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Topic: Climate change
Time to end the multigenerational Ponzi scheme
22 February 2009
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First, we need to trust our science. We do this every time we fly in a jet or rush to the doctor in hope of relief from illness; but now there is some cherry-picking of science going on in the various kinds of resistance to the news about climate change, and this double standard needs to be called out. The so-called climate change skeptics are now simply in denial. All science is skeptical, and the scientific community has looked at this situation and found compelling evidence for anyone with an open mind.

Science is telling us that if we keep living the way we do, we will trigger an unstoppable and irreversible climate change that may de-ice the planet and acidify the oceans, causing mass extinction. It took tens of millions of years for Earth to recover from previous mass extinctions. It is certain that human beings would be devastated by such an event, despite our intelligence and technological power—and there are instabilities in the climate system that include tipping points that we are closing in on fast.

Exhibit: The other side of the problem

That’s what our science is telling us. The most rational way to act is to believe that and then to act on that belief.

Above all, we need to decarbonize our power and transport systems, and, more generally, to build a carbon-neutral or even carbon-negative civilization as quickly as possible. It’s not a matter of technology. We already have good starter technology for lithium-ion batteries in cars; clean, renewable energy generation; cleaner building methods; and so on. The technical solutions are being improved all the time in research labs.

The main problem is making these changes happen more quickly than they can in the false pricing system that we have created and enforced within our hierarchical power structure. There is conflict over how to pay for decarbonizing, which is deemed “too expensive” to execute quickly. There is both a defense of the destructive carbon burning we are engaged in and a resistance to the most obvious solutions among people who remain frightened of the idea of government-led economic programs. But now we simply must have such programs because the market is not capable of taking action.

Am I saying that capitalism is going to have to change or else we will have an environmental catastrophe? Yes, I am. It should not be shocking to suggest that capitalism has to change. Capitalism evolved out of feudalism. Although the basis of power has changed from land to money and the system has become more mobile, the distribution of power and wealth has not changed that much. It’s still a hierarchical power structure, it was not designed with ecological sustainability in mind, and it won’t achieve that as it is currently constituted.

The main reason I believe capitalism is not up to the challenge is that it improperly and systemically undervalues the future. I’ll give two illustrations of this. First, our commodities and our carbon burning are almost universally underpriced, so we charge less for them than they cost. When this is done deliberately to kill off an economic competitor, it’s called predatory dumping; you could say that the victims of our predation are the generations to come, which are at a decided disadvantage in any competition with the present.

Second, the promise of capitalism was always that of class mobility—the idea that a working-class family could bootstrap their children into the middle class. With the right policies, over time, the whole world could do the same. There’s a problem with this, though. For everyone on Earth to live at Western levels of consumption, we would need two or three Earths. Looking at it this way, capitalism has become a kind of multigenerational Ponzi scheme, in which future generations are left holding the empty bag.

You could say we are that moment now. Half of the world’s people live on less than $2 a day, and yet the depletion of resources and environmental degradation mean they can never hope to rise to the level of affluent Westerners, who consume about 30 times as much in resources as they do. So this is now a false promise. The poorest three billion on Earth are being cheated if we pretend that the promise is still possible. The global population therefore exists in a kind of pyramid structure, with a horizontal line marking an adequate standard of living that is set about halfway down the pyramid.

The goal of world civilization should be the creation of something more like an oval on its side, resting on the line of adequacy. This may seem to be veering the discussion away from questions of climate to questions of social justice, but it is not; the two are intimately related. It turns out that the top and bottom ends of our global social pyramid are the two sectors that are by far the most carbon intensive and environmentally destructive, the poorest by way of deforestation and topsoil loss, the richest by way of hyperconsumption. The oval resting sideways on the line of adequacy is the best social shape for the climate.

This doubling of benefits when justice and sustainability are both considered is not unique. Another example: world population growth, which stands at about 75 million people a year, needs to slow down. What stabilizes population growth best? The full exercise of women’s rights. There is a direct correlation between population stabilization in nations and the degree to which women enjoy full human rights. So here is another area in which justice becomes a kind of climate change technology. Whenever we discuss climate change, these social and economic paradigm shifts must be part of the discussion.

Given this analysis, what are my suggestions?

