Capitalism Versus Planet Earth E-Book

Fawzi Ibrahim

• Herausgeber: Muswell Press
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2012

Beschreibung

The dangerous intersection between ecological and economic crisis leaving humanity with a stark choice: maintain capitalism or save the planet.

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Leseprobe

Contents

Title Page

Dedication

List of Figures and Tables

Preface

Foreword by Andrew Kliman

1Introduction

2From the Industrial Revolution to Global Pollution …

… traces the present environmental degradation back to the Industrial Revolution, the birth of modern-day capitalism and asks if our planet’s environmental woes are a result of human activity in general or the existing economic system.

3The Illusions of ‘New Economics’…

… outlines the theoretical underpinnings of mainstream environmental movements such as ‘natural capitalism’. This chapter argues that by designating natural resources as capital, they become commodities and, like other commodities, are open to trading for profit.

4Re-Claiming the Classicists: Adam Smith, David Ricardo and Karl Marx …

… takes issue with those ‘new economists’ who consider economic laws to be man made, contrasting their approach with the scientific analytical approach of Adam Smith, David Ricardo and Karl Marx. This chapter explains the basis of Marx’s theory of the tendency of the rate of profit to fall, extending it to modern-day capitalism and introducing the concept of the ‘critical zone’. Using a technique widely employed in science and engineering, it constructs a 3-variable graph of the ‘operating map of capital’ and goes on to explain how the toxic combination of vast capital accumulation and pressure on the rate of profit to fall inevitably leads the economy towards a ‘critical zone’ in which production for profit becomes unviable.

5Saviours of the Environment or Apologists for Capitalism? …

… challenges those who wish to bypass the economic laws of capitalism with concepts like the ‘tyranny of the bottom line’ and the ‘post‑growth economy’, arguing that, far from being an optional extra, growth is an indispensible necessity for capitalism. It demonstrates that the ‘polluter pays’ principle is an excuse for passing extra costs on to the consumer, allowing the capitalist to make higher profit.

6A Crisis Too Far …

… argues that the post-2007 financial/economic crisis is not the 1930s all over again, but far worse: it is a crisis of capital deficiency as capital approaches the ‘critical zone’. Contrary to popular conception, the post-2007 crisis was not caused by greedy bankers or incompetent politicians, but was a result of the inherent laws of highly advanced capitalism. In this economic quagmire, the belief that we can make capitalism constrain its behaviour for the sake of the planet is illusory.

7Post-Capitalist Economy …

… maintains that, far from being the natural order of things, capitalism, like all economic systems that preceded it, is a passing phase that is waiting to be superseded. The chapter looks at the ‘cash-free’ internal economy of the pre-reform NHS as a blueprint for a post-capitalist, non‑commodity economy.

8Capitalism versus Planet Earth – An Irreconcilable Conflict …

… argues that in the post-2007 financial/economic crisis, with capital in the ‘critical zone’, governments’ attention is focused on saving capitalism, leaving the environment a very distant second. The chapter concludes that it is not possible to reconcile the insatiable and expansive desires of capital with the need for renewable energy and sustainable living.

Appendix: The Critical Zone – Capitalism at the Edge of a Vortex …

… shows examples of the economic footprints of the UK and US for periods stretching back to 1880.

Index

Copyright

List of Figures and Tables

FIGURES

2.1 Population growth and CO2 concentration, 500–201074

2.2 Per capita annual CO2 emission in metric tons75

2.3 Average fertility rates, births per woman, 1980–9982

3.1 Flow diagram for an economic process104

3.2 Open system, reproduces the flow diagram for a typical economic process taking account of the natural environment108

4.1 A straight-line trajectory representing a falling rate of profit as capital accumulates142

4.2 Equal profit (EP) contours143

4.3 Notional evolution of the operating map of capital144

4.4 UK economic footprint (private non-financial corporations) 1965–79, gross147

4.5 UK economic footprint (private non-financial corporations) 1965–2010151

4.6 UK economic footprint (1965–2010) highlighting the sequence of privatisation and PFI contracts implemented by successive governments to prevent the economy entering the critical zone156

5.1 Closed system incorporating pollution tax194

A1 A theoretical economic footprint showing the expected downwards slope as capital accumulates262

A2 UK economic footprint for private non-financial corporations, 1965–2005263

A3 UK economic footprint for private non-financial corporations, 1965–2005, with RPI-adjusted figures showing capital retrenchment clusters264

