This Changes Everything (part 3)

April 19, 2017

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A key question in the political debate over energy is whether governments should have a strong energy policy at all. The conservative answer is essentially no. Government should not “pick winners and losers,” but remain neutral toward different energy sources and let the market decide. It is the “invisible hand” of the market that is most rational and fair. If fossil fuels are what sell, then we should continue extracting them.

Naomi Klein, on the other hand, sees our heavy reliance on environmentally dangerous sources of energy as a massive market failure. Fossil fuels are both more profitable for producers and cheaper for consumers than they should be, because market participants are not paying the full environmental cost. The planet, not the market, will dole out the consequences, including heavy costs for poor people who never got the benefits of high consumption. In this case, the market outcomes are neither rational nor just. Klein doesn’t say it in exactly these words, but the root of the problem is capitalism’s propensity to privatize benefits while socializing costs.

That is the basic argument for strong public policies–local, national and international–to facilitate a transition to cleaner energy as soon as possible.

Democratic resistance

Since the fossil fuel industry has accumulated enormous economic and political power, the only solution Klein sees is a massive democratic resistance movement. She sees such a movement emerging as the conflict between private interests and the public interest becomes clearer.

The fossil fuel industry is on a collision course with the climate, since it is planning to extract and burn far more carbon than scientists say the atmosphere can safely absorb. The valuation of fossil fuel companies on the stock market is based on the future profits projected on the basis of those plans, so they have strong incentive to keep going.

What really encourages resistance is that extractors are “pushing relentlessly into countless new territories, regardless of the impact on the local ecology (in particular, local water systems), as well as the fact that many of the industrial activities in question have neither been adequately tested nor regulated, yet have already shown themselves to be extraordinarily accident-prone.”

Resistance is growing especially in the Pacific Northwest, led especially by “resurgent Indigenous Nations, farmers, and fishers whose livelihoods depend on clean water and soil, and a great many relative newcomers who have chosen to live in that part of the world because of its natural beauty.”  For many people, climate change is still a somewhat abstract notion, but a threat to the local water supply is not.

And what could be more democratic than a popular demand for clean water? “Having the ability to defend one’s community’s water source from danger seems to a great many people like the very essence of self-determination.”

Of course, the success of a broad environmental movement remains to be seen. Truly transformative social movements are historically rare. Klein cites the example of anti-discrimination movements that achieved only partial victories. The movement for African American rights succeeded in outlawing the most obvious forms of discrimination. But it has not achieved the “massive investment in jobs, schools, and decent homes” that would be needed to eliminate the large racial gap in wealth and income. On the other hand, the labor movement of the 1930s achieved more substantial economic gains. In that instance, the crisis of the Great Depression shifted popular opinion dramatically to the left, producing the New Deal wave of progressive legislation. The climate crisis may require a political change of that magnitude.

Global responsibility

What makes the challenge of climate change so daunting is that it requires developed countries not only to curb their own fossil fuel emissions but to help poorer countries curb theirs. Klein believes that this is a matter of both economic necessity and moral justice.

“Developed countries, which represent less than 20 percent of the world’s population, have emitted almost 70 percent of all the greenhouse gas pollution that is now destabilizing the climate.” The richer countries not only have a history of appropriating other peoples land, labor and resources (especially through slavery and colonialism), but they have also appropriated the sky, “gobbling up most of our shared atmosphere’s capacity to safely absorb carbon.”

That puts developing countries in a real bind. They are told that they must limit their fossil fuel emissions just when they are starting to industrialize. But the cheapest and easiest way for them to develop is to use the most readily available sources of energy, without bearing the costs of environmental protection or innovative technologies.

They cannot break this deadlock without help, and that help can only come from those countries and corporations that grew wealthy, in large part, as a result of those illegitimate appropriations….With many of the biggest pools of untapped carbon on lands controlled by some of the poorest people on the planet, and with emissions rising most rapidly in what were, until recently, some of the poorest parts of the world, there is simply no credible way forward that does not involve redressing the real roots of poverty.

The United Nations Framework Convention on Climate Change (1992) recognized this when it asserted a principle of “common but differentiated responsibilities.” The nations of the world are all in this together, but the countries that have gotten the richest on fossil fuels have a special responsibility to switch to cleaner energy, as well as to help finance that transition in poorer countries.

One reason why emissions are falling in the United States (although not enough) but rising in poorer countries is that we have offshored so much manufacturing, especially to countries with weak environmental policies. The system is very profitable, but it complicates efforts to combat global warming.

