A few years back at a Leftish gathering a group of self-described Marxist economists channeled liberal Democrat Paul Krugman’s explanation of the Great Recession without apparently knowing of Mr. Krugman’s thesis. Basically, a self-perpetuating recession had a grip on the economy, Wall Street was a catalyst of the crisis but ultimately only a bit player, money is economically ‘neutral,’ and government spending could raise demand and end the recession.
This is all standard fare in liberal economics. Within the circular logic of the genre, it circles just fine. What was odd was hearing it from self-described Marxists. Since Wall Street created the money that fueled the housing bubble and bust through predatory lending, how was its role not (1) pivotal and (2) political? If money is ‘neutral,’ why have financial asset prices responded so favorably (for their owners) to asset purchases by global central banks? And finally, where is the class analysis?
In similar fashion, UMASS Amherst economist Robert Pollin argued recently that capitalist economic production is necessary to maintain social wellbeing. The object of his disparagement is the suggestion that a planned reduction in economic growth (‘degrowth’) is the most probable way of resolving climate crisis. For the uninitiated, the contention that challenges to capitalist production will hurt ‘the little people’ has been a rhetorical tactic of capitalist economists for at least a century now.
Graph: Real (inflation-adjusted) Per Capita GDP is more than double today what it was in 1970. In the U.S. in 1970 mass starvation was notably absent. So people could conceivably not only get by if U.S. GDP were halved, but could thrive. The problems with doing so are (1) social complexity has been built into the political economy and (2) unwinding this complexity requires planning and the political will to do so. However, climate crisis poses the threat of unplanned degrowth of similar or greater magnitude. Source: St. Louis Federal Reserve.
Degrowth is an argument that climate crisis is inexorably linked to industrial production (graph below). Therefore, goes the argument, the way to prevent it is to greatly limit industrial production. The pushback to this reasoning tends toward: economic growth is built into the global economic order; ending, or even reversing, it would cause mass economic dislocations; these dislocations would hurt the most vulnerable in proportion to their vulnerability; therefore, reforms to temper the worst excesses of capitalist production are the only realistic path forward.
Of course, what is realistic depends on one’s analysis of the problem(s). If the problem can be resolved through reform then the question becomes: how likely are the necessary reforms? However, this latter question is equally applicable to more potentially radical solutions. So a starting point is to assess the problem, which fortunately at this point is well-trodden territory. Industrial production has caused a web of related environmental problems that are aggregating to the point of being globally disruptive, perhaps catastrophically so, unless remedies are found.
The predominant misdirection in American discourse is that environmental crisis is ‘anthropogenic,’ is caused by ‘man.’ This rhetorical tactic universalizes culpability for outcomes clearly attributable to industrial capitalism. Climate crisis is caused by greenhouse gas emissions that have accumulated since the onset of large-scale industrialization around 1850. Dead and dying oceans are caused by the toxic run-off of industrial farming and industrial methods of fishing (bottom-trawling). Air and groundwater have been catastrophically poisoned such that vast swathes of humanity reduce their lives with each breath of air and drink of water they take.
Graph: CO2 emissions, along with the other toxic excrescences, are a product of industrial production and industrial agriculture, not universal ‘man.’ Modern industrialization began in earnest with the second industrial revolution around 1850 and grew exponentially with the global ‘rebuilding’ that followed WWII. China overtook the U.S. in the 1990s as the predominant emitter of greenhouse gases. But much of the increase came from ‘outsourced’ production from the U.S. and Europe. Source: C2es.
Calls for ‘managed,’ or in the debased parlance of modern commerce-speak, ‘smart’ capitalism, proceed as a method of reasoning in search of a purpose. Economist John Maynard Keynes’ project to temper capitalism, launched to ameliorate the worst effects of the Great Depression, produced social compromise that traded ‘internal’ for ‘external’ imperial reach. How much capitalism was actually tempered depended on which side of the imperial divide one lived on. This same strategy of technocratic parsing is very much at work in discourse on environmental resolution— problems are considered individually when their causes come from a common source. Within the global frame of climate crisis, geographically limited ‘solutions’ won’t work.
In the language of capitalist economics, ‘externalities’ are the intended, unintended consequences of capitalist production like greenhouse gas emissions and depleted oceans. They are intended in the sense that they are knowingly produced and unintended in that they are byproducts in the production of other goods. The sleight-of-hand used to sell capitalism has been to quantify the value of the goods produced while ignoring these byproducts. The capitalist ‘solution’ of putting a price on them assumes an improbable equivalence— how many iPhones equal drinkable water and breathable air, precisely?
Somewhat inconveniently for us humans, corporate profits rise when the costs of capitalist production are borne by others. Simple accounting arithmetic tells the story. Profits equal revenues minus costs; where externalities are a cost. If costs rise because corporations are forced to pay for their externalities, profits fall. If costs don’t rise because corporations can force their externalities onto others, profits are higher. But please note, in either case the externalities constitute costs. The question is: who pays? In a political system where wealth equates to political power (like the U.S.), capitalists are able to pollute with virtual impunity.
As it applies to global commerce, the phrase ‘race to the bottom’ encompasses a wish-list of capitalist cost-shifting. From the ‘external’ imperial reach of the 1950s – 1970s through passage of NAFTA and subsequent so-called ‘free-trade’ agreements, corporate control has superseded the nation-state frame of civil governance. Even after Democrats lost the recent national election U.S. President Barack Obama continued to push the TPP (Trans-Pacific Partnership) that contained language (ISDS) to solidify corporate control over civil governance.
