Collapse and Capitalism

You've probably heard this before.

A friend recently suggested to me that capitalism is the "cure" for climate change and other systemic risks to the biosphere. His argument was that the profit motive will incentivize businesses and individuals to innovate our way out of this mess.

I understand why he thinks that way. Capitalism has a long history of turning wants and needs into sources of revenue. People, businesses and governments are willing to pay for products and services that improve their standard of living, improve their financial standing or satisfy an emotional or physical need.

Centuries of innovation has raised living standards around the world, and technological developments have enabled humanity to do things never before imagined.

So if capitalism is so good at solving problems why couldn't it "solve" climate change? This is a fair question - especially considering most humans are indoctrinated into the "grow or perish" cult since birth.

My immediate answer to my friend's suggestion was somewhat fumbled, so I'm writing a more fulsome answer below.

1) Capitalism is What Created this Mess in the First Place

Capitalism, with its relentless drive for profit and growth, stands not as the savior of our environmental crisis but as its chief architect. Given that capitalism is responsible for wanton environmental destruction, why would it also be the solution?

This economic system, which prioritizes short-term gains and individual success over long-term sustainability and collective well-being, has steered us into an ecological dead end. If capitalism were capable of solving the environmental catastrophe it has helped create, we wouldn't be witnessing the relentless decline of our planet's health.

The truth is stark and undeniable: capitalism exacerbates environmental destruction, and a radical overhaul involving stringent regulation and managed de-growth is imperative for survival.

2) Capitalism Has Already Had its Chance to Fix This

Indeed, capitalism has already had plenty opportunity to redeem itself and it has not. It has had its chance, since NASA scientist James Hansen's testimony to the US Senate in 1988.

Instead, capitalism has demonstrated that it is incompatible with environmental sustainability. Its mechanisms, designed to maximize profit and fuel endless growth, inherently disregard the ecological limits of our planet and seek to externalize any cost possible.

This system has not, and will not, spontaneously rectify the environmental devastation it has caused. Instead, evidence points to a worsening situation, with climate change, biodiversity loss, and pollution accelerating on its watch.

3) Corporate Capitalism is Focused on Short-Term Goals

If you've worked in a corporation - the underpinning of the capitalist system - you know about short-termism. Successes are quickly forgotten and plans move in 12 month increments at best. Any planning beyond 12 months tends to bend to the realism of quarterly deliverables and immediate market forces.

In contrast, the climate crisis is long term nature. Although we're in the danger zone right now, addressing the challenge - whether years ago or today - requires long-term thinking. Corporations simply aren't structured to address long-term issues. In fact, doing some is an impediment to short-term successes.

This myopia encourages practices that deplete resources, pollute ecosystems, and jeopardize our collective future, all in the name of immediate gains. The individuals within these corporations, motivated by personal advancement and incentivized to prioritize profits, are complicit in this systemic neglect of the environment.

4) Capitalist Profit Outcomes Provide the Wrong Signals for Success

Capitalism's intrinsic flaw is its blatant disregard for the true costs of production, particularly negative externalities such as environmental degradation. The market prices we see fail to reflect the true economic, social, and environmental costs, leading to distorted economic signals. In other words, if profit is the signal by which we evaluate businesses, externalized costs provides an inflated signal of success.

This systemic failure results in overconsumption, overproduction, and a vicious cycle of exploitation that the planet can no longer sustain. Without incorporating these externalities into cost structures, capitalism continues to operate in an ecological vacuum, blind to the damages it inflicts. This is true for both traditional and "green" businesses.

5) Me, Me, Me

The individualist ethos that pervades capitalist systems stands in stark opposition to the collective action required to address environmental challenges. Capitalism fosters a culture of competition and self-interest, which undermines the cooperative efforts needed to tackle global issues like climate change. This focus on individual achievement and success at the expense of communal well-being and environmental health obstructs the path to sustainable solutions.

Individualism is taken to an extreme when viewed through the corporate lens. Corporations are distinct legal entities that operate to provide shareholder returns. These entities are incentivized to take risks - even ethical, moral and environmental risks - to improve profitability and individual bonuses. More times than not, the downsides of these risks - reduced compensation, fines or imprisonment - are immaterial and far outweighed by potential upside. Regulatory capture, corporate lobbyists and hefty legal teams ensure the system operates to insulate corporations and their directors from responsibility.

Individualistic motivations - whether an executive, person or corporate entity - simply incompatible with communal goals of environmental preservation.

True Costs and Managed De-Growth

There was a time that businesses hired children to work in mines and added bleach to whiten milk. History shows that unchecked capitalism will only worsen our predicament.

The path forward demands a bold departure from unchecked capitalism towards a model that prioritizes the planet and its inhabitants. Significant regulation is non-negotiable; we must enforce policies that internalize negative externalities and hold corporations accountable for their environmental impact.

Moreover, de-growth must be embraced by society. By intentionally scaling back production and consumption, we can align human activity with the Earth's ecological boundaries, ensuring a livable planet for future generations.

Will we do either of these things? I doubt it. This is wishful thinking - especially once the costs are measured. Both internalization of negative externalities and degrowth policies would raise costs across the board, reducing our standard of living. We've already seen the backlash against carbon taxes. There simply is no public appetite to derail the gravy train.