The government recently had published a report, arguing that US temperatures have increased due to human-induced activities, specifically thanks to the growth in greenhouse gases like carbon dioxide and methane. Global temperatures could very well exceed 10 degrees fahrenheit by the end of the twenty-first century. Water is growing scarcer in dry regions, torrential rains are increasing in wet regions, heat waves are becoming more common and more severe, wildfires are growing worse, forests are dying due to a growth in insects. Summers have become longer and hotter. Winters are becoming shorter and warmer (regardless of this past extremely cold winter season). Rain comes in heavier downpours. In Alaska, glaciers and frozen ground are melting, storms are reducing the fragile coastlines, communities have to flee inland. Sea levels could rise by three feet globally if emissions continue at the current rapid pace. This could threaten the continuing existence of coastal cities (Gillis 2014; NCA 2014). Droughts can become more severe, which would reduce food security and precipitate future military conflicts. The political imperative is obvious for most climate scientists: we have to dramatically curb greenhouse gas emissions, or otherwise the current trend toward rising temperatures will continue. Humanity itself may be at risk.
There are different possible responses that we might hear on this subject. One is denial, and the other are fancy methods for adjusting some policies and practices using newer technology. I find both responses to be displeasing. The climate change deniers are obviously living on a different planet, at least intellectually. There are still media programs like Fox News, or some right-wing oil billionaires and the political think tanks that they support, that deny global warming. Republican strategist Frank Luntz said, “Voters believe that there is no consensus about global warming within the scientific community. Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate.”But the 97% of climate scientists have by now established through decades of empirical observation that anthropogenic global warming is real, and that we should be very worried about it. Only 63% of the American public thought that climate change is real (Geiling 2014).
The second type of response is that climate change may be real, but we can address it via innovative technology. All we have to do, so the account goes, is to shift from greenhouse gas production and consumption to non-greenhouse gas alternatives. Nuclear engineers are particularly enthusiastic about promoting nuclear technology for energy production, because it does not emit any CO2. (I am very skeptical about the nuclear option, because there has been no safe storage solution, and the two disasters, Fukushima and Tchernobyl, have thoroughly discredited nuclear reactors as a safe way of energy generation.) Solar and wind technology supporters think that we have to install more solar plants and wind turbines. (I myself belong to this category.) Then there is geothermal energy. Yes, these are all interesting suggestions, but they can only scratch the surface.
There are several interlocking trends that have been described by people like Michael Mann (2012), Immanuel Wallerstein (1997), Garrett Hardin (1968), and Saral Sarkar (1999). It is the confluence of capitalism, consumerism and population growth. And without dealing with these essential elements, we won’t be able to reverse the trend of rising emission, rising sea levels and rising temperatures. The essential factor that ties these three phenomena- capitalism, consumerism and population growth- together are their inherent tendency for growth in the context of a finite, and greenhouse gas rich planet. More growth in human activities means more pollution and more greenhouse gas emissions, which means quicker global warming. We can discuss all we want about implementing some great new technology, but without addressing how to curb these three factors, we will simply be doomed. One could even argue that technology is going to make the matter worse by encouraging us to simply consume more. If our lives become more convenient with more goods, we might as well just consume more.
So let us take capitalism. Capitalism is our current economic system, in which the goal is to continuously increase capital through growth in production, consumption, trade and finance. Look at any newspaper, and you can see how every major decision by governments are made based on the state of the economy. Politicians really have to ensure a framework of continuous economic growth in order to stay elected, because that is what gives businesses the incentive to make investments that create jobs. It is only if the community has enough jobs that there can be social tranquility. (We seem to be forgetting this lesson in the developed countries, as a larger unemployed and underemployed workforce is currently tolerated, which will equally make the ups and downs of the business cycle much worse than they otherwise would be.) While capitalism has been able to deliver a rising standard of living for more people, it has also led to the massive increase in income and wealth inequality, which in itself leads to rising social tensions (the poor feel deprived and neglected, see Occupy Wall Street and Arab Spring). But even if we accept the rising-tide-lift-all-boat argument (not true in the US since the 1970s), our rising standard of living is essentially based on the degradation of our environment, as can be seen from the rising temperatures and sea levels. Any perceived improvements in our standard of living needs to be counter-balanced by the long-term negative costs that we have by now imposed on younger and future generations, who will live in a less habitable planet.