U.S. President Donald Trump’s economic program restates the long-held capitalist contention that externalities represent a pool of potential wealth that can be used to fund more economic production if environmental regulations are rescinded. This ‘capital formation’ view of externalities is a Great Depression era relic that misstates how economic production is funded since Richard Nixon ended the gold standard in 1971. For a variety of reasons there is currently more money sloshing around than is needed (wanted) to fund capital expenditures.
The implicit threat behind Mr. Trump’s (and the national Democrats’) economic frame is of a capital strike— the purposeful withdrawal of economic resources to bring workers and / or citizens to heel. By posing externalities as purposely withdrawn / withheld capital that can be ‘freed’ to put people to work, environmental regulation is recast as an enemy of the working class— as an affectation of limousine liberals who value unimpeded views of their ski chalets over the ability of working people to earn a living. Liberal support for labor-crushing trade agreements hasn’t helped reverse this caricature.
So what, precisely, would ‘smart’ capitalism look like? Mr. Pollin would have it fund teaching jobs and ‘green’ technologies. Without getting Wall Street (the ‘private’ credit system) out of the way first, large scale public expenditures that aren’t welfare for the rich are wishful thinking. And ‘green’ technologies tend to solve problems in one dimension— like reducing greenhouse gas emissions, by increasing them in other dimensions. How toxic are solar panels and hybrid car batteries to manufacture and dispose of? And in a larger sense, wasn’t / isn’t climate crisis an aggregation of the consequences of reductive problem solving (‘scientific’ economic production) in limited dimensions?
Graph: The ‘anthropogenic’ explanation of climate crisis is misdirection in several dimensions. Were universal ‘man’ to blame greenhouse gas emissions would be in rough proportion to population and they aren’t. Second, economic production in its most generic sense is nearly universal. But it is industrial production, a/k/a ‘capitalism,’ that is overwhelmingly responsible the emissions leading to climate crisis. Finally, there is little historical precedent for ‘reforming’ capitalism once the gaming of metrics is accounted for. Source: C2es.
That climate crisis is to a certain extent ‘accidental’ gets to the heart of the problem with reductive logic. One person, or even a very large corporation, emitting greenhouse gases wouldn’t cause a global climate crisis. A large number of corporations emitting greenhouse gases leaves none individually to blame but all collectively culpable— individually rational actions have aggregated to collective calamity. Additionally, through the cumulative impact of greenhouse gas emissions, this culpability is retroactive— it is a function of outcomes that were neither understood nor predicted when they were being caused.
This is to argue that capitalism creates more than a set of technical problems to be solved— it is an approach to the world in need of resolution. As with the residuals of slavery and genocide against indigenous populations, how would this retroactive culpability for climate crisis be resolved without ending the political economy that created it? On the one hand, infinite regress is not an option (‘we’ exist in the present). And on the other, the distribution of capitalism’s good, bad and ugly are inexorably embedded in current social relations. Phrased differently, once the universalizing hoax of ‘anthropocene’ climate crisis is more specifically attributed, how is that this specific attribution not the target?
Setting aside the problems with ‘Capitalism’ for a moment, how plausible and necessary is economic growth without it? Per capita (real) GDP was around $23,000 in 1970 (top graph) and is more than twice that today. (GDP was chosen by Mr. Pollin as a relevant metric). Mass starvation wasn’t prevalent in the U.S. in 1970. And in fact, according to the Census Bureau (graph below), the poverty rate in the U.S. is virtually unchanged since 1970. In short, poverty is a political problem, not an economic one. So why would economic growth be expected to solve it?
Graph: Given the alleged benefits of trickle-down economics, one would have expected that a doubling of (real) per capita GDP between 1970 (top graph) and the present would have reduced the poverty rate below its 1970 level. But this is not the case. This doubling of economic output has left the poverty rate right where it was, suggesting that poverty is a political problem, not one of inadequate resources. And yet Leftish economists argue that GDP growth is the way to alleviate poverty. And the punch line is that somebody, let’s call them the 0.001%, did benefit from these Leftish economic arguments. Source: Census Bureau.
Where Mr. Pollin has an implicit point is with the engineered complexity of modern political economy. Billions of people now buy their food in stores and their housing from home builders. Breakdowns in these complex systems could consign untold masses to starvation and rapid social dissolution. However, a planned reduction in economic production (degrowth) isn’t a breakdown. And as the Great Recession recently demonstrated, unplanned degrowth is a regular, uncontrolled byproduct of capitalism. So are wars over resources and economic predation that forces millions into extreme poverty.
Political irresolution of climate crisis is a function of capitalist social relations and the ‘boiling frog’ problem where environmental degradation is gradually raising the temperature but the water isn’t yet hot enough to force large-scale mobilization to address it. By the time the water (climate) is hot enough, options will be limited and global, unplanned, degrowth will likely result. The .001% that controls global politics through its economic power is apparently planning to relocate to Mars rather than see the light and ‘save’ humanity by stopping what they are doing.
An obvious implication of (real) per capita GDP in the U.S. doubling between 1970 and today (graph above) while the poverty rate remained unchanged is that the benefits of economic growth aren’t going to the poor. And in fact, survey after survey shows that most of the benefits of economic growth in recent decades have gone to a few hundred rich families and their servants in the managerial class. It is therefore specious to argue that economic growth benefits the poor.
The rich see the economics of climate crisis working in their favor or they would resolve it. And the (operational) logic of capitalism is socially inadequate to the point of being genocidal. Because the rich control the political system through their wealth, in what way could effective reforms be accomplished short of wresting control from them? A quick bet is that most people concerned about climate crisis (and related ills) want the simplest path to resolution. But that path also has to be probable. False prudence in the service of the status quo is unlikely to resolve the climate crisis.