Capitalism and sustainability. Both are vague, slippery words that evade simple definitions. They conjure up a soup of jargon and ideological catchphrases, shoehorned into political addresses and calls for action. Free market, divestment, ecological preservation, free trade, stock exchange, assets, resources, ethical consumerism, conscious consumerism, free consumerism, resource-based economy, competition. Capitalism? Sustainability?
The two have been discussed, debated, argued and waged philosophical wars for decades. The extended version of what these things are, why they exist, and every arena they affect, could commission a medium-sized library of reading materials and an encyclopedic book deal. So instead of giving you a rendition of constitutional laws and Greenpeace’s manifesto, we’ll start with the origins of the underlying concepts; the economy and ecology, whose similarity is often overlooked in favour of hemming them into political belief systems. “Eco” is derived from the Greek word “oikos” (meaning “house”), while “nomy” and “logy” descend from “nomos” (meaning “law”) and “logos” (meaning “knowledge”). By today’s definition in context, the economy is the management of the resources of a society, especially to its productivity. Ecology means the set of relationships existing between organisms and their environment. By those definitions, it seems that these two could work together in perfect harmony. I propose ‘economology’; the responsible management of resources to maintain a productive society and healthy environment.
However, as everything’s in the habit of becoming conflated, exasperated and confusing, these two are no exception. The umbrella terms that economy and ecology sit within; Capitalism and Sustainability, their jacked up, opinionated, and political taskmasters. Today, both systems are reaching a critical meeting point. Capitalisms push towards maximum profit is hindering the worlds ability to achieve the sustainable medium that is imperative to secure the world’s future. But with capitalism being the ally to furthering economic growth, is there any way for the economic system to work in conjunction with a future that isn’t threatened by climatic devastation?
As the midwife to economic growth, capitalism is the favoured structure of markets. By putting the factors of production such as trade and industry, capital and labour into the hands of the private sector rather than the state, companies are forced to constantly advance and improve to stay in the market, which in turn develops society. This encourages healthy market competition, vying for the pay packets of working citizens, which puts consumers in the driving seat of where they want markets to move, creating a democratic market that pushes out companies that do not provide useful goods and services. The motive to retain consumer interest, and therefore profits, are underwritten by the vested interests of shareholders, which pushes companies to keep the money rolling in, which in turn raises GDP.
With economic growth, countries and societies enter into a virtuous cycle of upward mobility, opportunity and improved living standards. Although capitalism has become ideologically synonymous with right-wing politics, it’s been proven that less government expenditure, particularly within markets, correlates to higher GPD. Even without employing it as a political framework, most countries, democratic or socialist, operate under some form of capitalism. State capitalism is present in China and Cuba, which maintains independent markets that conform to a high level of governmental regulation, while market capitalism as is found in the USA exists predominantly free from political control.
Since capitalism in its more contemporary form rode in with the Industrial Revolution, it has ushered in significant development in societies through the increased acceptance of free-market policies in both developed and emerging nations. Over the past 25 years, the average country that adopted and developed capitalist markets has gained the average citizen a 43% rise in income, nearly half a decade longer in life expectancy, and 2 more years in education. Before the revolution of technology and trade in the 1800s, 80% of the global population lived in poverty. By 1980, just over a third, and by the turn of the millennium, less than 20% of the world’s citizens live on less than 1 US Dollar a day.
But as the world has changed over that time, so has capitalism. The economics of capitalism, ‘produce to create profit’, has become a hyperbolic motto of ‘profit at all costs’. Financial wealth has overwritten economic growth and has evolved into a market that prioritises the bottom line over ethics, stock prices over wellbeing, and monopoly over fair competition. The drive for infinite growth from finite resources has breached several ecological boundaries concerning climate change, biodiversity loss and nutrient enrichment. The procurement of wealth by the few has increased inequality, fueling social tensions. But we cannot expect markets founded on the manifesto of profit at all costs to respect the Earth’s and humanities limits as it’s what neither capitalism or markets as we know them are designed to achieve.
Capitalism manufactures wealth by making people want to buy more. Ushered in by the drive for more money, consumerism is capitalisms wingman. To keep profits flowing, markets create pull-factors to keep customers coming back for more. Advertising manipulates the pull be creating new technologies and bringing trends full circle as in fashion (those flared jeans will come back soon enough). By making things fashionable, and therefore previous trends unfashionable, goods are put out of service before they become unusable. Lulling consumers into buying more than they need produces the very throwaway society that is misappropriating all available land and marine space into dumping grounds.
