47 Capitalism and Climate Change
47.1 Orthogonal?
Milanovic
The third critique that Alyssa Battistoni makes is in my opinion the easiest to answer. She criticizes the absence of discussion of climate change in “Capitalism, Alone”, calling such absence “irresponsible”. This is because development of capitalism is hitting the planetary limits and might lead to substantial catastrophes through the change in climate and loss of livelihood for many people, especially in Africa. I find this critique relatively easy to answer because it is based on a misunderstanding or even sloppy thinking. What is responsible for climate change is economic growth, not capitalism as such. Economic growth in turn comes from our desire, in poor and rich countries alike, among poor and rich people alike, to lead better lives and to have more goods and services. It is the production and consumption of these goods and services that is responsible for climate change. So if one wants to stop the climate change one needs to reduce the production of goods and services that are CO2 emission-intensive. But doing so through a combination of taxes and subsidies does in no way change capitalism.
No partisan of climate change, however radical, whether it be Alexandria Ocasio-Cortez, Bernie Sanders, or Greta Thunberg has suggested that large oil companies be nationalized, or that many of the companies responsible for emissions be run by worker councils; they have not suggested that profits of “bad” companies be confiscated. All such movements would indeed spell the end of capitalism in at least some sectors. Yet such ideas are never mentioned. No partisan of struggle against climate change is ever advocating policies that would effectively stop capitalism even in one small part of the economy. What they are advocating is a specific combination of taxes and subsidies, discouragement of consumption, carbon permits, and moral suasion (or moral shaming) which would result in the reduction of emissions.
But whether electricity or oil companies or meat producers or a person using air conditioning are working within one set of incentives, where the products that are responsible for climate change are cheap or expensive, they are still working within the capitalist framework. The company is still privately owned, the objective of the company is still maximization of profit, the objective of individuals is still maximization of wealth. It is just taking place under a different structure of prices. Differently structured prices may, one hopes, curb climate change but they have really nothing to do with eliminating capitalism. Since my book is about capitalism, I have very little to say about proposals which have nothing to say about capitalism as a mode of production. Despite much “noise”, capitalism, as accurately defined, and climate change, even in the words of their most vocal opponents, are really orthogonal. Whatever policies are adopted regarding climate change—even if they are of the most radical kind currently on offer—will have very little impact on capitalism as an economic system. Such policies can reduce profit rates of some companies or some branches of production but they will simply redistribute profits within the capitalist sector, not end capitalism as a system. To be blunt: capitalism and greed would be pursued under different relative prices.