In Klein’s view, the solution is not just for richer countries to contract their economies, while poorer countries expand theirs on the same old fossil-fuel model. That would just redistribute emissions, not reduce them. The challenge is for all countries, rich and poor alike, to agree to develop differently.

What kind of populism?

In a previous post, I mentioned Klein’s point about bad timing: Climate change became an issue just “at the peak of free market, end-of-history triumphalism.” She is hopeful, however, that other social problems such as growing inequality have helped discredit that ideology. If so, conservative politicians may be losing some of their cultural legitimacy, and a progressive counter-revolution may be in the making.

In this context, what should we make of Donald Trump’s “populism”, which arrived on the scene after Klein’s book was written? It is a little different than mainstream conservatism, since it encourages some government interventions in markets, especially restrictions on global free trade to protect US. manufacturing. (What exactly those restrictions would be is not clear.) When it comes to energy, it is worse than conservatism, since it is not so much energy neutral as pro-fossil fuel. Our new EPA Administrator is Scott Pruitt, who as Attorney General of Oklahoma consistently represented the interests of fossil-fuel companies. Our Secretary of State is Rex Tillerson, the former CEO of Exxon-Mobil. Neither Trump nor Pruitt has accepted the scientific consensus on climate change.

Trump seems obsessed with jobs in coal mining and pipeline construction. He has not shown much interest in creating new kinds of jobs or training workers to perform them.  Klein, on the other hand, points to the economic potential of clean energy. One study she summarizes is from the Canadian Centre for Policy Alternatives:

[I]f $5 billion is spent on a pipeline, it produces mostly short-term construction jobs, big private sector profits, and heavy public costs for future environmental damage. But if $5 billion is spent on public transit, building retrofits, and renewable energy, economies can gain, at the very least, three times as many jobs in the short term, while simultaneously helping to reduce the chances of catastrophic warming in the long term.

Trump’s brand of populism is a reactionary one favoring traditional industries and jobs. But the very fact that many of his supporters are disillusioned with establishment conservatism may create some room for a more progressive populism favoring a more innovative and sustainable economy. Whether public opinion will shift in that direction in time is hard to say. If history is any guide, the old economy may have to show even more signs of failure before people will turn to something new.


This Changes Everything (part 2)

April 18, 2017

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Naomi Klein’s book is a plea for strong action to combat climate change. On the one hand, she argues that renewable energy technologies “have become radically more efficient and affordable, making a full transition to the power they provide both technologically and economically feasible within the next few decades.” On the other hand, she sees methods of fossil fuel extraction becoming more and more dangerous. Natural gas is a popular alternative to coal, but fracking threatens water supplies, and gas obtained by fracking emits methane at a rate 30% higher than conventional gas. Public policy should focus on curbing fossil fuels and developing cleaner alternatives, both as quickly as possible.

Much of the book is a critique of more limited solutions that require fewer changes to our way of life. They treat climate change as “a narrow technical problem with no end of profitable solutions within the market system….” Change your lightbulbs and buy a different kind of cleaning liquid, and we’ll be fine.

Wishful thinking

Klein is rather disappointed in the environmental movement, which she says has failed to live up to its initial promise. Back in the 1970s, twenty-three federal environmental laws were passed, including the Clean Air Act, the Clean Water Act, the Wilderness Act, the Endangered Species Act and the Toxic Substances Act. But this legislative progress largely ground to a halt when the changing political climate brought Ronald Reagan to the White House. With free-market capitalism once again the reigning ideology, many of the new environmental groups tried to work within the system rather than challenging it. Many relied on donations from the same fossil-fuel companies that were also pushing environmental deregulation, and some even made their own investments in the fossil-fuel industry. Their reluctance to challenge the economic power structure forced them “to place their hopes in solutions–whether miracle products, or carbon markets, or ‘bridge fuels’–that are either so weak or so high-risk that entrusting them with our collective safety constitutes what can only be described as magical thinking.”

In the negotiations leading up to the Kyoto Protocol (1997), the United States insisted that emissions reduction be accomplished through “cap-and-trade” rather than direct emissions limits. Under cap-and-trade:

[P]rojects that were employing practices that claimed to be keeping carbon out of the atmosphere—whether by planting trees that sequester carbon, or by producing low carbon energy, or by upgrading a dirty factory to lower its emissions—could qualify for carbon credits. These credits could be purchased by polluters and used to offset their own emissions.