But the brilliant ideology of capitalism means that consumers can choose where they spend their money; brands that act in ways people don’t endorse don’t get money through the tills. The prime example of this is the popular nineties jewellers, Ratners, whose CEO publicly announced that their silver earrings were worth less than an M&S prawn sandwich, which probably lasted longer. The customers revolted and took their salaries elsewhere, promptly dropping the company’s value by £500 million and forcing it to rebrand into the Signet Group. Gerald Ratners’ interesting decision to vocalise unethical behaviour was misguided, and now savvy CEOs have cottoned onto this burgeoning trend of green awareness and pushed ‘green values’ into many of their products. VW came out with their new, Clean TDI diesel, marketed as being more efficient than normal diesel while emitting 40% fewer nitrogen oxides. It wasn’t until six years after the first cars were put on the market that it was discovered they’d rigged them to cut emissions when they were in the test centre, and back out on the road they released enough emissions to make 4×4 manufactures blush.
VWs desperate attempt to cut corners while professing the opposite in order to secure new consumer demographics is exemplary of the lengths corporations are willing to go to for more profit. And more often than not, it’s the environment and livelihoods that pay the cost that companies cut. Companies move manufacturing out of local areas and into far-flung places with low regulations and lower wages, making people at home redundant and exploiting the citizens of other nations. Resources are being mined in extortionate amounts that cannot be replenished, often from areas that are controlled by gangs and enslave children to hard labour. Habitats of animals and people are being destroyed to make way for mass agricultural arenas. And carbon is being expelled into the air in quantities that are unmanageable, further endangering all the organisms on the planet that are being made victims in the pursuit of uninhibited profit.
Corporations endorse the exploitation of natural resources, known as ‘natural capital’ as something to be enlisted as a means to profit. Much like financial capital, if too much is spent, the debt incurred will result in bankruptcy. If the stocks of natural capital are drained without allowing it to recover, the penalties incurred will result in global ecosystem collapse. And the companies know it and have even coined a term for it, ratified as ‘negative externalities’. More jargon that desensitises them from the real meaning; public costs that come from the pursuit of private profit. Whole teams are dedicated to analysing the risk, and yet the pursuit of profit at all costs encourages the continuation of business as usual.
There is nothing saying capitalism is dependent on exponential growth that has underlined the systemic exploitation of environments. However, the economic system has been designed to; levied on banks that are subject to interest, which requires exponential growth, to which shareholders are dependent on. These are the people putting pressure on companies to keep turning over profits to raise their share price. This is why the CEO turn over in most major companies is extraordinarily quick. Most head honchos only hold the position on a quarterly, or in some lucky cases, yearly, because they are desperately trying to prove that they can stay afloat for their shareholders. Shareholders thrive on risk, but flaunting environmental risk has too much on the line, and could impede not just the health of the world, but create conditions that negatively affect markets. Rising temperatures that threaten agricultural resource, to global disasters from extreme weather that forebodes to take with them manufacturing plants or entire consumer markets.
The evolving timeline allows companies to continue with business as usual. The looming devastation of climate change is continually moving. In 1990 there was apparently 500 days to save the planet. In 2007 there were ten, and just five years to plant all the trees that are required to remove the excess carbon. In 2012 it was 5 minute to midnight. In 2015 we were down to just months to save the world. This shifting deadline creates a disconnect between people and the planet and makes way for sceptics and deniers to use it as a reason to put off making environmental changes. Financiers and large companies instead rationale the shifting timeline as a reason for idleness.
Regulation is called upon to control this flagrant bastardisation of the economy. Market capitalism testifies that the system is self-regulating, but this has allowed it to unfold into market fundamentalism; faith that unregulated markets will somehow always produce the best possible results. First embraced in America by the right-wing in the seventies to help paper over divisions between its different constituencies, and to legitimise self-serving behaviour. Businesses employ it to oppose taxes, regulations, and other government measures that constrain their activities. But this corrupted style of capitalism, when it reaches its purest form, starts to pull apart at the seams. The profit-at-all-costs manifesto creates a survival of the fittest market, meaning that the strongest companies consume the weak, which at its endpoint results in a monopoly; foregoing the competition which is required for honest capitalism. The deregulation of markets reaches a point when it turns in on itself, when these market monopolies hold so much of public services, such as housing, prisons, schools, and transport, that they receive government handouts. And yet, social and religious conservatives swear by capitalisms absolutism and emphasis on individual autonomy.
Governments themselves are proving to be increasingly hesitant when it comes to regulating free markets. Despite the horrific failures that pure capitalism has created, from the Great Depression in the 1930s to the Great Recession in 2008, politics on both sides of the centre support free trade as the best thing for the economy. And it makes sense; when you close your eyes and ears to the means in which the economy is being boosted, it becomes a lucrative way to ensure GDP growth. That, in conjunction with financial pressure, though I’m sure there’s another word for it, from big business that pumps a lot of money into political campaigns and governments, encourages governments to ignore bills set up to mitigate against climate devastation.
