Why Democracies and Free Markets Struggle to Address Climate Change
The G7 Summit finished this week and among its products was a climate pledge. An ambitious plan that targets the elimination of coal use around the world, it was still met with criticism and disappoint by climate activists who feel it just does not do enough. Such has become the pattern after almost every gathering of world leaders. Given that the effects of climate change grow more catastrophic by the day and time to act has virtually run out, why does it feel like progress is still so slow?
The reality is that climate change is unique from any challenge ever confronted by humankind and this challenge defies the logic built into the systems of democracy and free markets that dominate the world we live in. There is good reason for such dominance, these systems are some of the greatest feats of human achievement and multiple historical attempts to substitute them with supposedly superior ones have failed. However, not only is a planetary ecological crisis unprecedented in human history, but it could also hardly have been conceived of by those who first composed these systems. While not nearly on the same scale the world response to the Covid pandemic has showcased many of the struggles that will plague a democratic and or market oriented response to the environmental disaster that is now only in its early stages.
Systems of Competition
Democratic governance and the market are designed to create competition for the benefit of a single group, voters or consumers. Those who succeed are rewarded with votes and money, both then translate to power.
The market, when free of interference, discovers the true value of resources based on their supply and demand while also pushing entrepreneurs to discover the best technologies and methods for the delivery of goods and services. Billions of variables that no one individual could comprehend are translated into prices that everyone can understand and react against. The beauty of the system is that it allows individuals in a society to be productive to the benefit of themselves and others without having to agree on motivations or ends.
Similarly, democracy forces those who lust for power to seek the approval of those they will govern. However, it does not, as an idealistic conceptualization might suggest, translate the desires of constituents into policy. Democratic competition is less sensitive and forgiving than market competition. An individual cannot control a percentage of an office, voters cannot give more votes to candidates they especially like, you either win or you lose. In this way its not the whole electorate’s preferences that are absorbed, merely those of the winners.
Systems of Trial and Error
At the heart of the competition, both these systems rely on trial and error. Providers of goods and services experiment with new technologies and methods to better please consumers. Opposition politicians forward alternative policy solutions to the ones currently in place and advocate their superiority. This is what makes these systems into what economists sometimes refer to as systems of discovery. By trying different things, providers and politicians discover what works and what does not. Ingenious individuals are rewarded for their creativity when they discover previously unknown or untested solutions to current problems. Businesses that increase customer satisfaction gain a larger market share. When a politician’s policies meet or exceed expectations they are returned to power, when they do not the opposition generally prevails.
The trial and error mechanism is driven solely by opinion. If consumers believe a product or a policy to be superior in meeting their needs, then it is. There is no relevant objective metric by which to measure these outputs, if one product is preferred to another then it is by default the better product. Since the competition is geared towards pleasing a set group, the perception of said group determines the reality.
Climate Change
So why are these systems ill-equipped to respond to climate change? The first and perhaps most crucial reason is that the perceptions of the consumer and the voter no longer determine reality. The planet and the constraints of science must be appeased to abate climate change, not people. Whether or not individuals believe climate change is real, or the degree of importance they assign to it, is irrelevant. It is real, it is happening, and our opinions will not mitigate it. The victory of politicians who deny climate change does not make their position correct or even plausible. Prices lack the ability to signal efficiently and coherently the damage done to the climate by each product. The system’s innate advantage dissipates as it becomes requisite for people to agree on the desired ends of sustainability. Even when consumer pressure forces the market to discover sustainable solutions, there is no mechanism to ensure this is happening quickly enough or broadly enough to address a problem that we failed to address seriously until the last possible moment. Companies might even be rewarded more for the appearance of sustainability than the actual act.
Like competition, trial and error also begins to malfunction when up against this issue. Again, time plays a major factor. Climate change worsens everyday and future consequences become more catastrophic. The Earth simply lacks the time to experiment with ineffectual solutions or climate change denial. When rising sea levels displace billions and heat waves leave large swathes of the planet uninhabitable it will not be possible to say, now let us try something else. This crisis is as often stated, existential.
Much of trial and error is done in the attempt to appease disparate interests within blocs of consumers or voters. This results in compromise solutions, especially in the zero-sum game of politics. Industries and individuals that will be displaced by climate solutions may still be willing to work towards a solution; however, they will, not unreasonably, search for compromises and allowances. They may offer to reduce emissions or suggest alternative strategies. On a normal issue this would be a healthy process. Climate change however, like politics, is a zero-sum game. Again, had we endeavored to solve this issue 50 or even 30 years ago, compromises would have proved valuable. Now it is all or nothing and this is not conducive to either the market or democracy. The coal miner must lose their job for the planet to live. Its an uncomfortable reality that politicians go to extreme lengths to avoid talking about because it is not popular, just ask Hillary Clinton. As a result, the competition effect drives politicians to either back ineffectual solutions unlikely to offend or attempt to deceive voters about the fallout of their policies.
