Is Sustainable Capitalism Possible? A Critical Response.

Any discussion of sustainable development is in itself problematic, as it suggests developing or improving upon something that is constant or unchanging. If this logic is used to critically evaluate sustainable capitalism, then it too is a flawed concept. This paper stands to illustrate the problems associated with the concept of sustainable capitalism and review potential steps that will allow a transition from carbon dependency to a system based on clean energy.

“While there are many variations of economic growth theory, all presuppose that capitalism cannot stand still; that the system must expand or contract, in other words, that it is both crisis-ridden and crisis-dependant…” (O’Connor 1998: 240). This statement brings up the first and second contradictions to capitalism; the first contradiction states that when capital tries to increase profits by reducing costs at the expense of the labour force, (i.e. mechanization/automation, or wage reductions); it inadvertently causes a reduction in consumer demand, a demand-side crisis. The second contradiction of capitalism states that “capital limits itself by impairing its own social and environmental conditions, hence increasing the costs and expenses of capital…” (O’Connor 1998: 159). This contradiction assumes that individual capitals offset the economic costs of increased production onto society and the environment, which evades the short-term costs but increases the negative long-term effects. With this reasoning it’s plausible to state that for capitalism to be sustainable it must commoditize its own barriers; that is, it must create a market for alternative energy, environmental cleanup and monitoring, occupational health and safety, and so on, so that these elements become part of, rather than against the capitalist system.

Carbon offsetting has created such a step, wherein it promotes carbon reduction by penalising activities/procedures that are carbon intensive. The income generated from this method would “allow industrialized countries to meet their [Kyoto] emission reduction targets by purchasing emission reductions that are associated with projects in the developing world…or eastern European economies in transition.” (Bumpus 2008: 128). While this step works to help solve the problem, it alone is far from the answer. Over time many problems have arisen from carbon offsetting, which is to be expected as this method should be viewed as a step in the right direction rather than the solution to the overall problem. Carbon taxation is another step to reduce carbon dependence, in which indirect taxes are implemented on fossil fuel inputs such as coal and oil, and outputs like gasoline and propane, in proportion to their carbon content. Within Canada, this model works similar to carbon offsetting in that it provides incentives to reduce carbon usage, but it does so in a rather direct manner that is easier for users to calculate. This model reallocates the tax revenue to fund carbon reduction techniques, but the income generated remains within each province, rather than going to developing nations. While carbon offsetting and taxation help provide incentives to reduce carbon dependence and provide global funding for a sustainable energy system, they do not provide the solution. These carbon incentives have been introduced to many nations and corporations, but are not well monitored or enforced. As such, there is a need to create a governing body or bodies to oversee progress and further develop the system.

This calls upon individual governments to develop “national expenditure policies that heavily subsidize alternative energy sources; technological research that leads to eliminating toxic chemicals and other substances at the source; innovations in mass transit; occupational health and safety conditions; national, regional and community enforcement procedures; and a redefinition and reorientation of scientific and technological priorities generally.” (O’Connor 1998: 237). This action will be met with resistance from both industry and society as it removes some elements of free will and imposes requirements on both. Government involvement, however, plays a key role in redefining our use of energy and has the ability to improve the development of sustainable capitalism and reduce the timeframe, through subsidies and enforcement. In this situation, involvement needs to be brought in methodically to minimize the short-term losses of profit, and it should be done in a way that encourages cooperation rather than enforcing it. This can begin with methods like carbon taxing, which will help subsidize the infrastructure mentioned above. Involvement by a governing body is necessary, as the task is too large to assume individuals will effectively take it upon themselves to organize and commit to a plan in which short-term profits are reduced, for a hope of long-term gains that may not be realized in their generation. For this reason, a global shift in the way individuals consume their resources must also accompany the change.

For too long developed nations, especially continental North America, have had seemingly unlimited access to cheap energy and this has fostered nations driven by overconsumption. The capitalist modality of wealth accrual and profit maximization has created and egocentric outlook, which places little emphasis on externalities created during the process. Developed societies need to move from a consumption-dominated behaviour to that of conservation. The availability of cheap energy has also allowed the development of steadily rising wages, and so as the cost of energy increases, there will likely be an effort on the part of capital to cheapen labour, which again brings up the first contradiction to capitalism (Abramsky 2010). Therefore these proposed solutions involve increasing the cost of energy and activities that use energy through direct and indirect taxes, while decreasing the cost of labour and parts of the labour force. On the other hand there will be new markets created for economic opportunities, but it will be important to regulate these markets so that the wealth is shared among the people, not only going to the hands of a few large corporations or nations.

Society needs to find a way to subsidize or finance a transition to cleaner energy sources that won’t induce a crisis in the economic system. We need to find a way to effectively switch from readily available, cheap energy, and move to an energy system that promotes a conservative outlook at energy usage through deterrents and incentives. For the above reasons it is especially critical that this shift is received by both industry and society, as this is an issue that cannot be fixed quickly, but must be brought into global culture and created as a social norm.

Literature Cited:

1. O’Connor, James. 1998. Natural Causes. Guilford Press. London

2. Bumpus, Adam., Liverman, Diana. 2008. Accumulation by Decarbonisation and the Governance of Carbon Offsets. Economic Geography. Volume 84, Issue 2, pages 127-155.

3. Abramsky, Kolya. 2010. Sparking a Worldwide Energy Revolution. AK Press