Maximizing profit and saving the planet are inherently in conflict. No amount of tinkering with the market can brake the drive to global ecological collapse
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by Richard Smith
Institute for Policy Research & Development, London
Summary
In rejecting the antigrowth approach of the first wave of environmentalists in the 1970s, pro-growth “green capitalism” theorists of the 1980s-90s like Paul Hawken, Lester Brown, and Francis Cairncross argued that green technology, green taxes, eco-conscious shopping and the like could “align” profit-seeking with environmental goals, even “invert many fundamentals” of business practice such that “restoring the environment and making money become one and the same process.”
This strategy has clearly failed.
I claim first, that the project of sustainable capitalism was misconceived and doomed from the start because maximizing profit and saving the planet are inherently in conflict and cannot be systematically aligned even if, here and there, they might coincide for a moment.
That’s because under capitalism, CEOs and corporate boards are not responsible to society, they’re responsible to private shareholders. CEOs can embrace environmentalism so long as this increases profits.
But saving the world requires that the pursuit of profits be systematically subordinated to ecological concerns: For example, the science says that to save the humans, we have to drastically cut fossil fuel consumption, even close down industries like coal. But no corporate board can sacrifice earnings to save the humans because to do so would be to risk shareholder flight or worse.
I claim that profit-maximization is an iron rule of capitalism, a rule that trumps all else, and this sets the limits to ecological reform – and not the other way around as green capitalism theorists supposed.
Secondly, I claim that contrary to green capitalism proponents, across the spectrum from resource extraction to manufacturing, the practical possibilities for “greening” and “dematerializing” production are severely limited.
This means, I contend, that the only way to prevent overshoot and collapse is to enforce a massive economic contraction in the industrialized economies, retrenching production across a broad range of unnecessary, resource-hogging, wasteful and polluting industries, even virtually shutting down the worst.
Yet this option is foreclosed under capitalism because this is not socialism: no one is promising new jobs to unemployed coal miners, oil-drillers, automakers, airline pilots, chemists, plastic junk makers, and others whose jobs would be lost because their industries would have to be retrenched – and unemployed workers don’t pay taxes.
So CEOs, workers, and governments find that they all “need” to maximize growth, overconsumption, even pollution, to destroy their childrens’ tomorrows to hang onto their jobs today because, if they don’t, the system falls into crisis, or worse.
So we’re all onboard the TGV of ravenous and ever-growing plunder and pollution. And as our locomotive races toward the cliff of ecological collapse, the only thoughts on the minds of our CEOS, capitalist economists, politicians and labor leaders is how to stoke the locomotive to get us there faster.
Corporations aren’t necessarily evil. They just can’t help themselves. They’re doing what they’re supposed to do for the benefit of their owners.
But this means that, so long as the global economy is based on capitalist private/corporate property and competitive production for market, we’re doomed to collective social suicide and no amount of tinkering with the market can brake the drive to global ecological collapse.
We can’t shop our way to sustainability because the problems we face cannot be solved by individual choices in the marketplace. They require collective democratic control over the economy to prioritize the needs of society and the environment. And they require national and international economic planning to re-organize the economy and redeploy labor and resources to these ends.
I conclude, therefore, that if humanity is to save itself, we have no choice but to overthrow capitalism and replace it with a democratically-planned socialist economy.
Continued … download this article here. (PDF: 248 Kb)
Posted on Climate and Capitalism with the author’s permission.
First published in Real World Economics Review #56
To the point of confronting the heedless pace of capitalist corporate activity, my suggestion is to imagine the possibilities through the most practical steps.
As legitimate certifications have proliferated, despite some corporate frauds, they join with numerous other civil society actions and green business activity to represent a kind of bastion for expanding social consciousness. The Green Festivals, sponsored by NGOs like Green America, are a dynamic phenomenon that has been growing, for example, along with even the corporate oriented EPA Green Power Partner list. Pepsi, while not an employee or community-owned firm, has gone 100% green power by buying RECs from STerling Planet wind power. The Superbowl and World Series also have been buying RECs. Thus, while Pepsi is not like Spain´s Mondragon Co-op Corp. or even employee-owned US-based SAI Corp., it is 100% green powered to the same extent that green business Whole Foods Markets, which has a green business model in its large proportion of organic and green product offerings. MOreover, Dell, Intel, and even the US Air Force are buying more or less comparable amounts of green power, though not at 100% capacity like Pepsi and Whole Foods.