Ironically, even this market-based solution was too radical to be ratified by Congress, but it was adopted in other countries, notably the European Union.

In theory, the emissions in the atmosphere could come out the same whether a polluting company reduced its own emissions or paid someone else to reduce theirs. The problem was that it was too easy to game the system. The alleged reductions that qualified for credits were sometimes illusory. Companies were accused of adopting dirty methods of production so that they could then earn credits for eliminating them. “Even conservative sources estimate that between 1/3 and 2/3 of carbon credits bought into the [European Union’s Emissions Trading System] ‘do not represent real carbon reductions.'”

In the following decade, the cap-and-trade bills introduced by President Obama came out of the US Climate Action Partnership, a coalition of environmental groups and large polluting companies. The bills would have given energy companies “free allowances” covering 90 percent of their existing emissions, so the most they would have to do to keep right on polluting was to buy credits to offset the other 10 percent. But again, even that plan was too radical to pass Congress.

Fixing the earth or fixing ourselves?

Klein is especially critical of technological fixes that promise to counteract the greenhouse effect of whatever emissions industry fails to control. One that has received a lot of attention is Solar Radiation Management, which would attempt to limit the amount of sunlight that reaches the earth. We might spray large amounts of sulfate into the stratosphere, with an effect similar to major volcanic eruptions that have been known to reduce global temperatures in the past. Among the objections Klein cites:

  • It could create a permanent haze over the earth, eliminating blue skies and interfering with astronomy
  • It could impede the production of solar energy
  • It would not address the underlying causes of climate change
  • It would not deal with other effects of climate change, such as increased carbon in the oceans, with detrimental effects on marine life and the aquatic food chain
  • Once started, it would have to be continued indefinitely; otherwise, “all the warming that you had artificially suppressed by putting up that virtual sunshade would hit the planet’s surface in one single tidal wave of heat, with no time for gradual adaptation.”

Apart from the scientific details, Klein questions the conception of humanity and nature that underlies proposals of this kind. We would be tinkering with the entire planet as if it were a machine that we could fine tune. The greatest danger is that the earth would “go wild in ways we cannot imagine,” since we don’t understand the whole biosphere well enough to know in advance what it would do. In the words of MIT microbiologist Sallie Chisholm:

“Proponents of research on geoengineering simply keep ignoring the fact that the biosphere is a player (not just a responder) in whatever we do, and its trajectory cannot be predicted. It is a living breathing collection of organisms (mostly microorganisms) that are evolving every second—a ‘self-organizing, complex, adaptive system’ (the strict term). These types of systems have emergent properties that simply cannot be predicted. We all know this! Yet proponents of geoengineering research leave that out of the discussion.”

Klein’s reference to complexity theory in this context suggests to me that environmentalism is part of a paradigm shift that has been taking shape for some time. The machine metaphor for understanding natural systems is under attack, and a more creative model of reality is emerging. (See especially the writings of complex system theorist Stuart Kauffman.) Our relationship to nature is coming to be seen more as a creative partnership and less as a dominance hierarchy.  As a sociologist of gender, I notice the same theme of partnership vs. dominance running through the study of gender relationships. That connection makes sense. In Western patriarchal culture, nature has been conceived as feminine and controllable, while mankind has been conceived as masculine and controlling. Klein also develops a parallel between women’s fertility and the fertility of the earth, both of which have been objects of male regulation. It is this entire worldview that is now being challenged.

Klein sums it up well when she says, “The earth is not our prisoner, our patient, our machine, or, indeed, our monster [i.e., our Frankenstein monster to get back under control]. It is our entire world. And the solution to global warming is not to fix the world, it is to fix ourselves.”

Continued


This Changes Everything

April 17, 2017

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Naomi Klein. This Changes Everything: Capitalism vs. the Climate. New York: Simon & Schuster, 2014

Journalist Naomi Klein spent five years delving deeply into the problem of climate change and what it may mean for our capitalist way of life. She concludes that up until now the world has been failing to tackle the problem effectively, and that’s mainly because the necessary steps “fundamentally conflict with deregulated capitalism, the reigning ideology for the entire period we have been struggling to find a way out of this crisis.”

The first part of her statement is widely accepted, at least among scientists and most world leaders. The 2009 climate summit in Copenhagen set a goal of limiting average global temperature to no more than 2 degrees Celsius above what it was when countries first turned to coal to power the industrial revolution. That would require the richer countries to reduce their carbon emissions “in the neighborhood of 8-10 percent a year.” So far that isn’t happening. According to the EPA, US carbon emissions dropped only 2.9% between 2014 and 2015, and only 11.7% over the ten-year period from 2005 to 2015. In the world as a whole, that drop was offset by increased emissions from developing countries.