  • Believe in science.
  • Believe in government, remembering always that it is of the people, by the people, and for the people, and crucial in the current situation.
  • Support a really strong follow-up to the Kyoto Protocol.
  • Institute carbon cap-and-trade systems.
  • Impose a carbon tax designed to charge for the real costs of burning carbon.
  • Follow the full “Green New Deal” program now coming together in discussions by the Obama administration.
  • Structure global economic policy to reward rapid transitions from carbon-burning to carbon-neutral technologies.
  • Support the full slate of human rights everywhere, even in countries that claim such justice is not part of their tradition.
  • Support global universal education as part of human-rights advocacy.
  • Dispense with all magical, talismanic phrases such as “free markets” and promote a larger systems analysis that is more empirical, without fundamentalist biases.
  • Encourage all business schools to include foundational classes in ecology, environmental economics, biology, and history.
  • Start programs at these same schools in postcapitalist studies.

Does the word postcapitalism look odd to you? It should, because you hardly ever see it. We have a blank spot in our vision of the future. Perhaps we think that history has somehow gone away. In fact, history is with us now more than ever, because we are at a crux in the human story. Choosing not to study a successor system to capitalism is an example of another kind of denial, an ostrich failure on the part of the field of economics and of business schools, I think, but it’s really all of us together, a social aporia or fear. We have persistently ignored and devalued the future—as if our actions are not creating that future for our children, as if things never change. But everything evolves. With a catastrophe bearing down on us, we need to evolve at nearly revolutionary speed. So some study of what could improve and replace our society’s current structure and systems is in order. If we don’t take such steps, the consequences will be intolerable. On the other hand, successfully dealing with this situation could lead to a sustainable civilization that would be truly exciting in its human potential.

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Comment [35]

Agree? Disagree? Let us know what you think. Please include your full name with your comment. Comments may be edited.

  • There’s one key leverage point that can give us a solution to this problem and many others: improve the accounting system to take include externalized costs. Solve that problem, then people will be faced with the real costs of what they do, and they will make the rational economic choice. We don’t need to throw out capitalism, we just need to refine it. The reason that externalized costs are not accounted for is the cost of information. Information is getting cheaper and cheaper. With cheaper data storage and computer it will be possible to accurantly account for externalized costs and charge accordingly.

    Posted 28 January 2010, 14:17 by Bryan Butler

  • Splendidly put forward!
    Our present consumption is subsidized by the environmental burden that the future generations would pay for. And while theoretically there are no free lunches but right now the global order of hyper-consumption is one example. A true capitalist would indeed despise the free lunch however as imperfect human beings we need to replan our world affairs. Free markets aren’t resulting in the ideal world order. Free markets as theoretically planned on paper against the backdrop of infinite resources neither have the infinite resources nor the time required to correct their course as humans learn from their mistakes.
    We’ve learnt now from our science as author pointed out and there is no point in subsidizing the mass ignorance. Its time we act on our learning.

    Posted 7 December 2009, 18:57 by Yash Saxena

  • @ian wells said:
    “Makes sense, but riddle me this: Oil companies around the world are investing huge amounts of money to find ever more oil. Huge amounts of money are being invested. To reduce carbon, these investments would need to switch to carbon neutral energy sources. What ways could this huge switch of investment occur? What would ever convince oil companies to NOT look for more oil sources?”

    As long as gas/oil companies are private enterprises, they don’t want to invest in anything else, since privelevels will be staggering high in a decade. For THEM it is best to invest in conventional drillings of course.
    But for US we would want to invest in durable energy resources. We can NOT convince the energy monopolies to do that, we have to FORCE them to do that.
    Therefore the oil and gascompanies need to be nationalized, so that the profits of gas and oil go directly into renewable energy and energy conservation.

    Posted 3 December 2009, 13:52 by Rob Heusdens

  • Obama and his administration have betrayed us on several fronts, the continued and escalating war, not prosecuting wall street and banking executives that got us into this mess, not prosecuting former administration officials, backing off of closing Gitmo, torture and today backing away from another campaign promise to end don’t ask don’t tell.
    Next he will side with the insurance companies and and I believe he will not fulfill his promise to back off from foreign oil and promote sustainable energy sources. We the people will suffer greatly from the giant scheme instituted by the rich, for the rich and we will see a depression

    Posted 8 June 2009, 20:41 by Kathleen O'Connor

  • The trouble is not so much that capitalism is failing to provide a solution as that it doesn’t exist. The corporatism that we have practiced since the industrial revolution uses the government as a tool to insulate industry from the damage they cause to the public. Absent government intervention on the polluter’s behalf, mass pollution would never have been economically viable due to the liability for damage to public health and property values. We don’t have a ponzi scheme, we have a protection racket in which the government are the thugs and industry the mob bosses. They promise to protect us (if we pay them enough money and defer to their authority) from the damage they would otherwise be forced to inflict on us. A more thorough response here:

    Posted 20 April 2009, 17:38 by Justen Robertson

  • This is very thoughtful. I have no problems with capitalism as way to link resources and human ingenuity to produce good and services. Consider the expansion of knowledge and technology that has led to great advances in medicine. The reason we are in deep trouble today is because of the way we choose to measure outcomes of good and services. We should depart from GDP and consider using Net Domestic Product(NDP). So this way we account for the deterioration of ecosystem services such as clean air, fertile soils, clean water, biodiversity. We must now begin to grapple with measuring the real demand of domestic growth and expansion of the so called wellbeing on national and global ecological resources. We must get the accounting right or we will destroy irretrievably, the production base.

