Wednesday, 1 March 2017

Climate Change and Eco-Socialism

Written by Jason O’ Neal and first published at Facts for Working People

Climate change is a fact of life in the twenty-first century. Our society’s dependence on fossil fuels to encourage more economic growth is directly contributing to the global warming crisis.  Climate models accounting for changes in surface air temperatures, ocean currents, land masses, and polar ice cover have forecast extreme weather events occurring on a more regular basis.  Organizations such as the Pentagon, the UN, NASA, and 90% of the world’s scientists forecast the end of life on Earth as we know it in the decades ahead unless things are changed.

For the past several decades, scientists and government policy makers have modeled possible solutions to the problem based on stabilizing the amount of carbon dioxide in the air at 350 ppm, (parts per million) a level that is probably no longer feasible.  If CO2 concentrations within the atmosphere continue to increase, the ability of the planet to sustain the environment will diminish.  Possibly crashing the entire ecosystem.  How did we arrive at such a dangerous precipice? And, can we do anything about it?  Current debates are between market-based approaches of taxes on emissions or trading programs against stricter government regulation.  What is left out of this discussion on the economic front is how to rapidly reduce emissions and improve carbon sequestering capabilities, both natural and technological.  With the easiest path to 350 ppm by the year 2030 becoming an unrealistic expectation, where do we set the next target? And, how did climate science and our political and economic goals become so disconnected?  

The use of carbon-dense fossil fuels helped to industrialize America as productivity exploded and the economy expanded.  Two hundred years had passed since the transition from feudal labor relations to industrial labor relations created the Second Industrial Revolution.  Rural communities were realigned with workers migrating to urban areas where they were forced to sell their labor for income.  The emerging economy became one based on social relations and interactions that were held in place by commodities.  Like the arguments between early economists during the transition between mercantilism and capitalism, questions about who was best equipped to responsibly manage surpluses from the economic boom remained.  Because ‘capital’ needs to be free and allowed to work in a global economy, neoclassical economics became the preferred economic system in the United States by the end of the nineteenth century.  The downside of this heightened productivity was that it was based on energy from fossil fuels and the risks associated with climate change were an unknown threat at the time. 

However, economists were concerned with the availability of fossil fuels, as indicated by William Stanley Jevons in his book The Coal Question, published in 1865.  Jevons’ answer was to maximize the “effects at the margin” and to not be “concerned with the last piece” as coal mining was no longer a physical restraint, but an economic restraint based on a “difficult” adjustment to the costlier extraction process.  The material comfort of society was based on efficiency and access to resources, but what Jevons failed to realize was that efficiency accelerated the process of extraction and his concept of maximizing at the margin did not solve the question of depletion.  Again, the atmospheric effects of burning fossil fuels was not addressed, perhaps not even considered, as economists were focused on control of the production and distribution process.

The first pushback against neoclassical economics was from, John Maynard Keynes, a British economist.  Keynes stated that people with money to invest prefer to “sit-out” of the economy waiting for better returns on their investment, “parking cash” elsewhere and saving it for future opportunities.  A strict “monetarist” economy, based on a free and self-regulating market that could only be adjusted by supplies of money through interest rates, would not solve this problem.  Keynes advocated for direct government intervention through increased spending to stimulate the market.  This was a fundamental element to FDR’s New Deal during the Great Depression which allowed the U.S. government to redirect surpluses through taxation of those who were hording the money.

The successes of the New Deal and the increased production during World War II faced a new economic threat.  The Soviet Union and the United States emerged from the war as the two major economic powerhouses in the world.  With both sides arguing for national security and access to developing world markets, the Cold War became a chess game of foreign policy and economic stability.  The hard stance of anti-trust against monopolies taken by the U.S. during the early twentieth century began to change after World War II. 

The Chicago School of Economics took the lead on economic philosophy to counter the state-run socialism of the Soviet Union under Stalin.  The Chicago School’s interpretation of neoliberalism was not as critical of private control of the economy as much as it was with government control.  The 1960s witnessed the horizontal integration of energy companies as they began to control physical resources.  After the early 1970s access to petroleum fields would eventually determine currency pricing and demand as the dollar remained the world reserve.

Part of this shift was helped by Milton Friedman, an American economist and critic of Keynes.  Friedman attacked social programs which he claimed created a dependency on welfare and he argued that the private sector could perform better at providing services to the public.  Economic systems need to naturalize themselves and neoliberal free-market ideology created by conservative economists, like Friedman, limited economic policies to market reasoning.  This gained influence through the popularity of his book, Capitalism and Freedom, and Friedman became a well-known and integral part of the economic policies of the Reagan administration. 