Much more controversy surrounds the question of what to do about it. Many people hope for a technological fix that could solve the problem with minimal impact on our habits of production and consumption. Economic conservatives want to limit changes to what can occur through market mechanisms such as consumer demand for greener products, while minimizing the role of government regulation. Liberals are willing to entertain government measures like a carbon tax, but are suspicious of calls for a more radical economic transformation.

Klein is willing to think more radically, since she regards climate change as a real game changer. It poses  a massive threat; it is happening rapidly; and it forces us to rethink how we have related to nature and organized our economic lives.

[T]he real reason we are failing to rise to the climate moment is because the actions required directly challenge our reigning economic paradigm (deregulated capitalism combined with public austerity), the stories on which Western cultures are founded (that we stand apart from nature and can outsmart its limits), as well as many of the activities that form our identities and define our communities (shopping, living virtually, shopping some more).

No doubt people prefer little problems with little solutions to big problems requiring big solutions. That makes Klein’s book a tough sell. Nevertheless, it’s worth reading, just in case she may be right.

The “greatest market failure”

The roots of the climate problem lie deeper than capitalism, in the relationship to nature that Klein calls “extractivism”.  She defines this as “a nonreciprocal, dominance-based relationship with the earth, one purely of taking. It is the opposite of stewardship….” Both Western religion and Western science conceived nature as a subordinate thing to be used for the benefit of spiritually or mentally superior humanity. Although these ideas preceded industrial capitalism, “the ability to harness the power of coal to power factories and ships is what, more than any single other factor, enabled these dangerous ideas to conquer the world.” The expansion of production and consumption in the modern market economy was built on the foundation of fossil fuel extraction.

Implicit in the notion of the “free market” was the freedom to dominate nature. (Klein also sees domination in the relationship of capital to labor and rich countries to poor countries, a point I’ll return to later.) As long as producers and consumers of fossil fuels “pay nothing for the privilege of treating our shared atmosphere as a free waste dump,” the “invisible hand” of the market fails to channel self-interest toward the general good. Since the true cost of burning fossil fuels is not factored in when calculating corporate profits or consumer prices, neither producers nor consumers have enough incentive to change their behavior. That’s especially true if much of the environmental damage they are causing hasn’t happened yet or is happening somewhere else on the planet. Klein quotes the Stern Review on the Economics of Climate Change when it calls that problem “the greatest market failure the world has ever seen.”

Part One of Klein’s book is called “Bad Timing.” The world was starting to hear about scientific evidence of global warming in the 1980s, around the same time that “neoliberal” economic policies were on the ascendancy. Those policies aimed to use low taxes and deregulation to free up private capital while restricting public action. After the collapse of the Soviet Union, conservatives declared the historical struggle among economic ideologies over and free-market capitalism the winner. A grand market failure was not something they wished to consider, let alone correct. “A belief system that vilifies collective action and declares war on all corporate regulation and all things public simply cannot be reconciled with a problem that demands collective action on an unprecedented scale and a dramatic reining in of the market forces that are largely responsible for creating and deepening the crisis.”

That is why the debate over climate change is so deeply polarizing. For social critics, the climate issue is the most powerful argument against deregulated capitalism. And for precisely that reason, the defenders of that retrograde brand of capitalism have strong motives to deny or minimize the problem.

Global climate and global trade

Another bit of bad timing is that the era of global climate agreements is also the era of global free-trade agreements, and the two have conflicting goals. Klein describes Ontario’s Green Energy and Green Economy Act, which Al Gore praised as the “single best green energy [program] on the North American continent.” In order to promote renewable energy and give manufacturers of materials like solar panels incentives to come to Ontario, it included a requirement that a certain percentage of materials be locally sourced. However, the World Trade Organization ruled that this “protectionist” provision violated the terms of the North American Free Trade Agreement. Global free-trade pacts have stronger enforcement mechanisms than international agreements to reduce carbon emissions, so “trade trumps climate.”

