Climate change is one of the most daunting, complex and consequential problems of our generation; it threatens every community, ecosystem, and corner of the world. Ever since the industrial revolution, we have been going down the path towards the unnatural. Our factories, cars, and new technologies all contribute to the exponential increase of greenhouse gas emissions that coincides with modern development. This phenomenon is clearly laid out on the infamous Hockey Stick Graph, created by Mann, Bradley & Hughes. The graph maps out the mean global temperature for the past 1000 years to demonstrate global warming and the “discernable human influence on climate” (Mann, xix).
The evidence for climate change is everywhere. “As of 2013, 905 animals have become extinct to the knowledge of researchers. This number stood at 784 in 2006. Animals (are) going extinct 100 to 1,000 times (possibly even 1,000 to 10,000 times) faster than at the normal background extinction rate, which is about 10 to 25 species per year”(Endangered Species). At this rate, during our children and grandchildren’s lifetimes, nearly half of all species will go extinct (Global Warming: What You Need to Know). The effects of greenhouse gases that we currently experiencing are based off of the emissions from 50 years ago. If the effects from those times are this bad, imagine what the future would look like when the earth begins to show the effects from the greenhouse gasses we are emitting now 50 years down the line.
We have a limited amount of time to make a difference to combat these challenges. But instead of making strides to alleviate this widespread problem, the United States continues to host organized skepticism about whether or not climate change is happening, and if it is happening, if humans cause it. This skepticism is costing us valuable time.The American government is failing to enact overarching policy programs to combat global warming and greenhouse gas emissions. America is the biggest contributor to climate change worldwide so this failure could be devastating not just us but the entire globe. The main problem lies within how the environment is treated within the American capitalist system. In this paper, I plan to look at the clash between our markets and the environment to show that the classical liberal argument is very flawed.
Classical liberalism is a political ideology that is rooted in total individual freedom. This means that it supports the free market and condemns government intervention. It supports total unregulated capitalism in which capitalism has four main components. The classical liberal definition of capitalism is that it has production for sale, sale for profit, production is privately owned and it is carried out by wage labor. This means that there are two markets, a market for goods where producers compete and a market for labor where laborers compete. The fundamental root of this argument lies in a belief that human nature is competitive individualism. Meaning the inbuilt, unchanging characteristics of human nature is that humans are selfish.
There are two arguments for classical liberalism: normative and pragmatic. The normative moral argument is what features classical liberal capitalism as good or desirable. Classical liberals believe that, morally, markets promote liberty and liberty is the paramount values, therefore the markets maximally promote our values. The pragmatic argument is more about the feasibility of this type of free market economy. Their understanding of the efficiency of this system is that the invisible hand works to coordinate supply and demand in order to reach the perfect and most efficient equilibrium, though later on we will realize that this is entirely untrue (Chibber, 9/18/14).
The classical liberal argument has holes. The most blaring piece of evidence is the trend across the rest of the world to move towards massive government intervention. In contrast to all other advanced counties, the US has had the freest market in the past 200 years. On average in other advanced countries, somewhere between 33 and 35% of the work force is employed by the public sector. This means so many jobs, programs and benefits for the citizens. In the United States the number is a little closer to 15% (Chibber, 9/4/14). We have the smallest public sector, lightest taxation, greatest inequality and provide the least amount of benefits to our citizens. Many other advanced countries balance providing citizen needs with having a free market economy. Why does the US have the strictest adherence to this free market rule as opposed to other advanced countries? The gist of the answer is that our wealthy have an obsession with growth, specifically maximizing their disposable income.
When it comes to the environment not having a prioritization of civilian needs is very detrimental to America because a free unregulated economy will quickly consume all of our natural resources and pollute the earth without being regulated. In a company there are always consequences based on decision. The decisions they make will determine the price of the good they are selling. And thus, we say that in a capitalist society prices give us information. But this information is not always accurate because the company will continuously be trying to cut costs in order to increase profits. Sometimes when companies make decisions they don’t have to cover the full cost of these decisions. This case is called a negative externality. Because it increases profits, there is an incentive for producers to seek out negative externalities (Chibber 9/23/14). Capitalists have a tendency to destroy the environment for individual gain. For example, if a manufacturer has a waste product that they decide to dump into a nearby river instead of paying for it to be properly disposed of that cuts cost. But the manufacturer will not necessarily be required to pay to clean up the river. The river then flows into the ocean and the pollution meets up with all the other pollution from the other manufacturers who made the same decision. We cannot blame the company here because there is no rule saying they cannot do that, and why would they take on an additional cost just because. The company’s main priority will always be profits and growth therefore it would be irrational for them to evade negative externalities.
Often, powerful actors even impose choices on consumers. In the 1930’s, many American cities had trains. But by the 1950’s they had largely disappeared (Snell). Now the American train system exists mains on the eastern seaboard, but even that train system does not hold a candle to those in other parts of the world. What happened is that the three biggest auto companies used their leverage to buy all of the railroad companies and eliminated that choice. After that, consumers could only choose between cars and busses. Because of power asymmetries they also have it in their interest to impose choices. Again, in a free market there are no rules against this and consequently it would be irrational for powerful actors who can afford to do this not to do so. More mass transportation is inherently better for the environment than individual cars because less carbon is emitted (among other reasons). We see again here, the environment loses out.