Trial and error usually occur with transfers of power as a new ideology wields the machinery of government. For climate change policy this creates for potentially fatal inconsistency. In the case of the United States, the shift can be as dramatic as switching from a global leader on solutions to outright climate change denial as was the case with the Trump administration. Climate change activists might decry the fact that President Biden does not make grander declarations but it is ultimately superficial anyway. What matters is what Congress can pass and even this has its limits. If the current Congress were to pass a carbon tax (a measure I strongly support), Republicans would inevitably repeal it upon their return to power; citing, at best, vague promises about ‘other ways’ to fix the problem. If solutions are not strong and consistent overtime, they will be pointless, democracy does not tend to lend itself to long-term rigid consistency for this would be the absence of competition. Just days ago, a Swiss referendum defeated the country’s measures to meet their Paris Accord goals with a slim 51% majority. Ultimately, the traditional logic of both, the market and democracy does not function in a manner easily compatible with climate change solutions.
The Lessons of Covid Response
One might observe that the world just responded to a major crisis with natural constraints. Though not without error, the world managed to come together to slow the spread of the disease until a dramatically accelerated vaccine process produced a way out. Does this not bode well for the ability of current systems to respond to climate change? In a word, no. In fact, it demonstrated many of the issues discussed here.
Delays caused by competition and failed alternatives to the standard mitigation methods proved costly in many countries across the globe. Perhaps nowhere is this more evident than in Brazil, where staunch refusal by both the federal government and large segments of the population to accept the need for lockdowns, masks, social distancing, and other measures has meant the country was disproportionately affected and now has the second largest number of deaths in the world. The trial of alternative solutions, mainly ineffective medications, wasted precious resources and killed many.
Furthermore, many of the solutions to the Covid crisis came in the form of authoritarian responses, even on the part of the democracies. Police departments across the world were essentially tasked with placing whole countries under house arrest. Freedom of movement, commerce, and behavior were significantly curtailed, and coercion heavily employed. Control over the daily lives of individuals was not only assumed by governments but transferred to the control of unelected bureaucrats, mostly health departments, that began to wield enormous power over what people could and could not do. These moves had advantages and doubtlessly saved lives, but one would be hard pressed to suggest that any Covid measure could be described as truly democratic.
It is true that market competition played a positive role in producing a vaccine. However, even this competition was for government money and on government terms. Otherwise, the free operation of business and markets was largely suspended or subjected to virtually unquestionable government restrictions.
The consequences were very real too and are likely to continue for decades. A few examples are expedient here. Despite improving conditions and reducing restrictions, the Governor of California decided to retain the emergency powers the crisis granted him on the basis that “There’s uncertainty in the future.” Given that this statement is eternally true, it is unclear when he would deem it appropriate for the governor not to wield emergency power. In the United Kingdom the government attempted to suppress pesky protests with pandemic measures even after protesters demonstrated the ability to manifest their concerns safely. Most glaringly, the government in Poland used pandemic measures to cancel elections, suppress the opposition, pass controversial legislation, and dole out political patronage.
Covid not only demonstrated the difficulties for democracies and markets in providing solutions but showed that these kinds of crises threaten the existence of these systems themselves. The world may yet survive the climate crisis, but it is not at all clear that democracy and free markets would do the same. The bureaucratization of power, discussed above, is particularly concerning. It is not hard to understand the urge in the face of complex crises to turn decision making power over to experts. However, when bureaucrats exercise control over power then democracy becomes hollow. Real decisionmakers remain immune from public pressure and input. Furthermore, experts are not omnipotent nor a cohesive bloc. Expert recommendations for Covid variated over the course of the pandemic as new data poured in daily. Surely climate science is more developed but that hardly means that scientists would be of one mind on how to fix the issue or even on understanding what fixed meant. Populations could essentially become hostages waiting for experts and bureaucrats to decide they no longer needed to control everything.
What now?
It is important to me that readers understand that this article is not a call to abandon hope and it is most certainly not an endorsement of authoritarianism or state planning. I would shudder to think that the erasure of progress and the enslavement of humanity was the only way to save the planet we call home. It should also be noted that such solutions would still be likely to fail in achieving their end goals. Indeed, as has been highlighted here democracy and the market are tools of discovery. It is quite possible that they contain within themselves the seeds of a solution and their own evolution. The purpose of this article is to highlight exactly why the prevailing systems of our day struggle so mightily with climate change. Only by appreciating the complexity of the task can we discover solutions. For all of its many evils, humanity has proven it has an even greater capacity for good. I believe it is a failing of some of my fellow climate activists to dismiss everything as simply not good enough. It is important to celebrate our progress even as we recognize the immediate need to do better. Though climate change is daunting and even terrifying, I for one am happy to bet on the human capacity for good rather than resign myself to the necessity of its evils.