Also, The Volker Fund, named after William Volker, assisted large corporations to spread capitalism as a global management system.  This Volker Fund controlled the structuring, curriculum and ideas that were vetted for the Chicago School during this time and it now functions as The Heritage Foundation, a think-tank promoting neoliberal economic policies.  Unfortunately, neoliberal economic growth models focus on “sustainable growth,” not “sustainable environment.”

A voice of reason not so popular at the time, was an American mathematician and economist, Nicholas Georgescu-Roegen.  A Romanian immigrant, Georgescu-Roegen argued for a return to biophysical thought as a foundation for economics.  Because resources have been treated as if they have no limits, his work with ecological economics was classified as outside of the normal parameters of economic policies.  Georgescu-Roegen argued that all production is based on materials and energy and that the earth’s natural resources were irreversibly downgraded when used in the economy.

These natural resources would eventually be depleted and the world economy would ultimately collapse.  Introducing thermodynamics into economics, although he was mistaken in some interpretations, Georgescu-Roegen was the inspiration for “de-growth” movements across the globe.  This forced many people to rethink neoclassical economics and its ties to “Promethean technologies” which helped to industrialize the process of food production and has resulted in more environmental degradation and deforestation to convert ancient forests into farmland.

Another ecological economist who was critical of neoclassical economics was Howard Odum.  He conducted his Silver Springs study to track energy inputs/outputs in a natural ecosystem.  Working on general systems theory, Odum also introduced the concept of “energy memory,” or Emergy, which is a measure of energy used in the past to form our environment today.  Because of the biophysical limits of the earth, Odum argued that “physical capital” will level off. 

His focus on Energy Return on Investment (EROI) showed how production growth is tied to energy efficiency, or outsourcing the energy consumption, and any step up the energy ladder (possibly using secondary sources which will become more energy expensive because they are based on a dwindling fossil fuel) could lead to irreversible climate change.  Odum advocated for an energy policy which offered a “prosperous way down” arguing that a complex adaptive living system must sustain itself.  Under current economic policies and development the addition of capital and labor has not reduced the use of energy; it has led to more energy consumption.  Increased infrastructure of the energy sector begins drawing more energy to produce and maintain itself. 

This results in an “infrastructure trap” where resources are exhausted with diminished returns on investment for maintaining the structures of society .  Odum criticized the economic philosophy of social structures built on a wave of cheap energy in the face of diminishing supplies from natural resources.  Although he was less enthusiastic of nuclear energy, because of costs associated with production and ecological degradation, Odum was not convinced that neoclassical economists placed our development on the right path.  We are now “constrained by the complexity of society.”

Today’s argument about climate change and how to best reach 350 ppm has become one hinged on atmospheric limits and trade-offs for interest rates by “discounting the future.”  The neoclassical economists’ favorite champion for intergenerational equity is William Nordhaus.  A Yale economist working on climate change models, Nordhaus’s most often cited model is DICE, an interpretation of climate change optimized for the economy while limiting the worst case scenarios for damage to the environment.  Nordhaus is still tethered to neoclassical economics and its “laissez-faire” attitude toward markets as the arbiter of climate change.  His position is that a social cost per ton of carbon should be discounted higher because future generations will have more money to combat climate change.  However, this limits the available options for structural change with every passing year as global temperatures are now exceeding forecasted predictions. 

Nordhaus’s opposition opinion is held by former chief economist at the World Bank, Nicholas Stern.  In his review he called for immediate and drastic measures to reduce the carbon in the atmosphere.  Nordhaus was a harsh critic of the “Stern Review” and he claimed Stern went too far, possibly because Stern advocates for a world economy with the ability to regulate carbon emissions to encourage their reduction.  Stern linked climate change to neoclassical economics and called it humankind’s “greatest market failure.”  When models for their positions are compared to one another they take different approaches for reaching their target goals.  Nordhaus uses a higher discount rate to not upset investment in the hopes that future generations will solve the crisis, while Stern uses a lower rate which values the quality of life of future generations over profits.  Perhaps a reasonable compromise between the two would suffice, but it would be more beneficial to do as much as possible now. 

Marx identified the contradiction of a stationary state in capitalism—he said it could not exist.  If a stationary state is needed to “de-grow” the economy and reverse the effects of climate change, then perhaps capitalism must go away.  Currently, policies are drafted about “reality” based on what the “economy is telling us.”  These policies dominate our social and environmental life and they restrict our ability to see our existence without it.  Capitalism is based on growth and, as it stands, infinite growth is not possible.  Would the answer be to allow governments to produce and distribute resources in a sustainable way to prevent ecological degradation, species extinction, pollution, and climate change?  