A4 Economic footprint for UK business, 1951–81265

A5 Economic footprint, US manufacturing, 1880–1950266

A6 Economic footprint for US business, 1951–81267

A7 Economic footprint, US corporations, 1947–2007268

TABLE

4.1 Capital investment (column 2) year on year, and its corresponding rate of profit (column 5) for private non-financial corporations (PNFCs) in the UK149

CHAPTER 1

Introduction

While the actions of mankind over the past thousand years have had a detrimental effect on the environment, it wasn’t until the Industrial Revolution that such effect became geologically significant – so much so that two eminent scientists, Paul Crutzen and Eugene Stoermer, proposed in a paper published in 2000 that this age be called the ‘Anthropocene’, ‘the recent age of man’, on the grounds that human activities have brought about profound and fundamental changes to the planet.

It is no coincidence that environmental degradation should have reached the crisis level it is at today at the same time as capitalism experiences one of the worst crises in its history. As CO2 pollution rose to its highest recorded level,1 Lehman Brothers filed for bankruptcy and the crisis that has been dubbed the ‘Credit Crunch’ took hold. But the Credit Crunch (and the subsequent economic and sovereign debt crises) is no ordinary crisis.

This book will demonstrate that, unlike past crises (which sooner or later blew away), the crisis that the global economy faces as it enters the second decade of the 21st century is not a passing phase, but a permanent feature in which governments continuously ensure capital’s profitability through austerity measures, bail-outs and quantitative easing. It is like a boat that has developed a leak; it may not sink, but you forever have to bail the water out – calmly in placid seas, frantically in choppy waters.

Any capacity that capitalism may have had to save the planet is today highly compromised by its need to extricate itself from a deepening economic and financial crisis, the like of which has never been witnessed.2 ‘For the better part of 200 years, industrial firms engaged in what might be described as “take, make, waste” as an organising paradigm’ wrote Stuart Hart of Cornell University.3 This organising paradigm becomes even more entrenched at times of crisis, and if it is a choice between saving capitalism and saving the planet, protection of the capitalist economy is deemed top priority. Witness how agreements limiting CO2 emissions have been so readily forgotten and abandoned following the 2008 financial crisis.

* * *

There is now widespread scepticism about capitalism’s ability to combat global warming. The Credit Crunch and the subsequent sovereign debt crisis have dented people’s belief in the market. George Monbiot, one of the more prominent environmentalists and Guardian columnist, made no bones about his disillusionment. In 2008 he wrote: ‘the government could set, by a certain date, a maximum level for carbon pollution per megawatt-hour for electricity production… Then … it could leave the rest to the market.’4 A year later, and anticipating the failure of the UN Climate Change Conference at Cancun, he wrote:

‘All I know is that we must stop dreaming about an institutional response that will never materialise and start facing a political reality we’ve sought to avoid.’5

The consensus that the market is the vehicle through which reduction in greenhouse gas emission is achieved is in serious doubt. The market that can’t secure its own creations (Barings and Northern Rock among many others) can hardly be expected to save ‘God’s’ creation – the planet itself. Far from saving the planet, the market, faced with a financial and economic meltdown, has no choice but to exploit the planet in a more intensive and comprehensive manner to save itself.

There is abundant criticism of the market. It ranges from inequality, unemployment and poverty to colonialism, imperialist wars and over-exploitation of natural resources. It comes from Marxists and socialists as well as those on the right who talk of the ‘excesses’ of capitalism. Yet it is not criticism that is required, but a critique.

* * *

The recently observed phenomenon of global warming is a result of an incremental quantitative increase in the concentration of greenhouse gases in the planet’s atmosphere, which reduces the amount of the Sun’s energy radiating back into space. The Earth’s atmosphere, which contains CO2 and other greenhouse gases, is transparent to sunlight, and sunlight passes through it largely unhindered, warming the Earth’s surface. The warm surface then radiates heat back towards the atmosphere. However, the wavelength of this radiation is much longer than that of sunlight and cannot readily pass through the atmosphere. Some of this radiation is absorbed in the upper atmosphere and re-emitted, with about half of the re-emitted energy returning to the Earth’s surface. The concentration of greenhouse gases in the atmosphere determines the amount of radiation returning to Earth.

