How do we stop climate change?
Is climate change a problem that can be solved by capitalist means?
In this essay, I am going to argue that climate change is not a problem that can become solved by capitalist means. By ‘capitalist means,’ I mean the methods and operations adopted from the profit-seeking market where the means of production and distribution are privately or corporately owned. In the first part of the essay, I’ll explain why capitalist countries inevitably encounter the problem of negative environmental consequences such as climate change.
Then, I move to illustrate why those problems could not become solved by capitalist means and market-based solutions such as carbon tax. In making these arguments, I draw upon the work of Christopher Wright and Daniel Nyberg, who argue that market-based solutions only delay climate change for continued economic growth and consumption rather than solving it. The temporary achievements of market-based solutions becomes canceled out as pollution-heavy industries shift to the developing countries where profit-seeking corporations find a lower cost of production.
The trade-off between economic development and environment
Capitalism bases its fundamentals on the renewability and support of nature, and the destruction of nature is the byproduct of industrialization. As economic activities expand, more supplies become needed to meet the growing demand of consumers’. A considerable portion of that supply becomes drawn directly from the exploitation of nature, especially during the early stage of industrialization. Imagine as agricultural productivity rose, natural resources such as forests became cut to obtain construction materials and land for cultivation. Considering the nature of economic behavior is profit-seeking, it’s not hard to deduce that industry would reach its hands to resources as much as possible to keep the cost of production low.
“Forests are particularly vulnerable during the take-off process of industrialization,1” as deforestation may result from overharvesting and land clearing for agriculture. It’s true that things do get better for forests as the economy further develops and shifts its focus to non-agricultural production. However, the consumption of energy and the generation of emissions rises with the level of economic growth. The number of vehicles and the amount of consumption of electricity are directly related to the stage of economic development. The wastes and emissions generated by industrial activities ultimately find their way back to the environment and cause pollution on the essential elements of the ecosystem, such as air, water, and land. “Empirical evidence shows an inevitability of environmental degradation along a country’s development path especially during the take-off process of industrialization2.”
Some may argue that the economic growth itself could be a powerful way for improving environmental quality.
The idea is that capitalism could also be the answer to the environmental problems it caused because capitalism encourages innovation of alternative resources. In the hope of reducing costs and increasing profit, private companies would invest in researches of new technologies for better efficiency in production. Given such advantage of capitalism, structural transformation once again occurs and gradually shift industries from energy-intensive to services and information/technology-intensive. The effectiveness of technology in cutting waste in production is undeniable.
However, it’s dangerous to call that a solution to the environmental problem because it suggests that we should focus more on economic growth and technology investment rather than coming up with particular environmental policies. There Are several reasons why technology innovation isn’t the ultimate solution for the problem even though it does help. Firstly, some environmental damages are just irreversible. Technology and clean energy make contributions to the whole picture at the later stage, but those methods can’t make up to some environmental degradation happened at the early stage of development, such as loss of biological diversity and destruction of unique natural sites.
In addition to technology innovations, certain environment-targeted policies becomes needed here to offset such damage. Secondly, even though new technology can help slow down the acceleration of environmental damage and climate change, it’s not something that happens over-night and saves the world all of a sudden. It could take decades to make ground-breaking progress and successfully apply such technology to the production frontline while such a complicated and enormous economy has been exploiting the environment for ages. Again it’s dangerous to sit and wait for the new technology to arrive without making an additional effort in making environment targeted policies as the technology may not come in time before the country desperately needs it.
Current market-based methods
The method currently favored by many countries is geoengineering, the large-scale intervention designed to tackle the effects of climate change directly. An example of that would be carbon credits. Carbon credits are the permits that allow the company that holds it to emit a certain amount of greenhouse gas. Companies who need to emit greenhouse gas have to buy a corresponding amount of carbon credits before emission.
Moreover, the total amount of carbon credits sold on the market becomes regulated by the government.
It aims to set a limit to the total amount of emission of greenhouse gas and transfer public environmental cost to the private cost of production. Such a method is effective as it forces companies to internalize the negative externalities imposed on the environment that they usually don’t take into consideration. By pricing and commoditizing nature itself, the responsibility to respond to climate change and the specifics of emission reduction is left to private corporations. The carbon credits are also designed to be exchangeable as emission becomes an asset, and the data regarding carbon credits are collected by the government and compared between corporations for the future regulation guide.
Critics of such an approach from Christopher Wright and Daniel Nyberg state that:
“such set-up suggests that the environment can solely be protected through the logic of market exchange4.”
The concern is that the market mechanism of carbon credits is pretty traditional. That the value of the commodity becomes calculated by the price and risk, and the speculations of the future.
The curtness behind this method is worrisome because the environment is not stable, predictable, or linear that can be simplified to commodities.
The attention on the commoditized part of the environment may lead to neglect over the unpriced aspects that could be just as important, and the unpredictability and instability of the natural environment make it difficult to monitor what’s missed.
Moreover, the geoengineering method is actually delaying climate change for continued economic growth and consumption rather than providing a solution. The use of geoengineering provides an excuse for the lack of action to reduce emissions.
Christopher Wright and Daniel Nyberg claim that “the lack of urgency blinds us to the most obvious solutions: keep fossil fuels in the ground, transitioning to renewable low-carbon energy sources and slowing down material consumption6.” It’s obvious that other approaches mentioned above acquire significant advantages that market based methods neglect.
As mentioned above, market-based methods effectively contribute to the slow-down of climate change within the country, though they can’t fundamentally solve the problem. However, there’re still concerns about such effects as it only works its magic in a particular country. No matter whether it’s investments in technology innovations or carrying out carbon credits policies, it increases the cost of production for the companies. There’s an alternative way to dodge the cost – shift environmentally unfriendly business to the developing countries. Not only could the company save money on costs such as carbon credits, but it’s also a natural incentive for profit seeking companies to turn to the developing countries for their cheap resources.
Developing countries tend to have cheaper labor and unexploited natural resources that set them to be an easy target.
While they are particularly vulnerable to environmental damage due to lack of regulations and technologies. Multinational companies may manage to reduce emissions at their home-country but fail to follow the same standard at a distant land. Moreover, climate change, such as global warming affects the planet as a whole. The emission and environmental degradation that happens in developing countries would eventually affect every country, including developed countries, even if they successfully manage to control their emission. The limited achievement of market-based solutions applied in developed countries would be canceled out as the rest of the world was caught in the trouble of balancing development and the environment.
In conclusion, market-based solutions fail to target such inevitability even though some of the methods are temporarily effective. The limited effectiveness of market-based methods leans toward delaying the problem and shifting the problem from one country to another. While strong actions toward the center of the problem are in urgent need.
Written by Jessie Zhou
1. Christopher Wright, Daniel Nyberg “Climate Change, Capitalism, and
Corporations” 2015, Cambridge university press
2. Panayotou T., “Empirical tests and policy analysis of environmental degradation at different stages of economic development,”. 1993, ILO Working Papers 992927783402676, International Labour Organization.
3. Naomi Klein, “This Changes Everything: Capitalism Vs. The Climate” 2015
How do we stop climate change?