Capitalism can’t save the planet
The quest for growth drives economics. That’s why our environment, financial system lurch from crisis to crisis
here was “a flaw” in the theory: this is the famous admission by Alan Greenspan, the former chair of the Federal Reserve, to a congressional inquiry into the 2008 financial crisis. His belief that the self-interest of the lending institutions would lead automatically to the correction of financial markets had proved wrong . Now, in the midst of the environmental crisis, we await a similar admission. We may be waiting some time.
For, as in Greenspan’s theory of the financial system, there cannot be a problem. The market is meant to be self-correcting: that’s what the theory says. As Milton Friedman, one of the architects of neoliberal ideology, put it: “Ecological values can find their natural space in the market, like any other consumer demand.” As long as environmental goods are correctly priced, neither planning nor regulation is required. Any attempt by governments or citizens to change the likely course of events is unwarranted and misguided.
But there’s a flaw. Hurricanes do not respond to market signals. The plastic fibres in our oceans, food and drinking water do not respond to market signals. Nor does the collapse of insect populations , or coral reefs, or the extirpation of orangutans from Borneo .
The unregulated market is as powerless in the face of these forces as the people in Florida who resolved to fight Hurricane Irma by shooting it. It is the wrong tool, the wrong approach, the wrong system.
There are two inherent problems with the pricing of the living world and its destruction. The first is that it depends on attaching a financial value to items — such as human life, species and ecosystems —that cannot be redeemed for money. The second is that it seeks to quantify events and processes that cannot be reliably predicted.
Environmental collapse does not progress by neat increments. You can estimate the money you might make from building an airport: this is likely to be linear and fairly predictable. But you cannot reasonably estimate the environmental cost the airport might incur. Climate breakdown will behave like a tectonic plate in an earthquake zone: periods of comparative stasis followed by sudden jolts. Any attempt to compare economic benefit with economic cost in such cases is an exercise in false precision.
A system that depends on growth can survive only if we progressively lose our ability to make reasoned decisions. After our needs, then strong desires, then faint desires have been met, we must keep buying goods and services we neither need nor want, induced by marketing to abandon our discriminating faculties, and to succumb instead to impulse.
Urge, splurge, purge: we are sucked into a cycle of compulsion followed by consumption, followed by the periodic detoxing of ourselves or our homes, like Romans making themselves sick after eating, so that we can cram more in.
Myth of self-regulating market
Continued economic growth depends on continued disposal: unless we rapidly junk the goods we buy, it fails. The growth economy and the throwaway society cannot be separated. Environmental destruction is not a byproduct of this system: it is a necessary element.
The environmental crisis is an inevitable result not just of neoliberalism — the most extreme variety of capitalism — but of capitalism itself. Even the social democratic (Keynesian) kind depends on perpetual growth on a finite planet: a formula for eventual collapse. But the peculiar contribution of neoliberalism is to deny that action is necessary: to insist that the system, like Greenspan’s financial markets, is inherently self-regulating. The myth of the selfregulating market accelerates the destruction of the self-regulating Earth.
What cannot be admitted must be denied. Ten years ago this week, Matt Ridley — as chair of Northern Rock — helped to cause the first run on a British bank since 1878. This triggered the financial crisis in the UK. Now, in his new incarnation as a Times columnist, he continues to demonstrate his unerring ability to assess risk, by insisting that we needn’t worry about hurricanes: as long as there’s enough money to keep bailing us out, we’ll be fine.
Ridley, who helped destroy the hopes of millions, is one of the faces of the New Optimism that claims life is becoming inexorably better. This vision relies on downplaying or dismissing the predictions of environmental scientists. We cannot buy our way out of a process that could, through a combination of heat stress, aridity, sea level rise and crop failure, render large parts of the inhabited world hostile to human life; and which, through sudden jolts, could translate environmental crisis into financial crisis.
This year, for the first time, three of the five global risks with the greatest potential impact listed by the World Economic Forum were environmental; a fourth (water crises) has a strong environmental component. If an economic crisis is caused by the environmental crisis, it will be the second crash in which Ridley will have played a part.
They bailed out the banks. But as the storms keep rolling in, you’ll have to bail out your own flooded home. There is no environmental rescue plan: to admit the need for one would be to admit that the economic system is based on a series of delusions. The environmental crisis demands a new ethics, politics and economics. A few of us are groping towards it , but it cannot be left to the scattered efforts of independent thinkers — this should be humanity’s central project. At least the first step is clear: to recognise that the current system is flawed.
George Monbiot is a Guardian columnist and author. His latest book is Out of the Wreckage: a New Politics for an Age of Crisis.