Every now and then, an old claim goes viral: capitalism is ruining the planet. The argument goes that capitalism requires economic growth in order to sustain itself. And economic growth requires more output, which means more carbon emissions and pollution. Ergo, capitalism is bad for the environment. A recent viral tweet by a Reverend from New York recycled this claim.
This type of vague claim about the alleged evils of capitalism isn’t uncommon. People often just use the term capitalism to mean bad, but then happily point to capitalist Nordic countries1Danish PM in US: Denmark is not socialist https://www.thelocal.dk/20151101/danish-pm-in-us-denmark-is-not-socialist/ as examples of socialist utopias. It all gets very confusing. Her follow-up tweet is important, though, because it gets to the heart of her concern. It also displays a fundamental misunderstanding at the heart of these arguments.
The Reverend argues that economic growth—which is, indeed, something that capitalism tends to deliver—inherently requires depleting the earth’s resources (which presumably also includes a relentless increase in carbon emissions). While it is true that for most of history economic growth has been very emissions-intensive, economic growth doesn’t inherently require increased resource use or emissions. Much of this depends on things like technology, land-use patterns, and the treatment of externalities. These are issues that both market and non-market economies have to grapple with. It’s not about capitalism.
In fact, it’s entirely possible that the things left-wing activists dislike about capitalism could get even worse while environmental outcomes improve dramatically. Let’s walk through one scenario.
Suppose in twenty years the world economic output has increased ten-fold. Bitcoin hits a million US dollars, crypto bros get rich selling NFTs, and metaverse speculators who got in on the early digital land rush are unfathomably wealthy. Meanwhile, for whatever reason, the median income has remained stagnant. All of the real, inflation-adjusted gains have gone to a small number of narcissistic entrepreneurs who escape the long arm of the IRS by building their own sovereign islands while tax bases around the world collapse. That sounds like a pretty dystopian scenario.
But there are other things that have changed in this scenario. Nuclear and hydropower are now the baseloads for the global energy grid, with most of the rest of the energy mix composed of solar, wind, and other renewable sources. The majority of the transportation industry is electrified. And incremental innovations have dramatically improved energy efficiency. In other words, our most pressing environmental problems have all been solved.
While this is a hypothetical scenario, it shows that there is no logical reason why capitalism can’t solve all of our biggest environmental problems, and they could be solved without doing anything to address the things left-wing activists hate about capitalism. This scenario is also pretty consistent with a pessimistic left-wing view of capitalist dynamics—which I don’t share—but it highlights that based on their own logic, there is no reason why capitalism is inherently at odds with the environment.
Markets are actually pretty good at solving problems when you let them. Tesla has done more than the governments of Venezuela or Cuba to address climate change. The fact that Elon Musk got rich is irrelevant to the environmental impact.
It’s true that politicians in market economies face incentives to pursue growth to the detriment of the environment. But that isn’t unique to market economies. The old Soviet Union was notorious for prioritizing industrialization over the environment.2“During seven decades of Soviet regime, there was a trade-off between economy and environment. Like many socialist states, the Union of Soviet Socialist Republics (USSR) believed in communal ownership of almost every property and treated nature as a free resource that the government has right to exploit. With very little regard for future, the USSR continued to run its economic engine, leaving behind a legacy of environmental catastrophe, including desertification and pollution.” https://www.downtoearth.org.in/coverage/environment/environmental-collapse-before-the-soviet-s-fall-56642
Environmental outcomes depend on technologies and policies that are unrelated to broader questions about capitalism versus socialism. If anything, distractions like this are likely to distract from concrete solutions. Loudly denouncing capitalism doesn’t do anything to reduce carbon emissions. If the goal is to reduce carbon emissions, it’s better to focus on actual policies that reduce carbon emissions rather than moralizing about capitalism.