    Posted 17 April 2009, 02:22 by Alex Awiti

  • I have another one for you – make sure that the most powerful country in the world abandons its two-party excludocracy and becomes a full multi-party “one man, one vote” society.

    Posted 2 April 2009, 02:43 by Khannea Suntzu

  • Problem is, the following statement from your article is completely false:

    “For everyone on Earth to live at Western levels of consumption, we would need two or three Earths.”

    The author’s thinking is all based on the premise that there isn’t enough to go around. Bucky Fuller spent 57 years proving him wrong. Operating Manual For Spaceship Earth can be found online for free.

    “If you ignorantly believe there’s not enough life-support available on planet Earth for all humanity, then survival of the fittest seems self-flatteringly to warrant magna-selfishness. However, it is due only to humans’ born state of ignorance, and the 99.99% invisibility of the technological capabilities, that they do not recognize the vast abundance of resources available to support all humanity at an omni-high standard of living.

    We have now scientifically and incontrovertibly found that there is ample to support all humanity. But humanity and its leaders have not yet learned so in sufficiently convincing degree to reorient world affairs in such a manner as to realize a sustainable high standard of living for all” (R.B. Fuller, Grunch of Giants, Foreword p.xxvii.)

    Posted 1 April 2009, 01:37 by Francis L. Goodwins

  • Dean Loomis wrote,

    “capitalism … improperly and systemically undervalues the future.” This is true, but not because capitalism is evil, any more than feudalism is evil, or communism is evil. But to get beyond ideological accusations of good and evil…”

    Forgive me for pointing this out, but the word “evil” was not used at all in the entire article, let alone to describe capitalism.

    The article doesn’t say capitalism is evil, but that capitalism is no longer an adequate answer to the social, economic, and environmental realities we now face.

    Posted 30 March 2009, 16:42 by Paul Gutches

  • Derrick, you wrote…

    “even climate advocates like Al Gore live in 10 room mansions.”

    I think this statement is indicative of a common misconception people have about efforts to reverse climate change.

    While moving in to smaller more energy efficient houses is certainly one laudable way to approach it, it sort of misses the bigger picture. It isn’t necessarily the amount of energy that we use which is the crux of the environmental problem. It’s the sustainability and carbon footprint of our energy sources that is the problem.

    I live in a small earthen home I built myself and spent all of $50 the entire winter to keep it warm. Yet, I don’t care if you live in a 20 room mansion if you can heat and cool it and provide electricity to it in a manner that leaves your carbon footprint neutral or negative. An earth home just happened to be more within my means.

    Posted 30 March 2009, 16:34 by Paul Gutches

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12 Mar 2010 · 06:29:12 PM GMT
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In response to Why Kyoto won’t work

28 Jan 2010 · 02:17:45 PM GMT
There’s one key leverage point that can give us a solution to this problem and many others: improve the accounting system to take include externalized costs. Solve that problem, then people will be faced with the real costs of what they do, an...
—Bryan Butler

In response to Time to end the multigenerational Ponzi scheme

19 Jan 2010 · 09:27:33 AM GMT
I have 2 points of contention here: 1. While for some reasons mentioned above implementing Kyoto to the last letter may not be cost effective, but I’m sure that doing away with it altogether is an extreme. 2. My second point is the labe...

In response to Why Kyoto won’t work

29 Dec 2009 · 01:19:33 AM GMT
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—S. Nunn

In response to Building a postcarbon economy

07 Dec 2009 · 06:57:31 PM GMT
Splendidly put forward! Our present consumption is subsidized by the environmental burden that the future generations would pay for. And while theoretically there are no free lunches but right now the global order of hyper-consumption is one exampl...
—Yash Saxena

In response to Time to end the multigenerational Ponzi scheme

03 Dec 2009 · 07:38:30 PM GMT
Climate policy should limit itself to the effects of climate change, and try to establish measures that will neutralize the effects. Our energy policy should be based on something different, managing the scarcity of fossil fuels, by implementing ...
—Rob Heusdens

In response to What is the most rational way to deal with the impact of climate change?