‘It is estimated that in the absence of carbon dioxide in the atmosphere, the temperature of the Earth’s surface would be about twenty degrees Celsius less than it is today, while if the present amount of carbon dioxide was to be doubled, the Earth’s temperature would rise between five and ten degrees Celsius which would endanger the delicate balance on which life depends.’6

The global ecosystem requires a certain presence of greenhouse gases – mainly water vapour (H2O), carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) – to act as an insulating blanket, trapping sufficient solar energy to keep the global average temperature in a pleasant range; not too cold like Mars or too hot like Venus. It isn’t greenhouse gas emission as such that’s the problem (cows after all have been producing methane gas for centuries), but its quantity. As the release of these gases into the atmosphere quickens its pace, a tipping point is reached at which a qualitative change begins to take place.

In the field of the environment, there are several examples of where small but unremitting incremental quantitative changes have led to a qualitative transformation. Air pollution, for instance, was at the beginning localised to the immediate vicinity of a cotton mill or a coal mine. However, over the years the atmosphere of towns and cities has been transformed, the most striking examples being the London smog of the late 1950s and early 1960s, and today’s car pollution, causing smog over cities such as Beijing and Los Angeles.

* * *

The science behind the causes of global warming and climate change is indisputable and clear. Since the Industrial Revolution – a miniscule period of time in ecological terms – energy that has been stored in fossil fuels over hundreds of millions of years has been released. Since energy cannot be dissipated (just transformed) it has to go somewhere, so it goes into the atmosphere, creating the conditions for global warming.7 The warnings are clear: the Earth is heating up on an accelerating scale.8 The Intergovernmental Panel on Climate Change (IPCC) reported in 2007 that the years between 1995 and 2006 rank among the 12 warmest years since 1850. Meanwhile, greenhouse gas emissions have been building up faster than the worst scenarios projected by the IPCC in 1995.9

Sea levels have risen by an average of 1.8mm per year since 1961 as a result of melting glaciers and ice caps.10 In 2009, the Royal Society stated:

‘The accumulation of carbon dioxide in the atmosphere will lead to long-term changes in the climate system that will persist for millennia. Our growing understanding of the balance of carbon between the atmosphere, oceans and terrestrial systems tells us that the greater the accumulation of carbon dioxide in the atmosphere, the greater the risk of long-term damage to Earth’s life support systems. Known or probable damage includes ocean acidification, loss of rain forests, degradation of ecosystems, and desertification. These effects will lead to loss of biodiversity and reduced agricultural productivity. Reducing emissions of greenhouse gases can substantially limit the extent and severity of long-term climate change.’11

In contrast to the startling clarity of the warning, the response has been woefully inadequate. The solutions range from ‘green taxes’ and ‘carbon trading’ to foreign aid and the abandonment of GDP as the measure of the health of the economy. All fall within the confines and restraints of the capitalist mode of production – a system that is incessantly expansive and inherently wasteful; the precise opposite of what is required to combat climate change. This book will argue that attempting to mitigate environmental degradation, rising sea levels and global warming is irreconcilable with meeting the needs (or wants) of the market.

* * *

Capitalism has in the past been called upon to constrain its activities and reform its behaviour for the greater good. In England in the early and mid-19th century, untreated sewage from a rapidly growing urban population and sprawling industrial development polluted major rivers in towns and cities, resulting in widespread diseases and serious threats of epidemics. The government had to intervene and the worst effects of capital’s bare instincts were constrained and regulated. Three Public Health Acts were passed: 1848, 1872 and 1875 – introducing basic public sanitation, and the appointment of a local medical officer, and making local authorities responsible for lighting, water supply, sewage disposal, parks, toilets and housing. The 1875 Artisans and Labourers Dwellings Act gave local authorities the power to demolish areas of housing with inadequate drainage or sewage disposal facilities. Low wages and appalling working conditions (especially for women and children) brought about the Factory Acts, which regulated the working week, and the Trade Union Acts, which provided for trade union representation.

The fact that these reforms had to be fiercely fought for is not the point. They were achieved, and capitalism’s excesses were contained – its carnivorous appetite for profit dulled. The nationalisations of public utilities and of what are commonly referred to as the ‘commanding heights’12 of the economy (coal mines in 1938, electricity generation in 1947, and railways in 1948, among many others) were further examples of the possibility of reining in primitive capitalist instincts. Foreign investment was regulated with various mechanisms including foreign exchange controls.

