MARKET CAPITALISM

Market Capitalism

Market Capitalism

Introduction

Under the headline “Economic Growth 'Cannot Continue'” the BBC on January 28, 2010 summarized a report issued by the New Economics Foundation (NEF) which asserts that “continuing economic growth is not possible if nations are to tackle climate change.” The NEF says that “unprecedented and probably impossible” carbon reductions would be needed to hold temperature rises below 2°C (3.6°F) without which we face catastrophic global warming. (Guttmann, 2008) “We urgently need to change our economy to live within its environmental budget,” said NEF's policy director Andrew Simms, adding that “There is no global, environmental central bank to bail us out if we become ecologically bankrupt.” In Growth Isn't Possible Simms and his co-author Victoria Johnson reviewed all the existing proposed models for dealing with climate change and energy use including renewable, carbon capture and storage, nuclear, and even geo-engineering, and concluded that these are “potentially dangerous distractions from more human-scale solutions” and that there are “no magic bullets” to save us.

The report concludes that even if we were to rapidly transition to an entirely clean energy -based economy, this would not suffice to save us because: “Globally, we are consuming nature's services - using resources and creating carbon emissions - 44 percent faster than nature can regenerate and reabsorb what we consume and the waste we produce. In other words . . . if the whole world wished to consume at the same rate it would require 3.4 planets like Earth.” Given these facts and trends, Simms and Johnson argue, we have no choice but to bring average global growth to a halt (with sharp reductions in growth in the industrialized countries balanced by accelerated growth in the developing countries to approximate equity but tend toward stasis on balance) and to radically reconstruct the global economy to conform to “environmental thresholds, which include biodiversity and the finite availability of natural resources.” (Guttmann, 2008)

The authors conclude that “a new macro-economic model is needed, one that allows the human population as a whole to thrive without having to rely on ultimately impossible, endless increases in consumption” and they point to Herman Daly's idea of a “Steady-State Economy” as their model. For a reaction to this report, the BBC asked Tom Clougherty, executive director of the Adam Smith Institute, a free-market think tank, for his response. Clougherty remarked that the NEF's report exhibited a complete lack of understanding of economics.

Why do capitalist economies grow?

Simms and Johnson begin by asking, “why do economies grow?” Their answer is that as a society we're “addicted” to growth.6 Bill McKibben, in his Forward to Tim Jackson's book calls growth a “spell”: “For a couple of hundred years, economic growth really was enchanting.” But “the endless growth of material economies” threatens the underpinnings of our civilization. The “spell” can be broken and it is past time we did it.7 Jackson says we can find a sustainable prosperity if we abandon the growth-obsessed, resource-intensive consumer economy, forget “keeping up with the Joneses,” and “live ...