Capitalism and the Environment

If you saw the Live Earth concerts recently, you may have an opinion on the value of the effort to save the planet. Certainly, there is skepticism whether progress was actually made by this approach which differed from the documentary film “An inconvenient truth”. Although I am not a Metallica fan, some of the artists were great (according to my taste) but perhaps the ultimate benefit of the concerts will be greater than most people understand. Political change happens when ideas percolate throughout society and become commonly accepted as the only way to proceed. This was a major event where leaders of the entertainment industry reached out to millions of fans, who otherwise might not been receptive to an environmental sermon.

No, we will not see any substantial changes this week or the next. The value of this event is more symbolic, hopefully being the date when capitalism got an invitation to the chiropractor for a major adjustment. In the past we have had to send capitalism out to the woodshed to stop child labour abuses, legislate safety regulations to prevent worker deaths, and begin the first waves of environmental regulations to slow down the abuse of this planet where we live and breathe.

Capitalism is celebrated around the world as being effective in producing goods for the masses at affordable prices. It’s tremendous force is related to the way that it marches over all obstacles, whether human or environmental, to achieve its prime objective – profit. Classical economics use supply and demand as its primary tools of analysis. Environmental damage is just part of externalized costs that are pushed off onto society in general to look after. Think about the individuals who are affected by severe air pollution. The degradation of the air and the health costs are borne by individuals and healthcare programs but not by the company who has avoided the cost of proper pollution abatement equipment.

A number of ecological economists have observed that the typical models proposed have not properly described human economic activity. In the view of Robert Costanza who set the annual net worth of nature at $33 trillion, the costs related to the destruction of “natural capital” or the value of nature are an intrinsic part of the economic equation to be considered by government decision-makers.

Today’s serious environmental issues of climate change, global over-population and the resultant decline in world resources such as oil and natural gas are still actively opposed by a majority of the business community and their linebackers, the politicians. What Al Gore has done with his film “An inconvenient Truth” and Live Earth is to throw millions of footballs over the heads of this defensive line and ask the entire world to catch the pass and run with it into the end zone. He has asked millions of people to play on his team in order to win quickly and decisively. Not your typical representative politics.

In the near future, the business community and the existing political chameleons will have to make a decision whether they want to participate in the decision to restrain the rapacious assault on our environment or to watch from the sidelines when a new government does it.

Although there are some technological advances and product efficiencies (like compact fluorescents) that can help the situation, it appears likely that industrial type solutions requiring restraint will be required. One example implemented in Europe is carbon trading, where emitters of CO2 are given limits beyond which they must buy credits from those who have not used their quota. Those companies who build energy efficiency into their operation will profit. Limits will decrease annually to meet target for CO2 reduction. But carbon trading has its down side and other options are possible.

A second option, suggested by David Fleming, is called the Tradable Energy Quota (TEQ). This is a debit card where industry and individuals are given energy credits for the year. When they purchase energy, they must show their card and it is electronically subtracted. If they exceed, they must purchase other credits. If this sounds like a modern day rationing system, it is. The alternative to reducing demand for oil when the production of oil declines is continual high prices which is just rationing by economic wealth. Like or not, our future is bleak unless we act.

Capitalism harnesses the greed of humans and transforms that force into a self-adjusting production system that has no equal. The question is whether capitalism can adapt to the new reality of diminished natural resources, less growth, and the requirement to reduce the CO2 levels. Can planet Earth really afford capitalism as it is presently operating? On the political level, can we afford the do-nothing policies of Stephen Harper? Here in New Brunswick, we have the façade of an energy and environmental policy. Can the Graham government provide us with a rational “road map” to survival or will it always be useless expenditures on more new roads?

Personally, I don’t have a ticket on the space shuttle to another planet so I would prefer that we save this one from the myopic management presently at the helm. How about taking a serious look at our leaders and giving the boot to those who aren’t “getting it on the environment” and real sustainability at the next election?