Nowhere in the world believes in the power business does for countries than the USA and their chief executive officer Donald Trump. In his acceptance speech, the president spoke to the people in his unique brand of communication; “I have spent my entire life in business looking at the untapped potential in projects and in people all over the world. That is now what I want to do for our country. Tremendous potential. I’ve got to know our country so well. It’s gonna be a beautiful thing.”
Trump’s business history is another topic of study in itself, but his first few business deals as the president say enough to his belief in the self-regulating market, even within public services. In his first ten days on the job, the new president signed an executive order to “minimise the economic burden” of the Affordable Care Act, allowing government agencies not to enforce regulations that impose a financial burden on a state, company or individual. The Federal Housing Authority announced the reversal of planned cuts to interest premiums on mortgages, making it harder for the working class to afford mortgages. And the privately owned Keystone pipeline that delivers oil from Canada to the US, which became symbolic of the battle between climate change and fossil fuels, was permitted to go ahead, four days after his swearing-in ceremony. To make it harder to pass environmental regulation, his barrow boys in the Senate all have financial ties to private sectors. In the front-running, Secretary of State Rex Tillerson is the former CEO of ExxonMobil, the oil company that knew about the looming climate change in the 1970s, decades before it became public knowledge, to push their private pursuits. By 2017, there were 5 Goldman Sachs executives in senior roles of Trumps administration. Not to mention his running mate Mike Pence, who as former Governor of Indiana, used the disaster of Hurricane Katrina to push his own agenda of extreme privatisation by reallocating funding from social security and medical care as disaster relief funds.
It’s not just the leading bodies in the United States who systematically create conditions for companies to act unethically. When it came to light that biodiesel from waste vegetable oil from restaurants can be used to fuel cars without a complex refitting, people saw it as an environmental solution to the high carbon emissions that petrol and diesel creates. Yet, the UK government proceeded to prosecute drivers with it in their tanks. After which, the taxation was risen to the same amount as diesel, removing any incentive people had to choose an environmentally friendly fuel over a high carbon emitting one. Australia has banned the use of biodiesel without a license with a $20’000 fine or a jail sentence.
Today it’s unprotected environments and debtors like institutions and governments too big to fail, who offer “sure financial bets” to investors and the promise of guaranteed multiplying financial returns. But environments are being exhausted, and the debtors are taking on debt faster than the growth of their earnings, even while cutting essential services. Beyond a restoration of limitless environments to restore endless growth, it’s a downward spiral. If in pursuit of vested interests the entire system upon which they depend is crippled, the debts will not just be undertaken by society, but their own markets.
Sustainable capitalism could exist in a wealth of different ways, but I believe that more regulation of the public commons is essential to move the economy in the right direction, financially and ecologically. Some say that more capitalism is needed, through private ownership of public commons that would impede companies from damaging others through the threat of lawsuits. But as we’ve proven, capitalism at it’s purest form eventually requires government bailouts in the end.
Governments need to wake up to the impact that climate change will have on their countries, people and yes, their GPD. The Stern Review of 2005 predicts that without action, the cost of climate change will be equivalent to a deficit of between 5% and 20% of global GDP every year. Whereas the cost of preventative measures will equate to just 1% of economic costs per year. But like capitalist markets, countries are under rigid competition for the top spot of highest GDP; for one state to impose strict regulation against companies that employ harmful practices, their GDP will be impacted when markets in countries who don’t do not suffer the same fate. This will skew the GDP scales negatively for nations that act ethically. The action must be taken internationally and unilaterally. Carbon should be taxed to impede profit to drive companies towards carbon-neutral energy usage. Exporting labour should come at a cost so high that it’s cheaper for companies to manufacture on their own soil. There should be penalties so high for companies that commit deforestation that it’s more cost-effective for them to log sustainably responsible forests.
A sustainable future does not have to be a choice between growth and mitigating climate change. The emerging fields of infrastructure from a sustainable future will replace businesses of the unsustainable past with new markets in low-carbon technologies and environmentally neutral trade. They will create new stocks and shares, worth $5 trillion in Asia alone, and global employment will rise by up to $380 million by 2030. As the effects of climate change grow, a new economy can develop alongside, with a genuinely exponential profit opportunity, in a way that does not cap the aspirations for growth of developed or emerging countries.
The consequences of climate change cannot be predicted with absolute certainty, but the risks can no longer be averted. Strong action to reduce emissions comes as a need for investment to secure societal, ecological and economic safety in the future. If we act within the short timeframe we have to avoid the most severe consequences, there will be far more growth to be had in the future. This requires a total overhaul of a system that sees investment as a tiresome waste of money that only negatively affects their bottom line in the present. As governments and people in business continue to inflate the bubble, and as pollution, instability and inequality issues rise, capitalism could become a victim of its own success. While the proposed route of economology could lead the way to an economically and ecologically secure future, the status quo warring between their usurpers capitalism and sustainability may simply not be an option in the future.