Every once in a while, an old claim goes viral: capitalism is ruining the planet. The argument is that capitalism needs economic growth to sustain itself. And economic growth requires more production, which means more carbon emissions and pollution. Therefore, capitalism is bad for the environment. A recent viral tweet from a New York reverend recycled that claim.
This type of vague assertion about the alleged evils of capitalism is not uncommon. Often people just use the term capitalism to mean evil, but then just cite the capitalist Nordic countries as examples of socialist utopias. Everything becomes very confusing. His follow-up tweet is important, however, because it gets to the heart of his concern. It also displays a fundamental misunderstanding at the heart of these arguments.
The Reverend argues that economic growth – which is, indeed, something capitalism tends to deliver – inherently requires the depletion of the earth’s resources (which likely 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 does not in itself require increased use of resources or emissions. Much depends on factors such as technology, land use patterns and the treatment of externalities. These are problems that both market and non-market economies have to deal with. It’s not about capitalism.
In fact, it’s entirely possible that the things left activists don’t like about capitalism will get even worse while environmental outcomes improve dramatically. Let’s walk through a scenario.
Suppose that in twenty years world economic production has increased tenfold. Bitcoin hits US$1 million, crypto brethren are getting rich selling NFTs, and metaverse speculators who have embarked on the digital land rush are incredibly wealthy. Meanwhile, for some reason, the median income has remained stagnant. All the real, inflation-adjusted gains have gone to a handful of narcissistic entrepreneurs who escape the long arm of the IRS by building their own sovereign islands while tax bases around the world crumble. It sounds like a pretty dystopian scenario.
But there are other things that have changed in this scenario. Nuclear and hydro are now the baseloads of the global energy grid, with most of the rest of the energy mix made up of solar, wind and other renewable sources. The majority of the transportation industry is electrified. And incremental innovations have dramatically improved fuel efficiency. In other words, our most pressing environmental problems have all been solved.
Although this is a hypothetical scenario, it shows that there is no logical reason why capitalism cannot solve all of our biggest environmental problems, and they could be solved without doing anything to solve the issues leftists hate about capitalism. This scenario is also quite consistent with a pessimistic view of left-wing capitalist dynamics – which I do not share – but it underlines that, according to their own logic, there is no reason for capitalism to be 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 fight climate change. The fact that Elon Musk got rich is irrelevant to the environmental impact.
It is true that politicians in market economies have an incentive to pursue growth at the expense of the environment. But this is not unique to market economies. The former Soviet Union was known for prioritizing industrialization over the environment.
Environmental outcomes depend on technologies and policies that are unrelated to broader questions of capitalism versus socialism. On the contrary, distractions like this are likely to divert attention from practical solutions. Loudly denouncing capitalism does nothing to reduce carbon emissions. If the goal is to reduce carbon emissions, it is better to focus on real policies that reduce carbon emissions rather than moralizing about capitalism.