'Markets have failed miserably even to recognize climate change'

A liberal journal argues that market solutions won’t do the job

In Canada, as elsewhere in the world, all of the major political parties favour “market solutions” to global warming. The Conservatives propose efficiency objectives. The Liberals want a carbon tax. The New Democrats argue for cap-and-trade. The differences are minor — all are based on faith that just a little bureaucratic encouragement will cause the free market fairy will solve the problem.

Bulletin of the Atomic Scientists, a highly-regarded liberal  journal, is raising serious doubts about that belief. The following are excerpts from a major editorial statement in the July-August issue:

When markets fail, government institutions often intervene to bail out those companies that face dissolution, as we have seen most recently in U.S. credit markets. Government prevents the market from collapsing completely and staves off even greater losses of jobs, earnings, and livelihoods by providing loans to keep firms in business and by establishing new rules to restructure the industry, with an eye to averting even greater future failures.

Given the enormity of the market failure that has resulted in climate change, one might expect government institutions, with their mandate to serve the greater public good, to intervene to cope with the waste products of fossil fuel-based energy production. For example, the U.S. federal government could step in to increase funding for research and development of technologies that don’t contribute to climate change, and help bring new solar, wind, and nuclear technologies to market more quickly. Using public money to restructure the energy market could save the biosphere and prevent further climate change.

Instead, government officials talk of finding market solutions to reduce greenhouse gas emissions without seriously considering substantial public investment in developing new energy sources. During the past 30 years, federal government expenditures for research and development in energy have declined and, at $3 billion in 2007, are less than half what they were in 1978, in real terms.

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Earth may not have time to let markets incorporate and correct for the externalities causing climate change. In fact, except for the insurance industry, markets have failed miserably even to recognize climate change. By the time Earth’s inhabitants acutely experience the consequences of this market failure — in food shortages due to drought and flood, the collapse of wild fisheries due to changes in ocean habitats, mass human migration as sea levels rise, and increasingly large and unpredictable wildfires — it will be too late to prevent additional catastrophic damage.

Indeed, climate change exposes fundamental failures of markets: Markets do not respond well to forecasts with 50- to 100-year time horizons. Nor do they respond well to the need for quick, large-scale coordinated action intended to yield timely results.

The Bulletin editors argue that governments must to organize a “large-scale, coordinated — indeed heroic — mission to prevent further catastrophic changes in the biosphere.” What the editors miss is the need to build mass pressure to force governments to act. As the programs of the capitalist parties show, the politician have no intention of acting on their own.

Posted in Capitalism, Greenhouse Gas
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Mark
8 years 1 month ago

But would a depression engender progressive politics?

tanay marquette
8 years 1 month ago

read an article from market watch. it was biarre. the writer was proposing a ‘good depression;’ not a great one, just a good one. he seemed to think that is what is needed to shake things up. he intimated that some government regulation is required. i think that is the crux of it. capitalism without stringent government control runs amuk with its greed and power mongering. this should be a basic definition repeated like a mantra these days–not the blathering of liberals that seek conciliation with the right wing!

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