What the classical liberals would argue is that when the environmental problems got bad enough the market would provide a solution. By that they probably mean something along the lines of a cool new geoengineering technique that relies on technology and corporations. This would open a whole new market. Examples of these techniques might include something like putting something in the sky to release greenhouses gasses more quickly, increased storage of carbon in biomass, or using algae biofuels to fuel the planet. There are a number of problems with this solution though. First, there is no guarantee that such a solution exists or what the ramifications of such solution would be. Second, creating a market around this could be potentially cataclysmic. And finally, it is much easier to just change what we are doing now instead of cleaning it up later.
Our society places a huge emphasis on growth. But, it is not enough just to grow, the rate matters. As a society, we are constantly racing to grow faster. The priority of economic growth was among the most important ideas of the twentieth century. Unfortunately, economic gains and environmental losses go hand in hand. As Gustave Speth tells us in his book The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability, “The economy consumes natural resources, (both renewable and nonrenewable resources), occupies the land, and releases pollutants” (Speth, 49). Hence, we can assume that the growth of the economy corresponds with the growth of the amount of pollutants in our atmosphere.
For example, in a report cited by Speth, we see that from 1890 to 1990 the world economy grew by 14 fold. Great news, right? But what was happening to the environment in the background? Energy use grew by 14 fold, carbon dioxide emissions went up by 17 fold, and the number of marine fish caught went up by 35 fold. The same trends hold true today, in spite of widespread environmental programs enacted globally, from 1980 to 2005 gross world product has increased by 46 percent. The use of paper and paper products increased by 46 percent, energy use increased by 23 percent, and carbon dioxide emissions grew by 16 percent (Speth, 50). It is very significant that the rate of increase of these factors is less than that of the world economy. Speth says that this is accounted for “by “dematerialization,” the increased productivity of resource inputs, and the reduction of wastes discharged per unit of output.” Despite dematerialization, the fact remains that things are still getting worse, just a little more slowly.
This market failure has two facets. First, in a market prices provide information. There is no cost for many valuable resources such as clean air or water or a cost of emitting harmful greenhouses gasses like carbon. Therefore, the market exploits these resources with ease. But how could we expect the invisible hand to create prices to allocate these resources properly? What corporation would impose a price on clean air? Here we find an example of where the classical liberal argument is crumbling. Government intervention would be necessary to properly price Mother Natures gifts. The environment and the beloved American free market remain in collision. And it is clear that today’s growth is unsustainable in the future.
To begin to fathom a solution to this problem, we must first understand the structural limitations we have as a society that has inhibited them from being changed thus far. Speth articulates seven main limits in his book. The first is that modern environmentalists believe that climate change can be solved within our existing system. Second, it aims primarily at small problems because the movement takes what it can get and would prefer small victories to large defeats. Third, the movement wants to be a positive economic force and not impose too much of a change on people. Fourth, the solutions are coming from the environmentalism sector but they do not know about corruption, flaws, or inner workings of our political system. The movement is not focused on a strong political or grassroots movement. And finally, it entrusts major action to expert bureaucracies that have seemingly good intentions but in reality get very little done.
Climate change could represent a historic opportunity for the world, but especially Americans. It is not just another issue but a civilizational wake up call. If we start by thinking about the history of capitalism in contrast to the history of the world we realize that there have been maybe 500 years of capitalism and say 4,500 years of not-capitalism (Chibber 9/4/14). Before 500 years ago, we focused on breaking even instead of focusing on profits, growth and disposable income. Shifting back towards something like that would mean investing heavily in our public sector. It is not unrealistic because other advanced countries are doing it. In the past few years Germany has made over 25% of its electricity renewable because the people have voted to de-privatize parts of it (Klein). In the Netherlands they tax very highly (up to 52% on income) and have a massive public sector and with that they have universal health insurance, low inequality rates, free high-quality schooling, incredible social security, programs to help rehabilitate the poor, they even gives parents subsidies for having children and countless other benefits for their citizens. The Netherlands incidentally has one of the best laid out plans to combat climate change, which was critical given their geographic vulnerability. The country built the government funded Delta plan; which consisted of a network of dikes, man-made islands and a river levee that was designed to prevent a storm so strong that it would only occur once in 10,000 years. It is astounding that they can do that and we cannot even pass legislature to impose a carbon tax (Speth).
Classical liberals will continue to argue for freer markets, less restrictions, less taxes, more profits and more disposable income. But this thirst for rapid expansion is digging our country into a hole that is catastrophic for us and for the rest of the world. The effects of climate change we have faced so far are showing that the environment is starting to react after we have spent decades poisoning it. What use are pockets full of money if we have no planet to live on? Instead of separating the environmentalists off into their own sector and expecting them to fix this monumental problem for us, we should all embrace the problem and begin to integrate environmental considerations into every piece of legislature. Just think of where we could be if our capitalists put that same amount of desperate attention they put into finding negative externalities and cutting costs into combatting a problem that is so dire.
WORKS CITED
Chibber, Vivek. Lecture.
Global Warming: What You Need to Know. Dir. Nicolas Brown. Perf. Tom Brokaw, James Hansen, Michael Oppenheimer, Stephen Pacala. Discovery, 2006.
Klein, Naomi. This Changes Everything: Capitalism vs. the Climate. Simon & Schuster. New York. Print.
Mann, Michael E. The Hockey Stick and the Climate Wars: Dispatches from the Front Lines. New York: Columbia UP, 2012. Print.
Snell, Bradford C. “American Ground Transport”, A Proposal for Restructuring the Automobile, Truck, Bus & Rail Industries. Rep. Print. 1974 U.S. Government Report.
Speth, James Gustave. The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability. New Haven: Yale UP, 2008. Print.
