We’re exploring, is it possible to run an expanding capitalist economy while keeping its impacts within safe ecological boundaries? Or is capitalism a greed-driven system doomed to destroy itself?
On one side of the argument, capitalism is a system ready to save the planet, as it promotes technological innovation. Competitive, open markets harnessed by capitalism provide strong incentives for the world’s brightest minds to find creative solutions to climate change without the need for market interventions. In a capitalist society when resources become depleted, demand and competition drive innovation for alternatives. For example, the cost of solar panels has fallen by 82% over the last decade as the technology has progressed and the supply chain has become more competitive.
Efficiency is a pillar of a capitalist society that provides firms with the incentive to avoid waste by being efficient- rewarding those who come up with ways to do better with less. Whilst this sounds good in theory, the sad reality is that efficiency does not always benefit the environment because it is designed to maximise profit rather than minimise impact. The environmental costs are often externalised, in other words, no one pays for the true cost of production.
'In other words, no one pays for the true cost of production'
When looking for the benefits of capitalism, some academics suggest that we must harness our current capitalist society to tackle climate change simply because there are no better-suited alternatives. While it is clear that socialism has a worse environmental record, with only ten years left to tackle the climate crisis, many are in favour of trying to find a way to make capitalism work. Instead of a completely new system, we need to reimagine a version of capitalism where prices reflect environmental and societal costs in a fairer market.
On the other hand of the debate, environmental problems can be seen as the outcome of a market where destroying the earth is absent from prices set by the marketplace.
“A destabilised climate is the cost of deregulated, global capitalism, its unintended, yet unavoidable consequence” Naomi Klein
Capitalism at its very core encourages consumption, despite the fact that we live on a planet with finite ecological and natural resources, capitalism embeds consumption as a core tenet.
The reality is that if we all consumed goods at the rate of an average American citizen, we would need 4.4 planet Earth’s to sustain our rate of consumption. To prevent further environmental collapse, our attitudes towards consumption must drastically change, something which is not possible under a capitalist society.
Capitalism also fails to account for environmental costs as a competitive market drives down prices, by encouraging companies to hide or externalise the true cost of production. For example, the price we pay for a burger is not the true cost as it fails to take into account the impact of water usage, deforestation, or carbon emissions. Instead, society must then bear the true cost further down the line in the form of environmental degradation.
Continually encouraging firms to make goods cheaper also comes at the expense of social justice, often exploiting works in the form of low wages, job insecurity and unsafe working conditions. Modern capitalism is racialised capitalism and is built on the backs of exploited BIPOC communities, especially in the Global South, perpetuating a deeply unequal system.
Capitalism as we know it is based on the flawed logic of exponential growth on a finite planet- this is a fundamental contradiction that cannot be fixed.
While there is no doubt that capitalism in its current form is driving us to climate breakdown we will leave you with one question- can we reimagine capitalism or do we need an entirely new system?
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