Global free trade contributes to climate problems in other ways. China has become “a free trader’s dream…and a climate nightmare.” Corporations feeling burdened by environmental regulations or high labor costs can offshore their manufacturing operations to developing countries. There costs can be contained by low environmental and labor standards, which go together in a package deal. “The same logic that is willing to work laborers to the bone for pennies a day will burn mountains of dirty coal while spending next to nothing on pollution controls because it’s the cheapest way to produce.” That is certainly a capitalist logic, at least in one form. Producing cheap goods for export is not the only way to compete in the global marketplace, but it is an obvious way for a poor country wishing to industrialize quickly.

The resulting loss of manufacturing jobs in countries like the United States puts pressure on less educated workers to hold onto jobs in the fossil fuel industry if they have them, and to oppose environmental regulations that threaten those jobs. (Instead of working to raise environmental standards internationally, President Trump proposes to lower them domestically, protecting coal jobs by joining the global race to the bottom.) Another downside is that the goods imported from overseas that could have been produced at home have to be shipped, another big contributor to fossil fuel emissions.

Managing the economic transition

Klein maintains that running the economy on renewable energy is becoming technically feasible, but the private sector will not make the transition fast enough on its own. The profits from using fossil fuels are too great, and the profits from large-scale investments in solar or wind power are too uncertain. She sees an expanded role for governments and community cooperatives in fighting carbon emissions and promoting cleaner alternatives.

Some fossil fuel production can be curbed through carbon taxes that reflect the true cost to society of that production. Government can also charge higher royalty rates for oil, gas, and coal extraction. These additional revenues can then be devoted to investing in the “post-fossil fuel future, as well as to helping communities and workers adapt to these new realities.” Some forms of production are so irrational from an environmental perspective that they need to be banned outright. In order to get at the least accessible coil, oil and gas, companies are “blasting the bedrock of our continents, pumping our water with toxins, lopping off mountaintops, scraping off boreal forests, endangering the deep ocean, and scrambling to exploit the melting Arctic.”

Until the day comes–if it ever does–when renewables can provide as much energy as fossil fuels do now, we will need to reduce energy consumption. Here too, Klein believes that private self-interested decisions will have to be supplemented by new public policies. For example:

That means cheap public transit and clean light rail accessible to all; affordable, energy-efficient housing along those transit lines; cities planned for high-density living; bike lanes in which riders aren’t asked to risk their lives to get to work; land management that discourages sprawl and encourages local, low-energy forms of agriculture; urban design that clusters essential services like schools and health care along transit routes and in pedestrian-friendly areas….

Although she is a critic of contemporary capitalism, Klein is not as radical as some authors I have read. She does not call for an end to capitalism as such, or an end to economic growth altogether. That would be a problem especially for the less developed countries, which contain a majority of the world’s people and are counting on economic growth to lift millions out of poverty. She summarizes what she does hope for in a section called “Growing the Caring Economy, Shrinking the Careless One”:

Obviously a huge number of jobs would be created in the sectors that are part of the green transition—in mass transit, renewable energy, weatherization, and ecosystem restoration. And those sectors that are not governed by the drive for increased yearly profit (the public sector, co-ops, local businesses, nonprofits) would expand their share of overall economic activity, as would those sectors with minimal ecological impact (such as the caregiving professions…).

The richer countries, which are farther along in the transition to a service economy, might center their lives less around acquiring–and powering–material things. But they could be compensated by living lives richer in human relationships and services. (I wouldn’t be the first sociologist to suggest that modern urbanites and suburbanites sacrificed a degree of human community in their rush toward material prosperity.) Meanwhile the locus of material progress could shift more to the poorer countries. But higher standards of environmental protection would need to spread everywhere.

Continued

 

 

 


U.S. Election May Undo Efforts to Control Climate Change

November 15, 2016

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Early indications from Donald Trump are that he is poised to carry out his threat to repudiate the Paris climate agreement and dismantle the EPA regulations intended to implement it. Reuters reported yesterday that his advisors are looking into a number of ways to withdraw from the Paris accord, which is not necessarily a simple process. Trump has also appointed Myron Ebell, one of the most prominent climate change deniers, to lead the transition at the EPA, with the responsibility to recommend key personnel and set new directions for the agency. Ebell directs environmental and energy policy for the Competitive Enterprise Institute, a libertarian advocacy group partly funded by fossil-fuel companies. He argues that the EPA’s Clean Power Plan is bad for the economy and exceeds the agency’s legal authority.

What follows is a little background on the climate change issue.

