The climate crisis cannot be solved without a change to our economic system

Updated: Aug 20, 2020

By Kavi Mehan - Geography student @ St John's College, Cambridge

After a period of modernisation and profligate economic growth, humans have intensified the greenhouse effect, enhanced global warming and are now responsible for natural disasters which cause 90,000 deaths annually. Ester Boserup, a renowned Danish economist, famously argued that ‘necessity is the mother of invention’: in times of ecological crisis, human ingenuity will inevitably find a means to overcome any issues we may face. Indeed, a worrying majority of stakeholders – politicians, economists, academics and scientists – use this logic and believe that the climate crisis can be averted through a collective effort by all of humanity to decarbonise the economy. The European Commission themselves recently announced plans to establish a ‘climate- neutral’ economy by 2050. In my opinion, the words of supranational organisations are fallacious. The rest of this short, essay will seek to convince the reader that efforts to solve the current crisis are futile. Hence, contrary to opinion, I believe it to be true that the ecological systems of this planet are doomed unless we extensively reform the political-economic system which has governed our existence since the 16th century: capitalism.

Capitalism is a destructive force which has degraded the natural environment. I would argue that it achieves this in very nuanced, dangerous ways. Capitalism has become strongly associated with crisis tendencies (Harvey, 1982). The institutional greed and risk taking which oils the cogs of the capitalist world machine, was at the heart of the recent financial crisis – perverse incentives by financial institutions and lax regulatory oversight collapsed the housing market and plunged the world economy into a deep recession. In essence, capitalism works in a way which perpetually undermines and collapses itself, which has strong implications for progress towards decarbonisation. For example, in the next recession, in the wake of mass unemployment, poverty and social disorder, environmental issues will inevitably become shunted to the periphery of the political agenda. Our fetishization of GDP under capitalism condemns politicians to focus on issues which matter in a recession: easing monetary policy, reducing unemployment and kickstarting the economy again, hence detracting focus from the immanent ecological crisis (O’Connor, 1994).

You may argue, however, that capitalism does offer mitigatory mechanisms to the climate crisis, and you would be right to assume so. Capitalists relentlessly look for ways to lower their costs and boost profits within the circuit of production, which is often achieved by technological innovation. For example, in recent years, in the ‘real’ economy, we have seen investments in renewable energy and ambitious geoengineering projects. Similarly, in the fictitious and speculative realm of corporate finance, ESG investing and corporate social responsibility have emerged as means to reduce one’s carbon footprint. Whilst admirable, these efforts are not sufficient, as the crisis tendencies which lie at the heart of capitalism will continually shift focus from the realm of environmentalism and sustainability, towards the realm of economic growth – an unfortunate outcome of the neoliberal world order.

References and further Reading:

Harvey (2010). The Enigma of Capital: And the Crises of Capitalism. Oxford Publishing

O'Connor, M. (1994). Is Capitalism Sustainable?: Political Economy and the Politics of Ideology. The Guilford Press.

Klein (2007). This Changes Everything: Capitalism Vs The Climate.

Harvey (2007). A Brief History of Neoliberalism.