In a real sense, I consider the environmental crisis to be capitalism’s “final externality”, to borrow from economists. An externality is the creation of costs not borne by the cost-creators, but by other people, who have not created the costs. We humans living in a capitalist system are creating the huge environmental costs that have to be borne by the next generation. I consider the environment to be the final externality, because the other form of capitalism’s externality, namely the social problems (poverty, inequality), have existed for much longer than capitalism itself, and show no clear signs of resolution. Poverty, inequality, social stratification can well exist forever, and to this extent I would disagree with more ardent Marxists, who argue that all that needs to happen to declare paradise on earth is for a self-conscious proletariat to take over the factories, offices and governments. As horrible as social problems may be, and as hard as we struggle to fight against them, the continuing existence of these problems alone will not lead to the downfall of capitalism. It can, therefore, not be considered a final externality.
It is different with the environment. Here the collective failure of humanity to stem the tide of global warming has the real potential to threaten all of our lives. How do you reverse CO2 emissions? The returns on capital will also need to decrease, even though, as sociologists know, capital is a social creation, and there can be many ways in which capital growth can be restored, such as by making workers work harder etc. We have seen such a destruction of capital with the drought waves of the summer that destroy a portion of our agricultural crops, which raises food prices, leading to potential food riots (especially in the poor countries), and at the very least to rising food prices, which reduces the earnings of other capitalist producers. (Reducing food prices can be really important to capitalists. A nice historical example are the British manufacturers of the 1800s, who had pushed for the repeal of the corn laws, which extracted huge rent payments from manufacturers to landowners, because the manufacturers had to pay higher wages to their workers to afford the expensive domestic food. With the end of the corn laws in 1846, the import of foreign food was permitted, and the manufacturers could cut wages and reap more profits without risking their workers’ starvation thanks to shrinking food prices.)
Business reports have repeatedly blamed the harsh winter for the sluggish US GDP growth figures. The cold winter and the many snow storms generally reduce commerce. People prefer to stay at home rather than go to the shopping mall. Consumption for heating gas increases, but consumption for all other consumer items concomitantly decrease. (Admittedly, the cold winter is a bad example, because it is the opposite of global warming, but the larger point was that changes in the environment can have adverse consequences on commerce.) I consider the environment to be capitalism’s “final externality”, because if it can bring down humanity, it can bring down the socio-economic system, which we have so proudly erected. In order for capitalism to thrive, it requires not only humans that are still alive, but a functioning eco-system, where resources can continue to be extracted from. This will be put into question with global warming.
But capitalism itself is a social arrangement that builds on the other two pillars, principally consumerism and population growth. The premise of capitalism is that there are consumers, who can buy the goods and services that are offered in the market. It is true that with financialization over the last few years much more emphasis has been placed on the buying and selling of fictitious commodities, but all of those investments in financial assets ultimately need to find consumers, who need to buy a specific commodity. The huge economic and financial crisis of 2008, which built on the built-up of mortgage debt issued partly to low-income homebuyers, illustrates quite clearly that no investor can divorce himself from the developments in the real economy, i.e. from the ability and willingness of consumers to consume. For capitalism to function there needs to be continuous consumerism, even if that does not elevate national levels of happiness (as Richard Layard (2006) points out). The whole point of developing the advertising industry in the early twentieth century was that with rising labor productivity and rising incomes, it was not good enough for working class people to set aside more disposable income and enjoy more leisure, but to plug any extra earnings back into the economy via large-scale purchases of consumer items, which sure enough were developed (the radio, the wash machine, the refrigerator, the smartphone etc.). As Randall Collins (2013) pointed out, consumerism may be threatened with increasing automation and technological displacement of middle class workers. But the overarching point sticks that the consumers need to be willing to spend more income on goods that may not objectively or subjectively make them better off, but that they are told that they should consume. Technically, human needs in an elementary sense (food, clothing, shelter, sex, health) may be limited, but human wants (entertainment, education, cars, mansions etc.) are unlimited. Whatever is defined as a current want can be redefined as tomorrow’s need. And if consumer sovereignty holds, as Michael Mann (2012) pointed out, then we are in for some very hot times.
But convincing individuals to consume more commodities (if they have sufficient resources to afford them, which begs the wealth distribution question again) might not be sufficient over the long term. The most dynamic markets are the so-called emerging markets. It is not surprising why they should be called emerging markets: these are countries that are not as rich as the developed countries, and they came out of abject poverty only a few decades ago. It is not surprising that as their incomes are going up, so does their consumption, and so does the willingness of foreign and domestic investors to sink their money into these dynamic markets. But the bottom line is that there seems to be much fewer sources for dynamism in the advanced industrial countries, and that may have something to do with the aging of the population, austerity policies, growing inequality or declining marginal utility of consumption (the more one consumes, the less one benefits from it, so one will not consume much more), to borrow from the economists. I don’t have the time and space to analyze each of these points, but it will be sufficient to state that it will not be enough to maintain healthy capital growth by convincing people to simply consume more commodities.