The threat of climate change

The great majority of climate scientists now agree that global average temperature is rising, that the rise is largely due to human changes in the atmosphere due to greenhouse gas emissions, and that continuing the trend will have serious negative consequences: stronger storms, longer droughts, loss of farmland to desert, food shortages, rising sea levels and coastal flooding. Could the science be wrong? Perhaps, but who is Donald Trump to say that it is?

If the science is not wrong, then slowing global warming is a serious economic and technological challenge. It is also a moral challenge, since the benefits and costs of burning fossil fuels are distributed differently. The benefits are distributed economically, going primarily to the biggest sellers, buyers and consumers of fossil fuels, as well as the workers whose livelihood has depended on those industries. The costs will be distributed more geographically, since whether your land turns to desert or your city is submerged will depend on where you live. The path we are on has great potential for environmental injustice, as some people enjoy economic benefits at the expense of others, many yet unborn. If the environmental damage and the resulting social upheaval are severe enough, everybody may lose in the end.

Responding to climate change will require global and national cooperation. Although market incentives have a role to play, such as the incentive to save on fuel bills by buying energy-efficient homes and cars, international agreements and strong national policies are also necessary. This is not a great time to return to nineteenth century nationalism or laissez-faire economics!

The Paris Accord

In December of 2015, the world’s first comprehensive climate agreement was approved in Paris. It set the goal of “holding the increase in the global average temperature to well below 2 degrees Celsius [3.6 degrees Fahrenheit] above pre-industrial levels.” The agreement itself does not tell each nation exactly how much to control greenhouse gas emissions. It allows countries to set their own “nationally determined contributions” to the goal, requiring only that they be ambitious, progressive over time, and designed to meet the overall objective.

Even before the U.S. election cast doubt on this country’s commitment, environmentalists were already calling attention to the many possibilities for failure. The temperature goal itself may not be strict enough; the agreement lacks an enforcement mechanism to insure compliance; and even countries with the best of intentions could fail to deliver on their promises.

The agreement stipulated that it would go into effect only when countries producing at least 55% of the world’s greenhouse gas emissions formally approved it. That threshold was reached this month when the European Union ratified it, just a few days before the U.S. election. As it stands now, 109 countries representing 76% of emissions are now on board. Since the United States represents 18% of emissions, U.S. withdrawal wouldn’t kill the agreement, but it would be a serious blow to its prospects for success, especially since some other countries might follow suit. If the world’s largest economy is not going to bear the costs of change, why should others?

The Clean Power Plan

Under the direction of President Obama, and under the authority of the Clean Air Act, the Environmental Protection Agency issued the first national standards to address carbon pollution from power plants. According to the EPA, power plants account for 31% of the country’s greenhouse gas emissions. The new regulations are intended both to reduce emissions from power plants powered by fossil fuels and to promote alternative forms of energy.

Taking into account the regional energy distribution system, the EPA sets emission goals for states, while allowing the states some flexibility in how they go about meeting the goals. Specifically, the regulations aim to (1) make improvements in coal-fired plants to reduce their carbon emissions, (2) move away from coal toward lower-emitting natural gas, and (3) promote renewable energy sources like wind and solar. The plan includes a Clean Energy Incentive Program to induce states to move in that direction.

The regulations try to balance the need to reduce emissions with the need to maintain the reliability of the country’s electricity supply. To avoid disruptions, emissions reductions are phased in over a period of up to 15 years.

Over 100 companies and 28 states are litigating some aspect of the Clean Power Plan. In February of this year, the Supreme Court stayed implementation of the plan pending further judicial review. The Supreme Court itself is likely to weigh in sometime next year.

Many ways to delay

The transition to cleaner forms of energy was never going to be quick and easy. The fossil fuel industry is very powerful, and their influence on politicians considerable. Although Donald Trump promised to “drain the swamp” and fight the “special interests,” reducing the influence of Big Oil was probably not what he had in mind. Maybe he could be persuaded to take environmental regulation more seriously, but not if he surrounds himself with climate change deniers like Myron Ebell.

If President Trump persists in his disregard for science and the environment, he has many ways of blocking action on climate change. He would not have to completely renounce the Paris agreement. That would be difficult, since countries that have already signed it are not allowed to leave it until at least 2020. Leaving sooner would be a violation of the U.N. Framework Convention on Climate Change, the parent agreement that was ratified by the U.S. Senate and later produced the Paris accord. However, Trump could direct the EPA to revise the regulations that implement the agreement, a process that could take years, or just appoint administrators who decline to enforce them. The United States would simply endure the international embarrassment of missing its emissions-control targets.

