Capitalism's Foul: Obstructing a Transition to Renewable Energy and Human Equity

Energy and wealth distribution are accomplished by a system of social relations and production called capitalism. However, the allocation of this wealth and energy supply has created problems; climate change, postcolonial unrest, and poverty should cause us to stop and think about the system that got us here. If we accept that all knowledge is political, that someone somewhere, created the institutions of capitalism for a purpose, we should not withhold scrutiny; especially at this critical juncture in human history where the future demands bonafide institutions which can meet the task of changing our energy system and restoring equity to our world.

I would like to discuss briefly the obstacles embedded within this capitalist system which may impede this transition.

Subtracting fossil fuel from the capitalist equation is one of these obstacles. Capitalism harnessed fossil energy during the eighteenth century to fuel its expansion. Fossil fuels enabled rapid expansion of trade and markets over the globe; augmented exponentially the amount of work human bodies can accomplish, and generated a great deal of wealth for capitalist nations and individuals.(1) Finding a substitute with these magical qualities is the first challenge we face if we want to continue with present rates of economic growth and increasing global consumption.

However even if we were to discover a new source of abundant energy to replace fossil fuels there are contradictions and political motives within capitalism which must be addressed before we speak of the mechanics of a new energy system, or social order.

The first contradiction is between production by capitalists and consumption by labour. Capitalists want to maximize profits which means paying the lowest wages possible. However, these wages must be carefully measured to ensure an adequate level of consumption by labour; because when there is not enough people, and money, to buy all the stuff we have a crisis of overproduction and underconsumption. Then, a crisis, people lose their jobs, as we saw during the Great Depression in the 1920s and the US mortgage crisis in 2009.

The second contradiction in capitalism is, the tendency of firms to shift the costs of pollution onto the health of labour and the environment; these costs are then born by individuals and the state as pollution cleanup and health care bills. However, this crafty maneuver catches up with capitalists because in the long run pollution hinders the productivity of labour and land which lowers the profit rate, not to mention making people quite irate!(1) These two contradictions will cripple solutions to our energy and poverty crisis if left untouched.

Another obstacle is the possibility that the present capitalist system requires an uneven geography of energy use and wealth.  If this is true, than any future attempt to level out the use of energy and wealth will necessarily fail unless this systemic flaw is corrected. The present arrangement of global capitalism is enabled by ample cheap labour; two billion souls living outside the formal economy are feeding the industrial cities of the global south with cheap and plentiful labour for free, i.e. it does not require wages paid by capitalists to reproduce itself; instead, renewable energy from biomass, like dung and wood, is used to nourish this population instead of money wages. Their day-to-day existence is provided by the toils of their labour and that of their animals.(2) For many reasons these people living hand to mouth leave their rural subsistence lifestyles for the promising light of the city and the wages available there which are needed to survive in a global cash economy. Herein lies the problem; if this population of two billion peasants are brought in to the formal economy and their standard of living raised, as we are told will happen as the “rising tide” of economic growth “floats all boats”(4), who will form the army of cheap labour necessary to achieve a ‘sustainable’ profit rate?(3) We have seen rapid deindustrialization in the developed industrial nations over the last 40 years as firms moved production away from organized and high cost labour towards these cheap labour supplies to boost profit rates. However high profit rates depend on keeping wages low and keeping the commodities used to sustain the labour force cheap. Without cheap labour, profit rates fall, and commodities rise in price forcing up wages even more.

The implication of a necessary underclass of flexible, cheap labour is that it is opposed to the goal of transitioning to renewable energy and human development. Constructing a new energy system and reducing poverty and inequality under the current capitalist system means increasing wages and transitioning to renewable energy sources. If wages rise too much in these traditionally poor industrial areas, profit rates fall. Renewable energy must provide energy at the same price as fossil fuels to maintain profit rates. If renewable energy is more expensive, this too will strangle profits.

So challenges exist beyond the technical task of rewiring our society with windmills and solar panels. First, fossil fuels are the darling of capitalism. They enable the explosive nature of capitalist development fueling innovation, transportation and production at breakneck speed. Breaking this habit will be tough given the good times it has provided. In addition, the contradictions inherent in capitalism are being constantly managed with each consecutive crisis. Capital is always seeking the cheapest labour and the lowest wages while simultaneously seeking to raise consumption levels. This only works when there is wide range of income levels. When everyone gets paid what they are worth there is no margin left for profits. The other contradiction is that cheap goods and services depend on offloading the costs of producing these goods onto some peripheral environment and population. If everyone starts speaking up there will be no backyards left to dump the refuse of production. The final problem is more specifically political and stems from these contradiction: Our species of capitalism rests on inequality; inequality which allows fabulous wealth to be created at reckless speed but only for the lucky few. What to do? Well, that’s up to me and you.

Notes

(1) Huber, T. “Energizing historical materialism: Fossil fuels, space and the capitalist mode of production.” Geoforum 40, (2008): 105-115.

(2) Abramsky Koyla. “Chapter 5: Energy, Work, and social reproduction in the world-economy” in Sparking a Worldwide Energy Revolution. Edited by Koyla Abramsky, AK Press, Oakland, CA, 2010. pp. 98-99.

(3) O’Connor, James. “Is Sustainable Capitalism Possible?” in Natural Causes. Guilford Press: New York, NY, 1998.

(4) This is the status quo strategy to improve the well being of the global poor. As economic growth increases global production of goods and services, and thus global prosperity, so too will the poor prosper by induction into the formal capitalist economy.