The third variable, which has developed in tandem with capitalism and consumerism, is population growth, which I had treated in an earlier post (Liu 2013). Without a growth in the total population capitalism can not flourish. The world population has increased from about 1 billion in the early 1800s to over 7 billion today, which is really unprecedented in human history. Our innovations ranging from improved food production to medicine have created the avenues for a growing world population, which has been celebrated as a tremendous human victory. The Malthusian fear about a lack of food production leading to large-scale starvation has never come true. The lack of consumers and workers has so far also not bothered our capitalist economy, because steady growth in population also implies steady growth of consumers and workers.
I am personally very worried about the implications of long-term population trends, and fear that Malthusian trends may very much come true if my theory is correct that the environmental crisis is capitalism’s and humanity’s “final externality” (i.e. will threaten our existence). Thankfully, there is a leveling off in population growth in the horizon, because many developed countries have reproduced much less than the replacement rate of 2.1 children per woman. Japan has a current birth rate of 1.39, and coupled with a low rate of immigration this implies a shrinking population. The natural experiment with the potential clash with capitalism is already in the making here. GDP growth rates are very sluggish in Japan, and deflationary fears scare away many investors, which very much threatens the Japanese model of social harmony, because unemployment and precarious jobs are resultingly and inevitably increasing there. (I will ignore the effects of Abenomics for now, because I think that Shinzo Abe’s policies only scratch the surface, and does nothing to change underlying population trends.)
The Western countries, like in Europe, try to avert the demographic-economic challenge (i.e. no population growth= no economic growth) by importing more foreign workers and immigrants, but that is producing cultural confrontations in the form of nativism and racism against foreigners. The US is somewhat more fortunate in that its women reproduce at replacement rate, and immigration is substantial even as millions of applicants are rebuffed every year. Despite diminished social mobility in this country, for the poor and downtrodden in the world, the US is still the land of opportunity. The less developed countries are dramatically reducing their fertility rate, which is related to modernization, urbanization, the rising cost of raising children (education, child care etc.), and rising female labor participation, so one may presume that the quantity of consumers will rise slower in the future, which could doom capitalism, but might benefit the environment through lower levels of output growth. But I am very skeptical that demographics will be the key variable to save our planet, because it takes a few generations, i.e. centuries, to stabilize and reduce the population, while the more severe weather is a contemporarily exacerbating phenomenon.
But suppose that every country were like the US (which is logically impossible, of course- fallacy of composition: not every country in the world can be a magnet for immigrants, because then there would be no emigrants). We could maintain population growth, and give enough confidence to investors that the economy is going to continue to grow as a result of it (which I think is a key explanatory variable for average-higher economic performance in the US than in Europe and Japan, where productivity per hour worked is very comparable with the US). We could save capitalism, but we would have to doom the environment. Temperature increases will be larger and in a shorter time scale, which is already a tragedy, as we can see with many climate refugees from dry regions in East Africa, who are fleeing to Europe and other destinations. The huge world population will also make the disaster of environmental deaths (hurricane, floods, droughts and other natural disasters) more palpable. Since there are more of us, more of us will die in the case of natural disaster.
Capitalism, consumerism and population growth are the three structural trends that will make tackling the environmental crisis a basically intractable problem. What is even more concerning is that none of the policy makers, business leaders, and journalists and only very few academics want to talk about these intractable structural trends. Yet, the impending environmental crisis has encouraged some academics to point out some possible solutions. Sarkar advocates ‘eco-socialism’, or the combination of a fair distributional economic system and environmental preservation through abandoning the pursuit of economic growth. Defining these lofty goals are very nice, but there are currently no clear strategies on how to achieve them. There is a complete disagreement among different actors about the ends of society, and envisioning solutions to a social-structural crisis, as I explained them, are particularly difficult, because without the consent of sufficient powerful actors, you can not affect major changes in policy. (The actors themselves, of course, can change.) The only thing that makes me optimistic about the future is the fact that if humans really feel threatened, we will pull together and do something to fix it. (‘Feeling threatened’ and ‘being threatened’ are, of course, two different things, because we are threatened by climate change without seemingly sufficient level of alert, because climate change is such a gradual and global process, for which everyone collectively but no one specifically feels responsible.) Nothing would resolve the West-East standoff on the Ukraine more quickly than a foreign invasion from Marsians.