These days are replete of ominous climate symbolism. The UN organizes a climate summit, Greta gives a speech, last Friday in Germany hundreds of thousands of people took part in the Fridays for Future movement, with some companies and trade unions even joining, and the weekly ‘The Economist’ published a full ‘climate issue’. Is this a historic moment of change? As a German, all this flurry left me deeply frustrated. On the same Friday, the German government agreed on a policy package that is supposed to tackle climate change, and Chancellor Merkel presented this as a breakthrough to the UN. Indeed, her political partner, the Bavarian leader of the Christian Social Party CSU, Markus Söder, spoke of a ‘revolution’.
This is tragic. All relevant experts, including the Federal Agency for Environmental Policy (Umweltbundesamt) agree that the German policy package will not achieve anything significant; and even whether implementation will really succeed, is by no means safe. We have lots of partial policy measures, but no substantial change in the core parameter, namely raising the cost of carbon radically. The intended pricing is depressingly low, and even spread over years to come, and implemented by a complicated mechanism. I do not want to dwell on the details, the newspapers state the facts.
This tragic German failure bodes the worst for other countries where climate policies are much more fragile and disputed, beginning with the US and adding…well, most of the world, India, Australia, you name it. Despite the climate circus at the UN, no really, really substantial action is taken. Revolution postponed. Revolution impossible?
The question of a climate revolution is a tricky one. When we think of revolutions, the idea is always that there is a group in society which suffers from oppression and exploitation and which revolts against the ruling strata. But the climate issue is different. It would be unfair to claim that big oil, capitalists and autocrats are solely responsible for the mess. Responsibility is with all of us. The trouble with German politics is that there are two types of people in German society, and sometimes they are even the same, depending on context. Concern about climate change is growing, many citizens regard this as most important policy issue, thus supporting the current high of the Greens in political support. But there are as many others who feel to be the losers of any kind of policy adopted by the political and social elites, and they even vote the far-right. And there are those who are concerned about the climate, but would still vote down policies that would impose substantial costs of adaptation on them. That’s why the German elephant gave birth to a mouse. There is no free lunch, including revolutions for free.
The paradox of the climate revolution seems that the class enemy is us. Indeed, many ecological economists, theorists of degrowth and eco-warriors argue that what is needed is a fundamental revolution in lifestyles and mindsets of everyone. Can that work? Think of the radical shift with regard to smoking. Would really substantial climate policies work out in the same way?
I do not think so. The lifestyle argument is deeply problematic because it focuses on the lifestyles of rich post-industrial nations. To a certain extent, Germany’s woes are not necessary. Britain has already moved away from coal and only contributes about 1 percent to global CO2 emissions. For the rich countries, adopting climate friendly lifestyles is possible, but won’t have large effect, apart from big emitters such as the US. The real challenge is India, China and Africa. Well, this discussion lingers on for many years, how can we design a global policy that allows for development as growth for most of the world population?
We need to reframe the issue. Once again, The Economist: The editorial makes a clear statement that one should not blame capitalism for the climate issue, but rely on its creative powers to discover the solution. The recipe is simple: Increase costs of carbon, and then let markets respond. The alternative? Eco-socialism and climate planning? As an economist, I must admit that there are too many reasons why this must also fail. And after all, it’s the politics, stupid, in both scenarios.
I think that all these debates fail to recognize the true nature of the problem, and hence we always fall back on these polar views, markets as solution or government intervention. We simply do not face the truth about how the system works that we want to change. Capitalism is a part of it, but not the entire story. Capitalism is a constitutive part of the technosphere, but the technosphere follows certain physical regularities that are not entirely determined by capitalism. There are two basic insights of technosphere science (as I call it):
Unless the systemic and regulatory framework of technosphere is radically changed, partial technological progress in greening the economy will not alter the current trajectory of growth of the technosphere and hence will not keep it within planetary boundaries.
Mere incentivization of climate-friendly behaviour, while retaining the current systemic and regulatory features of the economy, will not change the growth dynamics of the technosphere, and will trigger countervailing political forces.
For both basic hypotheses, the posts on this blog give plenty of evidence.
The real task is to design a fully-fledged alternative economic system beyond the duality of green capitalism and eco-planning. We are too much focused on the direct causal factors of global warming, and do not include the systemic interdependencies. The problem of politics is that if it targets only on the direct factors, changes will lead to immense problems of adaptation in other domains of the economy which cause political tensions that will eventually undermine the policy. For example, you cannot radically increase the cost of carbon without considering the pension system which is heavily invested in the energy sector. We have excellent examples for such a comprehensive approach, such as Sweden where taxing carbon was made part and parcel of a wholesale reform of the tax system. But that is not enough. We need to rethink the entire architecture of our current economic system, and how it governs technosphere evolution, of which the trajectory of global warming is one manifestation.
That would be a revolution, indeed. Even a radical carbon tax would only tinker with one element, and just changing lifestyles while running the same economic institutions would not be sustainable at all. The list of necessary changes is long: Radically reforming the monetary system, radically reforming the system of corporate law, radically reforming the tax system, radically reforming the property rights in natural resources, radically reforming the system of intellectual property rights, and…and…well, a revolution, indeed.
Believe it or not: That would be a market economy, neither green capitalism nor eco-planning