Economic models explain the interactions of members of different societies and their relationships to one another in a system of exchanges.  A basic mechanical representation of capitalist economics in the United States would be a grandfather clock.  Like the clock telling the time of day, a phenomenon which would still exist without the clock, models of American capitalism attempt to describe what is happening within the economy.  The pendulum on the clock swings from side to side like a smooth and reliable business cycle responding to monetary policies or fiscal spending through government intervention.  However, just like the clock that was designed more than a century ago, the working gears on the inside of the economy need to be re calibrated.  Before mechanics can make the required changes they must decide what size gears to use, this is also the puzzle facing most economists when it comes to adjusting the economy to mitigate for climate change. 

Do we make small changes to facilitate continued growth hoping on a technological breakthrough, possibly at the expense of future generations?  Or, do we make drastic changes in our current lifestyle and consumption patterns to allow our civilization to arrive at a safe place in a distant future?  One thing is for sure.  Doing nothing will not fix the clock and, as each second ticks by, the time to act is running out.   

Unfortunately, all the different suggestions for how to combat climate change have one thing in common. They look for a solution within the boundaries of capitalism. But environmental catastrophe, nuclear war, starvation, global drought, these all threaten to destroy life on Earth as we know it and the harsh and brutal reality is that there is no solution to these crises on a capitalist basis.

All these economists and climate change people refuse to face this reality. Keynes, when he was faced with the inability of his economic theories to solve capitalist crisis, when he was faced with the inevitability of wars and catastrophe under capitalism, came up with the pathetic response: "In the long run we are all dead." This is an appropriate answer to all the economists and climate change people who are trying to find a solution on the basis of capitalism. In a recent article on this Blog we referred to the scientist Stephen Hawking who recently said that the human race would only have a future if it emigrated to another planet. Capitalism cannot solve the problems of society. The capitalist class is driving the human species and the planet down the road to disaster. This is the reality. So is there no hope?

A common expression that business likes to use these days is “thinking outside the box.” And this is what working people have to do if we want to solve the issue of climate change. Capitalism is one system of social organization but there is an alternative system and that is democratic socialism. And there is an alternative social power that can bring about that system and that is the working class, the vast majority of people on the planet.

This system would be based on democratically elected workers and poor peoples councils that would be linked together worldwide. Through their democratic integrated structure the wealth and resources of society can be taken out of the private hands of the capitalist class. On this basis, and with the help of today's new technology and communications systems which exist as never before, the working class would be able to draw up a democratic sustainable economic world plan of production, distribution and exchange.  The working class internationally represented in their councils would have available to them the knowledge and resources that humanity possesses.

We rarely think of it but why do factories have to run 24 hours a day, seven days a week all year long?  Think of the energy this requires. The only thing that halts that process is when recessions or slumps occur and production is halted by the capitalists themselves in the interest of profits. Under a democratic socialist system, the drive to produce would be based on social need, not profits. The working class would not draw up a plan that would destroy the planet’s environment and our own futures.  This democratic plan could be broken down industry by industry, sector by sector, workplace by workplace, even worker by worker. On this basis every worker would be able to know what work they had to do to meet the plan.

The building of 2400 square feet homes for two people would be curtailed. Mass transit, rationally planned housing and the way we construct society would be entirely different.  This in turn would allow people to be at one with their labor, would end the alienation of people from their labor. And flowing from this, as production increased and met the needs of society, the working week could be reduced and the human species could move forward into a new world.

Capitalism is wasteful and inefficient because profit is the prime mover. There are more than sufficient solar, tidal, wind and other natural resources to provide energy for the world without using destructive fossil fuels.

This is the alternative to the threatening catastrophe of capitalism and only the working class can make it possible. As Marx pointed out, “The emancipation of the working class must be the act of the working class itself.” The economists and climatologists who tinker at their computers to try and solve the environmental crisis under capitalism are never going to be able to succeed. Capitalism cannot solve the crisis of climate change. Not only that. They are doing harm to the entire discussion of climate change because by their refusal to stand up and say the crisis of climate change cannot be resolved under capitalism, they are maintaining illusions that it can. They are maintaining illusions in capitalism and the capitalist class. They are refusing to assist the working class to see that it and only it can save life on the planet as we know it. 

Jason O'Neil was Founding Member Green Party, UC Berkeley

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