Another thing Trump could do is carry out his threat to cut off contributions to the Green Climate Fund, which was set up for richer countries to help poorer ones with the costs of transitioning to cleaner energy. India has already declared that its participation in the global effort depends on such assistance.

I remember how, during the 1980s, the response to the international AIDS crisis was delayed by the Reagan administration. That was partly because of their fiscal conservatism, and partly because they thought of AIDS as a “gay disease” affecting only a morally suspect minority. (AIDS was once called GRIDS–gay-related immune deficiency syndrome.) A delay of several years in getting AIDS research funded no doubt cost many lives. I can’t help wondering how much environmental damage may be done before conservatives start taking the threat of climate change seriously. Scientists warn of a tipping point when the global warming trend becomes irreversible. Future historians may marvel that we worried more about Hillary Clinton’s email server than about the planet.


Postcapitalism (part 4)

May 18, 2016

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The last part of Paul Mason’s Postcapitalism discusses how the transition out of capitalism might unfold, with special attention to the role of the state in facilitating change.

To review, Mason expects information technology to liberate people from the capitalist market economy. We will be liberated as workers because fewer hours of paid work will be required to produce the necessities of life. We will be liberated as consumers because goods and services will be more abundant and less expensive. We will be able to devote more of our time to voluntary activity and sharing.

A rough road

If this sounds too rosy and idealistic, readers should take a close look at Chapter 2, “Long Waves, Short Memories,” and Chapter 9, “The Rational Case for Panic.” Mason does not expect a smooth, leisurely and pleasant transition beyond capitalism, but something more tumultuous. As the historical material in the book makes clear, the history of capitalism is not just a story of steady progress through technological innovation and rising productivity. It is a story of periodic crises as the profitability of existing industries wanes and capital has to find new opportunities elsewhere. The transition now underway is especially difficult because it calls into question the viability of capitalism itself. As production becomes more knowledge-based, the means of production become harder to own and maintain as sources of private profit. Since the 1970s, capitalists have been counteracting the tendency for profits to fall by holding wages down in the developed countries and exploiting the cheap labor of poorer countries, but at the cost of increasing inequality and social resistance.

To make matters worse, new environmental and demographic conditions are delivering “external shocks” to the economic system. The prime example is climate change, a problem that Mason does not believe the market can solve on its own. When the price of fossil fuels goes up, energy companies take that as a signal “that it’s a good idea to invest in new and more expensive ways of finding carbon.” When the price goes down, consumers conclude that they can drive more or buy less fuel-efficient vehicles. However the market fluctuates, the price does not factor in the externalities, the true costs of environmental impacts on the global economy.

Another shock is the “demographic timebomb,” the addition of another two billion people to the planet by mid-century, most of them in poorer countries. In the richer countries, falling birth rates and rising longevity are creating rapidly aging populations. With fewer working-age people to support more retirees, workers are under pressure to generate enough wealth to save for their own long retirement as well as contribute to the support of today’s retirees through payroll taxes. Demographic change puts additional stress on the economy in several ways: requiring the financial system to deliver high investment returns for retirement accounts, increasing the demands on public spending for the elderly, and increasing the flow of migrants from rapidly growing poor countries to slower growing but aging rich countries.

The world cannot afford a leisurely transformation to the postcapitalist economy Mason foresees. The world needs a rapid deployment of new technologies to produce as much as we can, but do it in a cleaner, greener way that mitigates environmental damage. The potential benefits are enormous, but the task of getting from here to there is daunting.

“Project Zero”

Because of the urgency of the situation, Mason believes that a spontaneous process of increasing information-based activity is not enough. The process needs to become a conscious project, based on the insight that “a new route beyond capitalism has opened up, based on promoting and nurturing non-market production and exchange, and driven by information technology.” He calls it “Project Zero” because “its aims are a zero-carbon energy system; the production of machines, products and services with zero marginal costs; and the reduction of necessary labour time as close as possible to zero.”

The state has a special role to play in Project Zero because only the state is “centralized, strategic and fast” enough to address the urgent problems. However, Mason rejects the old socialist idea of a centrally planned economy, arguing that a centralized bureaucracy cannot respond to new data fast enough to keep up with the pace of change in the information society. Recall the earlier point that the key agent of change will be the educated and networked individual, which implies a high degree of decentralization.

