Capitalism — Our best tool or greatest liability?

With the Industrial Revolution came two dominant ideas of the twenty-first century, capitalism, and climate change. Now, with the issue of climate change mounting into a global crisis, these two ideas are clashing. Just as in the days of the industrial revolution, capitalism remains heavily dependent on dirty energy sources such as oil, coal, and gasoline. But as the carbon in the atmosphere grows, the choice between green and gas becomes a choice between life and death. Now, the question is, can capitalism break its lifelong ties to fossil fuels and help solve the climate crisis?

The simple answer is no; pure laissez-fair capitalism cannot solve this issue of climate change. Free-market capitalism cares about one thing — profits. As Stan Cox states, “People running big corporations — indeed, those running businesses of all sizes — seek to maximize profits not because they are misguided, but because that’s their job in a capitalist economy.” (Cox 18) Therefore, if profit is the guiding force of capitalism, then as long as there is a profit to be made at the expense of the planet, such a profit will be reaped. In such a situation, the use of fossil fuels and other harmful practices will only end when they no longer become profitable. But with the effects of climate change already beginning to set in, time is not a resource the world has. As Dr. Joeri Rogelj explains, “… we can stay within 1.5C but only just — only if we cut emissions in the next decade,” and, “if we don’t, by the time of the next IPCC report at the end of this decade, 1.5C will be out the window.” (Harvey 21) With such a limited amount of time for drastic action to be taken, the free market of capitalism simply cannot be trusted with the fate of the world. Larry Elliot argues that capitalism can succeed in solving the climate issue, but that for this to happen, “the world needs to wage war on climate change.” (Elliot 18) This idea, which is central to Elliot’s case, undermines the very principles of his own argument. Why would capitalism possibly decide to declare war on climate change? Capitalism is centered around present profits, so while Elliot may dream of his good ol’ American capitalism taking up the noble war against emissions, his grandchildren will certainly face the consequential reality of his woeful idealism.

While hopes free market capitalism coming to our planet’s rescue may prove fruitless, this doesn’t mean that capitalism altogether must go to the scrapyard. Indeed, any proposal dependent on such a solution would certainly end with not better a fate than the world of Elliot. Capitalism is central to many of the world’s largest economies, with America being the posterchild. It would be unfathomable for such countries to make the shift from capitalism anytime in the foreseeable future, and so with only a decade for serious climate action, any climate solution that is incompatible with capitalism is sure to fail. Furthermore, the competition and innovation fueled by capitalism is a valuable tool in the fight against climate change, one we cannot afford to forego. So how does capitalism change from a liability into an asset? The answer — global regulation via an exponential carbon tax. While some may argue that capitalism cannot solve climate change, or that a carbon tax is not a viable solution, an exponential carbon tax’s ability to drive out carbon emissions while also incentivizing growth in green energy through the capitalist model can solve the climate crisis.

An exponential carbon tax will properly incentivize green energy within the capitalist model. The energy sector is one of the largest and most profitable markets on the planet, and there is no shortage of individuals and corporations trying to seize their share of this market. Indeed, a capitalist society does not have to worry about scaring companies away from the energy market, and therefore can be more imposing with regulations on this market. While a carbon tax will not directly stop the use of fossil fuels, its solution is even better as it completely disincentivizes the use of fossil fuels. With this tax, fossil fuels will eventually become so expensive to use that it will be impossible to make any significant profit through fossil fuels. Thus, green energy will become the only way to make a profit within the energy sector, the perfect motivation for solving climate change in a capitalist economy.

Some argue that a carbon tax in an inequitable solution to climate change, however this is not only largely incorrect but is also outweighed by the importance of saving the planet. The energy demands of the world are massive, and yet an incredibly amount of people continue to suffer from a severe lack of access to energy, reffered to as “energy poverty.” Thus, the already huge amounts of energy produced by the world will have to further grow if we hope to provide energy to those whose energy demands have yet to be met. Stan Cox argues that, “The tax would have to be extremely high if it is to achieve the necessarily steep emissions reduction, and that would place an insupportable burden on the world’s poor majority.” (Cox 18) This idea is based upon the flawed logic that the increased expense of fossil fuels will simply be passed along to the consumer, in this case the poor majority, however this is not the case. Indeed, the energy demands of the world are only going to increase, therefore the demand by consumers for energy will not change. Thus, when energy from fossil fuels becomes too expensive to fulfill this demand, the market will look for a cheaper solution. Therefore, as green energy becomes cheaper, not only relative to fossil fuel but also naturally as green energy scales upwards, the free market will push out fossil fuels and encourage the expansion of green energy. Additionally, Cox’s “fair alternative” solution of rationing is simply not viable. Fairness is a great ideal, but unfortunately, just as with Elliot’s proposed solution, idealism is not a force that we can place the fate of the world upon. Having the rich and powerful of the world implement a carbon-tax is plenty hopeful but asking for a solution based on a fair distribution of emissions is the stuff of dreams. In fact, one of the strengths of a carbon tax is that it allows the ultra-wealthy to continue the use of fossil fuels, which will not be significant enough to hinder our carbon goals for this decade, and merely pay the expensive tax associated with them, making this solution more appealing to those with the power to make this idea a reality.

Another point of opposition against the carbon tax argues that green energy will not be able to fulfill the world’s massive and growing energy demands, however the innovation fueled by capitalism will be able to overcome this obstacle. The exponential growth of this carbon tax is key to its effectiveness. By making the tax exponential, a timeline is set for the reduction of emissions that is both immediately effective and provides adequate time for phasing off fossil fuels. A careful balancing of time is required for regulating fossil fuels. The world cannot go without energy, and even a seemingly slight reduction of energy production could prove catastrophic in the scope of the world’s rapidly growing electricity demands. Still, the clock of the planet’s survival is counting down, and immediate action must be taken. With an exponentially growing carbon tax, the profitability of fossil fuels is immediately impacted, and companies are forced to look to alternative methods for future earnings, yet profits are not impacted harshly enough to harm overall energy production as there is still sizeable revenue to be heavily competed for. As it stands, the world is on a path to destruction, and the time before our fate is sealed grows closer every day. Enormous change is needed, and it is needed now, and the excuse that the world isn’t prepared for this change simply won’t do. In the past decade we have seen massive development in the green sector, well beyond most expectations. Now, we must put our faith in the fruits of competition, innovation, and the human mind. We cannot let the thought of failure deter our course; it is simply a risk we must take, for if we chose not to act now, we are certainly doomed.