However, in the recent past all these reforms have been rolled back, one by one. In Britain, public utilities have been privatised, exchange controls removed and trade union rights repealed. Today, Britain has the most punitive and restrictive trade union laws of any developed country and capital stands almost as deregulated as it was in the 19th century. Gone are the nationalised industries. What Harold Macmillan, a previous Tory Prime Minister, called the ‘family silver’13 was sold to any bidder regardless of national base.14

A similar process took place in Europe15 and elsewhere.16 For developing economies, privatisation was enforced by the International Monetary Fund (IMF) and the World Bank.17 Today we see the IMF openly marching into countries such as Ireland and Greece demanding that they privatise state assets if they are to be bailed out of their sovereign debt.

While it is true that capitalism has been able to accommodate various reforms in the past, it certainly seems to be unable to do so now, otherwise why have they been abandoned, from the late 1970s onward? And why have they not been restored by succeeding governments? Why, in short, has Keynesian economics been replaced by neo-liberalism? Was it purely a question of personalities, changing government policies, or something more fundamental than that? If it was the former, then why have the Labour governments of Blair and Brown continued with the same policies as their predecessor Conservative governments? In fact, Thatcher’s policies can be traced back to the government of her Labour predecessor, James Callaghan. It is clear that the economic policies of various governments form a continuum, regardless of which party happens to be in power.

This book will argue that it is an illusion to think that capitalism can be prevailed upon, cajoled, reformed or regulated to take the necessary steps to control global warming; that capitalism has entered a critical zone, perched at the ‘edge of a vortex’,18 where the availability of capital falls far short of that which is needed to maintain profits. Capitalism at such a precarious juncture is preoccupied with saving itself; the last thing on its mind would be saving the planet.

* * *

Nevertheless, and in spite of overwhelming evidence to the contrary, prominent environmental writers and activists, not to mention economists and politicians, continue to maintain a strong faith in the market, some with caution, and others with enthusiasm.19 Raghuram Rajan in his award-winning book Fault Lines, a book dedicated to analysing the causes of what the Institute for Fiscal Studies called the ‘Great Recession’, begins with a statement of faith: ‘I believe that the basic ideas of the free-enterprise system are sound.’20 With this simple statement, that which is to be put in the spotlight is conveniently dispensed with as a suitable subject for investigation. It is like someone investigating the fault lines in Christianity asserting his belief that the basic ideas of the virgin birth and resurrection are sound.

New models are offered to persuade corporations that it is in ‘their interest’ to go green, including ‘business for social responsibility’, ‘natural capitalism’, ‘sustainable global enterprise’ and ‘green profitability’. And of course there are countless proposals to skew the ‘market’ to go green, such as green taxes,21 ‘polluter pays’, carbon trading and carbon credits.

Most, if not all, of these measures are biased against the poor. Take carbon credits for instance. Each year everyone would get equal carbon credits to spend, with those exceeding their quotas able to buy credits from people who use less credit. It sounds egalitarian (after all, everyone gets an equal amount of carbon credit). But like all equality of the unequal, it is a sham. It is nothing more than a licence for the rich to pollute at will at the expense of the poor, who have to suffer the effects of not just their own reduced carbon footprint but also that of the rich. In this respect it is not different from the much-admired congestion charge in London and other ‘green taxes’.

The Stern Review on the Economics of Climate Change goes as far as acknowledging a failure of the market; a failure that the report wishes to rectify:22

‘Climate change is an example of market failure involving externalities and public goods. Given the magnitude and nature of the effects… it has profound implications for economic growth and development. All in all, it must be regarded as market failure on the greatest scale the world has seen.’23

The solution to the ‘failure of the market’ is then framed in the very language of the market, namely the setting up of another market: a carbon-trading market.

Those who fail to identify the market itself as the culprit leave but one other thing to blame – the general public. Human society itself is thus blamed for its greed, wasteful nature, selfishness,24 irrationality and over-population.25 The question must be posed: What part does a cotton mill worker, a miner or a sweatshop operative play in polluting the air in Manchester, Michigan or Mumbai? In what way are they greedy, wasteful, selfish or irrational? They are merely trying to feed themselves and their families. They are merely trying to survive in a capitalist world.

Lifestyle, simple pleasures and everyday activity are deemed culpable, as evidenced by proposals for fuel tax, carbon tax, road charges and draconian recycling dictats with equally draconian fines;26 not to mention the moral pressure put on individuals to save energy. This sort of contempt neatly complements that of capitalism, which sees people as merely objects for exploitation.