Thus, profit is not the only basis for an economic enterprise. I suggest responsible accounting, socially and environmentally, is a better model. There are gradations in the world´s economic enterprises, not undifferentiated evil, despite the gigantic power and threat from some or many of them. Again, this returns to the hard necessity of acknowledging real world accomplishments for what they are. Food Co-ops, and even the DAnish Wind Co-op Middelgrunden, that have gone 100% green are great, but not entirely alone as evidenced by the likes of Whole Foods et al.
I have been in agreement with James´ point for some time, which relates to my disagreement with Richard´s premise, that the “green economy has failed.”
That it has a long way to go still, and that it faces significant obstacles still are related points that I think describe the current reality.
For example, wind power developers have been progressing steadily, notably from local enterprise in places like Denmark, Germany, and the UK, and even some in the US and elsewhere. Certification initiatives like Fair TRade, organic, and Forest Stewardship have been making important strides.
To declare the green economy “dead” is made here without discussion of examples, and shows a real disconnect with reality. To build a green and socially responsible society, socialist or some decentralized co-operative capitalist version of that, requires linking ethical principles with real world efforts. The value of such unfounded declarations that green capitalism is dead lies in the motivation to recognize that the study of human behavior did not begin, nor end, with Marx. From Robert Owen to Sigmund Freud, from the Rochdale Co-op Store to Carl Jung and Jean PIaget, from the US Food Co-ops of the 1970s to Voluntary Simplicity and Civil Society, I´m sorry that anyone concerned with this subject fails to appreciate that the objective of social justice is a living, breathing phenomenon with practical acomplishments, possibilities, and opportunities that make resorting to anything but social entrepreneurship, educational advocacy, and constructive public protest events essentially misinformed.
Too bad about a possible drop in oil production within a few years, the low EROEI of energy replacements, the lag time needed to retool manufacturing to use other sources of energy, and one “minor” issue called “climate change.”
James, thats exactly how I feel.
You cannot lead by descriptions of problems, only solutions to problems and I feel that’s really lacking in this movement.
By now we all know the issues, we all know whats going on, we just have no detailed alternative.
The basic reality is that the linear exploitation of resources, our current mode of operation, is more immediately financially rewarding than is taking the cyclic approach which is sustainable in the long term.
The linear approach is more immediately financially rewarding because our current economic system externalises many costs associated with such linear actions, i.e. it does not attribute these costs to their rightful sources.
In South Africa for example we are now faced with serious pollution of the ground water in areas where 120 years of gold mining has come to an end. The cessation of mining means that the old mine workings are filling up with water which then leaches all sorts of chemicals and heavy metals, hazardous to life, out of the exposed rock so that we get what is known as acid mine drainage. This results in boreholes, streams and rivers that can no longer support life. Generally the shareholders of the closed mines have died or disappeared with their financial rewards and the current and future generations have no choice but to bear these environmental costs bequeathed to them by earlier generations.
Perhaps if the true costs of mining the gold had to be factored into the financing of the gold mines they would not have been rewarding enough to be developed.
You could well be right but, if so, we need to put all our energies into imagining an alternative, right down to the nuts and bolts, or no-one will listen.
this article has some brilliant paragraphs which would be a useful communique to the general public.
Still think that the overthrow of capitalism is a long, long way off though and may have to wait until it has brought itself to its knees. In the meantime its about preparing the ground for that change, having the right people in the right places.
We must continue to use consumerism against itself, continue to raise awareness and stimulate communities, We must unite and form a network?
I agree on all of the arguments. However, many people assume that socialism means even small homes or tiny amount of land to grow food equals capitalism. It need not, as long as it is only used by a family and they are the ones doing the work, either alone or through exchange labour or with neighbors. The real issues is with people controling the labour of others and affecting their very survival.