Limits on private capital

So what can the state do to facilitate the transition to postcapitalism? First, it can curb private economic power in industries where it has become a danger to the public good. The energy industry would be one, as the discussion of the climate issue illustrates. The state should actively discourage fossil fuel production and encourage cleaner sources of energy. Mason also sees a much larger role of government in the financial industry. One proposal sure to provoke controversy is that the state take control of the central bank in order to implement a monetary policy that helps debtors more than creditors. That would be a looser monetary policy that keeps interest rates low but allows the inflation rate to be somewhat higher. Over time, that erodes the real value of debt, in contrast to a strict monetary policy that protects wealthy lenders by placing primary emphasis on fighting inflation. Since government itself is a large debtor, that would help governments recover from the fiscal crisis resulting from demands for both low taxes on capital and high spending on social programs to assist struggling wage-earners.

Mason would also reorganize the banking system to make it less profit-driven, by encouraging non-profit banks, credit unions, peer-to-peer lenders, and “a comprehensive state-owned provider of financial services.” He would regulate the remaining profit-oriented banking to curb wasteful speculation and encourage its proper role of efficiently allocating capital to productive activities.

In the economy as a whole, the state would act to insure that what profits remain would be a reward for entrepreneurship, and not just a “rent” based on ownership. Creators of new knowledge would get the rewards of intellectual property rights, but those rights would be short-lived to encourage the flow of knowledge and the continued incentive for further innovation.

Liberating workers

Another thing the state can do is strengthen the legal rights and protections of workers to give them more bargaining power in their relationship with capital. This will indirectly encourage the fuller application of new technologies that can produce economic abundance. “If we legally empowered the workforces of global corporations with strong employment rights, their owners would be forced to promote high-wage, high-growth, high-technology models, instead of the opposite.” Owners would try to make each worker as productive as possible if they could no longer profit from paying such low wages.

An obvious objection is that higher wages and productivity would have the downside of less employment. But for Mason, less employment in capitalist workplaces where owners profit by overworking and/or underpaying workers is ultimately a good thing. Ideally, workers would be better paid for the hours they worked, but also have the option of working fewer hours. They could then experience the decline of paid employment as a liberation, not an involuntary displacement.

The other side of the transformation of work is the increasing opportunities for work outside of traditional profit-centered firms, such as in non-profits and co-ops. Mason recommend that the state “reshape the tax system to reward the creation of non-profits and collaborative production.”

Liberating consumers

The replacement of millions of workers by automated systems is unlikely to be experienced as a good thing unless it has benefits for people as consumers, not just as workers. Here the state can facilitate the transition by providing a basic income to all households, to support those who are voluntarily or involuntarily outside the system of paid employment. That can improve the safety net for those who are displaced by new technologies. It also “gives people a chance to build positions in the non-market economy” by subsidizing participation in volunteer work, co-ops and adult learning opportunities. Market work would still be rewarding as long as minimum wages were higher than the basic income.

In the long run, the abundance of things made available by hi-tech production methods would bring the monetary cost of living down and reduce consumers’ dependency on earned income. People could rely more heavily on non-market forms of sharing, since they would have more time for unpaid but socially useful activity. As the income tax base became smaller, government’s ability to pay a basic income would decline, but so would people’s need for one.

Can democracy survive the transition?

Just about every one of Mason’s political suggestions goes against conservative thinking, which sees the free market as the creator of wealth and the limited state as its supporter. In the conservative view, the state should tax and regulate capital as little as possible, protect wealth against inflation with tight monetary policy, and keep people dependent on paid employment by providing only the most meager welfare benefits. Mason ends his book by warning that if the democratic state tries to facilitate a transition beyond capitalism, the economic elite may decide that preserving capitalism is more important than preserving the democratic state!

How long will it take before the culture of the Western elite swings toward emulating Putin and Xi Jinping? On some campuses, you can already hear it: “China shows capitalism works better without democracy” has become a standard talking point. The self-belief of the 1 per cent is in danger of ebbing away, to be replaced by a pure and undisguised oligarchy.”

We can already see the beginnings of an alliance between right-wing autocrats and blue-collar workers fearful of losing their jobs, especially in doomed occupations like coal mining or pipeline construction. If such alliances succeed in taking over the governments of developed countries such as the United States, then things could get pretty ugly in the next few decades.

In the last great transition of capitalism, in the early twentieth century, authoritarian politics had to be defeated before the democratic state could help create a broader-based prosperity. (Third-world peoples and racial minorities remained excluded however.) We should not be surprised if the same turns out to be true of the twenty-first century, as we struggle to create a more inclusive and sustainable prosperity.