie is an artist and political economist in New York.