In reality, the reduction in greenhouse gases as a result of individual action pales into insignificance when compared with the pollution caused by large corporations. To add insult to injury, these very same corporations continue to pollute the atmosphere, turn our forests into dust bowls and destroy marine life. They then demand subsidies and tax breaks from the government (that’s us) for every step they are forced to take to clean up their act. And governments all over the world oblige. Demands on corporations are conditioned by the God-given right for corporations to make a profit.27

NEWECONOMICS

The theoretical underpinning of market-led proposals for reducing greenhouse gas emissions and containing global warming is a new economic doctrine referred to as either ‘natural capitalism’ or ‘natural economy’. Proponents of new economics share one thing: a blind faith in the market. Listen to Stuart Hart of the Johnson Graduate School of Management at Cornell University. In his book Capitalism at the Crossroads (with a Foreword by Al Gore) he makes the sweeping statement: ‘Throughout human history, however, wherever there have been people, there have been markets.’28 So, according to Hart, cavemen and cavewomen had a daily market where they congregated to sell their wares, and hunter– gatherers got together in the African plains to exchange deer skins and plants; not to mention the primitive societies who did a roaring trade in the markets of African jungles.

But these primitive markets, and even their successors in early urban civilisations, were of a fundamentally different nature to the ‘market’ of today. The capitalist ‘market’ is not a glorified local market where local villagers bring their fruit and veg and other produce; it is nothing like the bazaars of the Middle East, or the merchants’ markets of the Middle Ages, or even today’s shopping malls. The ‘market’ is a market for stocks, shares and bonds. It distributes and allocates the social wealth to this or that enterprise.

This approach to political economy was finally crowned by Fukuyama’s notion of ‘the end of history’. Fukuyama’s acclaimed thesis heralded not so much the end of history as the end of political economy and the end of analysis. The purpose was to enshrine, once and for all, the ‘market’ as an eternal feature of human existence, part and parcel of the human condition. The market (a euphemism for capitalism) has become an article of faith and, like any other faith, it is blind and cannot be questioned. That’s why we have those who advocate ‘natural capitalism’ in agreement with advocates of the steady-state economy, as well as those who advocate sustainability, eco-effectiveness, carbon trading and green taxation.29

Jonathon Porritt, a very well-regarded environmentalist, dispenses with capitalism altogether. He redefines capital as ‘a stock of anything that has the capacity to generate a flow of benefits which are valued by humans’,30 which leads to his ‘five capital framework’, among which is natural capital: ‘Historically, the first type of capital was undoubtedly natural capital.’ So, according to this thesis, there was capital even in the Stone Age when man lived in caves. If only the cavemen knew it, they would have become capitalists! With his second capital, ‘human capital’, even labour turns into capital. But a definition of capital, if it is to be of any value, must show how it relates to capitalism, the system of production and exchange that it gave its name to. To define capital in any other way would be like defining a star as a ‘prominent performer’ when discussing cosmology. This is why Adam Smith defines capital as the part of the capitalist’s stock that ‘afford(s) him … revenue’.31 By revenue he, of course, means profit.

THE ‘MARKET’

Under capitalism ‘the market’ allocates the resources. Owners of capital, be they individuals, corporations or institutions, decide which investments they support and which they spurn. They are committed and sometimes required by law to obtain maximum return on their investment. In the process of resource allocation, the ordinary person in the street has no say, in spite of the fact that the wealth that is being dished out to this or that enterprise is social wealth, created by society.

Just observe how some utility corporations justify lower taxes and/or higher prices by the need to invest. In a letter to the Guardian, David Porter, Chief Executive of the Association of Electricity Producers objected to a windfall tax because ‘it would take money out of the electricity industry just as it is planning to raise huge sums for investment in vital new infrastructure’.32 But the money the electricity industry wishes to invest is not their money, but our money, the consumers’ money. The same argument is put forward when utility corporations such as water and gas wish to raise prices above the rate of inflation.

The government, which is supposed to represent society and upon which so much hope is placed, uses society’s money gathered in taxes to ensure high profits for capitalists in the form of subsidies, tax breaks and, in the case of the Private Finance Initiative, unadulterated handover of social wealth to the corporate sector. Governments see as their duty the protection of corporations’ profits abroad through intelligence gathering, subversion and war.33 To all of this add the enormous 2008–09 and subsequent multi-billion pound bailout of the financial sector.

The operation of the ‘market’ depends on a fast return of the wages paid to workers back to the capitalist; the faster the better. Marx and Engels put it this way:

‘No sooner is the exploitation of labour by the manufacturer, so far, at an end, that he receives his wages in cash, than he is set upon by the other portions of the bourgeoisie, the landlord, the shopkeeper, the pawnbroker, etc.’34