Our Capitalism, short-term interests, and the failure of Adaptation

by Tristan on June 7, 2010

in Climate change, Offshore oil and gas, Water pollution

The National Post is reporting that the economic fallout of the BP oil spill will be minimal. Any reduction in GDP along America’s Gulf Coast resulting from oil shortages will be offset by the increased local spending associated with cleanup efforts. They go as far as to say that:

the economic fallout from the disaster is likely to relatively benign to the global recovery and may even end up benefiting Canada’s resource-rich economy, economists say.

The failure of thought here is obvious – a distinction is being drawn not only between monetizable and non-monetizable costs (in fact, the environmental cost can be monetized), but between those costs immediately felt by capitalism, and those which have no immediate bearing on shareholder value. This is the same failure of Capitalism to respond to environmental crisis as prevents adaptation to respond to the threat of dangerous global warming.

What we should take from this is the failure of capitalism to be adaptive, to respond to incentives, to anticipate profitable futures. Rather, in its current structures it responds only, or at least principally, to short term incentives and ignores as best it can long term disaster. Capitalism, therefore, is a weak system – a system which is not for us adequate to the challenges posed by the fore-knowledge of long term environmental crises. It must be tamed (i.e. more highly regulated), or eliminated, if we desire to not go under as a result of environmental crises.

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{ 8 comments… read them below or add one }

Milan June 7, 2010 at 11:59 am

In the sense you are using, I think capitalism is highly adaptive. That’s why I am not really worried about peak oil. It’s just the sort of crisis the economic system can deal with, where scarcity produces high prices that change behaviour.

When it comes to costs less easily internalized by markets, we can draw a distinction between those that ultimately fall on human beings and those that do not. I think we are far enough along now in causing climate change that non-human harms are a low level concern. It might be very sad to lose beautiful places and rare species, but the real fight is for the future of humanity.

The challenge in reforming our political and economic systems is to make them take that threat into account and begin addressing it in a serious way.

Tristan June 7, 2010 at 12:10 pm

The system is adaptive only to what is monetized, and can not be deflected away from short term balance sheets. Environmental crisis is “money”, but the costs are long term, and rarely born by those actors which cause them. Therefore, the system, to be adaptive, needs to be reformed to take these long term interests into account – or else it is not adaptive in the ways humanity requires.

Why do you think there is so much monetary support for climate denial? Because it is in corporate interests – it would be irrational not to spend money to deflect the public opinion away from regulating costs into corporate activity.

Milan June 7, 2010 at 12:23 pm

This goes back to what was discussed before. It may be unethical and stupid, but people are much more swayed by wallet-type costs and benefits within the near future.

Governments constrain those urges in many ways: requiring mines to pay reclamation costs, imposing product liability, mandating insurance, etc. We need to do that for climate. Doing so requires building up the political will necessary to overcome opposition from status quo actors.

Tristan June 7, 2010 at 12:42 pm

“people are much more swayed by wallet-type costs and benefits within the near future.”

“People”, thought neutrally, don’t exist. Public relations, campaigns of anti-union, anti-democratic, and anti-government sentiment produce certain sets of preferences in certain orders of popularities. This doesn’t mean freedom is impossible, it just means that the twentieth century has been for the most part set against it.

Leaving “people” out of the equation, it isn’t hard to see what kind of structural changes are needed to employ Capitalism’s adaptivity to solve environmental crisis. The problem is, capitalism is a strange animal that acts to preserve its current set of values (short term profit, CEO bonuses etc…) Look at Obama’s difficulty at reforming the financial sector as evidence for the extreme power of bankers.

So, while formally the capitalist system certainly can be reformed, the question is whether such a reform is politically possible. The issue of “advocacy” is not merely to assert what is desirable, but what is possible – and how to get from what is possible to what is desirable.

Milan June 11, 2010 at 12:04 pm

I think the drive towards climate stability bears many similarities to the drive towards ending slavery in the United States. Just as the economic structures of many US states depended on slavery, the economic structure of our society now depends on burning fossil fuels.

What was and is necessary is the political will required to force the change. Once that is done, economies will adapt just fine.

Byron Smith June 11, 2010 at 1:46 pm

The “political will required to force the change” from US slavery included a civil war. Just noting.

Tristan June 11, 2010 at 2:01 pm

There was a political movement towards ending slavery, but it succeeded only when it was taken up by power interests who used it as a means to other ends. Also, slavery didn’t really end with the civil war – the Jim Crow laws and the lack of land reform meant similar conditions persisted for half a century after the “end” of slavery.

Milan June 11, 2010 at 2:51 pm

Quite possibly, the last major emitters will need to be shut down with force or the threat of force. That will include places where fossil fuel reserves are the dominant source of potential wealth and political influence, such as Saudi Arabia, Alberta, Qatar, etc.

Force may not actually be required (for instance, their fossil fuel exports could be blockaded and they could be forbidden from importing materials and equipment that sustain internal fossil fuel use), but that kind of serious may ultimately be necessary to produce global carbon neutrality.

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