Climate Change Crisis — A Crisis of Capitalism

The extreme version of late-stage capitalism, centered around planned obsolescence is killing the environment. The extreme environmental damage is a direct bi-product of extreme capitalism.

Capitalism has two unwanted sons. They are twins. One is called Inequality, and the other is called Climate Change. Capitalism has vehemently denied the paternity of these sons, yet it is a known fact that it produces these two bi-products.

What value are we creating for shareholders if we end up destroying the very same environment that shareholders live in? Are these shareholders going to live on Mars whilst they create value on earth?

The climate change crisis in all its manifestations (droughts, floods, rising sea levels, heatwaves, fires, etc) should rightfully be identified as a crisis caused by capitalism. It is a crisis of capitalism. If capitalism is not reigned in, it will destroy the earth. The good thing right now is that many have realized the unsustainability of environmental damage. At least we almost all agree on a starting point, though we have some pockets of resistance from denialists who refuse to acknowledge the existence of visible reality.

There are a few things to ponder.

  1. No way of pricing-in negative externalities
  2. Encourages waste (waste-is-growth economic model)
  3. Misallocation of resources — overpopulation is a lie
  4. The unsustainability of environmental damage = unsustainability of capitalism itself

Pricing-in Negative Externalities

Capitalism had no mechanism to inherently “price-in” negative externalities. The value of goods and services that are produced in the economy does not include the ecological costs. Air pollution, carbon dioxide emissions, water pollution, deforestation, and land degradation have never been factored into the selling price because they are collectively borne by the public.

Carbon credits are an attempt to resolve this. They seek to ensure that the total costs of production factor in an ecological cost. It is a reverse pricing mechanism that incentivizes non-polluters. It's some progress. But it does not fundamentally change the economics of planned obsolescence which is at the center of environmental damage.

Alternatives to capitalism do not necessarily explicitly price-in negative externalities either. However, that should not preclude us from stating that economic systems (including capitalism) have to be adjusted to factor in negative externalities.

Waste-is-Growth Economic Model

People buy a lot of stuff that they don't really need, over and over again. people buy stuff that they need, over and over again, when they ought to only buy once. The economic system is engineered towards waste, which is misidentified as growth. All the wastage in the global economic system is considered solid GDP growth.

What if the average time people spend before buying a new smartphone increased from 24 to 48 months? We would surely have lower reported sales numbers, smartphone shipping numbers, lower GDP growth, etc but we would not necessarily be worse off. People would still have access to smartphones (the same old ones). We globally avoid the immense wasteful system of getting a new phone every two years. This would do wonders for the environment. Newer models would only be required once the technological changes for smartphones (via global R&D) have sufficiently advanced to warrant new smartphones for all again.

Workers at Apple and Samsung would have more resting hours, but with lower sales, some might be retrenched. That’s where the capitalistic system traps us. It's a pyramid scheme where a slight withdrawal can collapse things. Would Apple, Samsung, and Xiaomi exist as they are if there were only 1 million smartphone sales in a year? No, they wouldn’t. So, we are tricked into believing we cannot do without them. Without the capitalists and their waste-is-growth economic system, we will all die. That is what we think but that is not what actually happens.

If production is reorganized, we could still have access to smartphones and still avoid wasting resources.

Misallocation of Resources — Overpopulation is a Lie

We are not yet overpopulated. Malthusians would want you to believe that there are too many of us and we are putting a strain on resources. Yes, we have more people than we had a century ago, but to say we are overpopulated is an exaggeration. The earth has enough resources to carry 7.7 billion people if the resources are allocated efficiently. At the core of the problem affecting the environment is the misallocation of resources.

Resources are being exploited by a wasteful economic system. The bulk of consumption is done at the top, by a few people. The bulk of the exploitation of natural resources only benefits a tiny minority. A few consumer nations at the core consume endlessly. Planned obsolescence, now being implemented at a global level is the epitome of resource misallocation. This resource misallocation is the one responsible for damaging the environment and it lies at the core of capitalism. It is a central tenet. Hence the gross misallocation of resources is a crisis of capitalism.

The unsustainability of Environmental Damage = Unsustainability of Extreme Capitalism

The unsustainability of environmental damage is obvious. If we continue unabated, we will end up destroying the earth by making it inhabitable. This is beyond any reasonable doubt. What’s not obvious, though it ought to be obvious, is the link between the unsustainability of environmental damage and the unsustainability of extreme capitalism.

Capitalism is individualistic. It cannot successfully solve factors that need collective solutions. It has no solution to the problem of the commons. The environment is a problem of the commons. It has to be solved communally, at a global level. Current solutions are multi-faceted, and they attempt to make the corporation a citizen, a member of the global community. Success has been elusive because communal principles are at odds with individualistic competitive market forces. The competitive forces under capitalism are operating at corporate levels, country levels, regional levels, and continental levels to militate against climate change efforts. Fellas in Africa don't want to let go of fossil fuels etc. True collaboration is elusive. It cannot happen under the global capitalistic mode of production. Thinking that capitalism can reform, and we will find ways of ensuring sustainability is a comforting lie. You cannot successfully bake-in sustainability into capitalism without breaking it.

These attempts to bake-in sustainability are socialist. They break capitalism and transform it into a weird version of socialism, with large socialist projects and a big government with a load of rules, laws, and incentive structures. Those who complain that carbon credits are socialist schemes are right. They are socialist and there is nothing wrong with socialism. It is a transitional state between the gradual dismantling of capitalism and the full realization of post-scarcity communism.

Extreme capitalism has to be gradually and carefully dismantled if we are to save the environment. The environment is under siege from a waste-is-growth late-stage capitalistic economic model. This is the villain. You choose what to save: capitalism or the environment. If we choose the environment and adopt an economic system that inherently takes care of the environment because principles of commonality are baked into the system, then we stand a chance of preserving the earth.

You cannot challenge the unsustainability of climate change without challenging the unsustainability of capitalism.

Are you willing to call this crisis for what it is, a crisis of capitalism? If not, you are not yet serious about saving the earth. If you are not ready to talk about capitalism as the center of the crisis, then you might as well accept that we deserve the unsustainability of the environment as the outcome.

Reality Check!

Ciao!

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Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss

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Ryan Gosha

Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss