As politicians and lobbyists bargain over the way to meet climate change targets, Nick J Fox questions whether ‘green capitalism’ can deliver the goods.

After years of platitudes, world leaders at the Glasgow COP26 meeting have rushed to declare the need for urgent action to address anthropogenic climate change.  But with greenhouse gas emissions strongly associated historically with industrialisation and economic growth, this poses a conundrum for governments wedded to a capitalist market economy.  Many, including the UK’s Boris Johnson and US President Joe Biden, have embraced what has been described as ‘green capitalism’: an ideology and economic perspective that regards the market economy as the optimal may to address environmental challenges. 

Practically, this has meant promoting technological innovations like wind farms and carbon capture as the principal means to mitigate and eventually reduce greenhouse gas emissions, while enabling a new climate-friendly industrial revolution to fuel economic growth and future prosperity.  This resonates with the long-held view of the United Nations intergovernmental panel on climate change (IPCC) that environment sustainability must be tied to measures to end poverty and enhance human well-being.

Advocates of green capitalism acknowledge anthropogenic impacts on the environment, including climate change, but argue that a market economy holds the best hope of reversing these impacts through ingenuity and entrepreneurialism, while ensuring the continuity of the economic growth that they argue has been the engine of both national and individual prosperity since the industrial revolution.  Zysman and Huberty (2014: xiii) argue that the free-market economy and the environment can be mutually beneficial, within a ‘green spiral’, that:

reflects a process of mutually reinforcing feedback between climate policy and industrial interests, in which the development of new infrastructure and energy approaches creates new economic clienteles who then become advocates for further action. … These green industrial interests help stabilize policies in place and push for new policies, offsetting opposition from interests tied to the pre-existing system.

Harris (2014: 45) notes that advocates of this technological solution to climate change claim that – within a capitalist market framework, these innovations will out-compete and thus replace existing polluting technologies, thereby reducing net carbon emissions to zero to meet global targets. 

Green capitalism has been widely criticised by environmentalists and social scientists, who point to the clear association between the growth of energy consumption since the Industrial revolution and the amount of carbon released into the atmosphere and consequent global warming (Baer, 2018: 29-30; Keen, 2021: 1162). 

Many of these critiques have been founded on neo-Marxist and critical theory, and specifically Marx’s analysis of capitalism’s built-in need for ceaseless economic growth.  For these critics, capitalism is solely responsible for the current climate crisis, and it is delusional to imagine it can now become planet Earth’s saviour.  As a corollary, they suggest that only a shift to global eco-socialism can resolve the current climate crisis (Kovel, 2008).

Capitalism’s creative destruction

While these ideological analyses of green capitalism are cogent and persuasive, my recent research has set out to examine green capitalism’s propositions from another perspective: the more-than-human ontology of new materialism.  This research included evidence on the workings and shortcomings of free-market capitalist entrepreneurialism in a different sector: the digital economy.  This sector has been utterly transformed in the years since the invention of the first personal computers by Apple and IBM in the early 1980s.

This development trajectory has been achieved almost entirely according to capitalist market forces, and has involved a range of innovations, from consumer technology through to major infrastructure such as communication satellites, the internet, cellular/mobile phone and broadband networks.  While contributing significant advances in digital connectivity, the ensuing digital economy has been sullied by cut-throat competition between technologies, inequalities in access – both within jurisdictions and between global North and South, inadequate governance and user protection, and domination by a few mega-corporations such as Amazon, Microsoft, Apple and the ‘Tier 1’ telecoms giants that provide the Internet’s infrastructure.

A more-than-human analysis discloses the key feature of how a capitalism market economy can innovate.  The development of the personal computer by IBM is an exemplar of how a new technology exploited a gap in an existing technology market.  Aimed principally at the business community, IBM’s PC was a cheaper competitor for the large mainframe computers that had – until then – dominated the market. With no major competitors in this business market, it was a run-away success.  In the first 18 months of marketing, IBM sold half a million PCs, twice its initial expectation (Boka Raton Historical Society, 2021). 

But the free market development of digital technologies is strewn with examples of the unintended consequences of the capitalist free market: predatory competition, wastefulness and the creation of inequalities.

So, for instance, after IBM created its ‘open architecture’ PC (using off-the-shelf components and only a small amount of copyright-able software), its initially huge run-away sales were swiftly eroded by ‘cloned’ machines from other manufacturers with their own original versions of the copyrighted software.  These undercut IBM’s price point, while adding refinements and higher-specification hardware.  The more-than-human forces of supply and demand meant that within a decade, IBM’s market share declined to just eight per cent (Thompson and Strickland, 1997).  In 2005, it departed the personal computing market altogether, selling its remaining interest to clone rival Lenovo.

These supply and demand forces in a capitalist market are also hugely wasteful of resources.  The progressive technological developments in audio and video media over the past 40 years is a notable example.  Analogue technologies such as vinyl discs, cassette players such as the Sony Walkman, cartridge players, and VHS and Betamax video players all had their respective heydays, but then became victims of subsequent technologies such as CDs, DVDs and now streaming services.  In all this ‘creative destruction’, what has been wasted is not only the media and the devices to play them, but also the human labour and manufacturing infrastructure used to produce superseded technology.

The digital economy also reveals specific examples of the inequalities that seem endemic to capitalism (Coburn, 2004: 44; Skeggs, 2019).  As technology has marched forward, a ‘digital divide’ has emerged, between rich and poor, old and young, those with and without digital skills, and between global North and South (van Deursen and van Dijk, 2019).  Limited access to fast broadband has affected not only access to services such as entertainment streaming, but also to telemedicine (Benda et al, 2020) and business enterprise in rural or remote areas (Xu et al, 2019).  Uneven opportunities to digital work-skills has implications both within nations and between global North and South.

Is green capitalism fit for purpose?

On a positive note, this analysis of the digital economy suggests that the market can be an effective means to replace old technology with more effective or desirable ones.  For climate change innovation, this suggests that the market can provide a means for technologies such as wind and solar renewable energy sources to swiftly out-compete fossil fuel energy generation, as production costs fall and competitiveness with fossil fuels consequently increases.  Micro-generation on domestic and commercial buildings can complement large-scale energy generation, enabling de-carbonisation of much energy production. 

But while the cut-and-thrust of capitalist competition may well have succoured the dynamism and responsiveness of the digital economy, it has also led to its domination in the 2020s by a handful of multinationals such as Amazon, Apple, Microsoft, Google and social media companies Facebook and Twitter.  Looking back over the last 40 years of digital capitalism, it’s shareholders who are the big winners, not consumers. 

This raises question-marks about a green capitalist solution to climate change.  Wastefulness and the inherent inequalities of a capitalist market are disturbing consequences of a market economy. 

But above all, the need for businesses in a capitalist economy (such as mega-corporations Amazon, Microsoft and Apple) to sustain market share through incessant growth poses the greatest hurdle for green capitalism.  As noted earlier, there is a remarkable correlation between economic growth and output of greenhouse gases.  If global production continues to grow between now and 2050, the task of de-carbonising the atmosphere through technology is made far harder, as Paterson (2020: 400) explains:

To have any chance of meeting a 2oC target, the global economy needs to reduce emissions absolutely by around 3% per year (and every year that emissions keep going up, the decline needed after emissions peak is faster still). If the global economy grows at 2%, then in relative terms, the global economy needs to decarbonize by 5% annually. The historical rate of relative decarbonization is around 1%.  So with existing rates of GDP growth, we need to increase the historical rate of socio-technical change fivefold, while with zero economic growth, we ‘only’ need to triple it.

Indeed, Paterson may be underestimating the additional requirement for emission reduction, as his growth calculation does not take into account the energy wasted on goods or services that are produced and then discarded by businesses in a competitive capitalist market.

So I am led to the conclude that we must give green capitalism the thumbs down.  But what is the alternative? 

A modest proposal

While not unsympathetic to the conclusions of neo-Marxist scholars that capitalism needs replacing with an eco-socialist or communitarian socioeconomic system, I concur with Paterson’s (2020) view that resolving the climate crisis is too urgent an issue to defer until a new world order can be established. 

The alternative is a pragmatic approach: acknowledging that a market economy may be a means to deliver some aspects of the consumer behavioural changes required (for instance a shift toward electric vehicles, the use of smart energy management in domestic and commercial buildings, installing solar panels and so forth), while shifting the emphasis in the rest of the economy toward what some have called ‘de-growth’ (Koch and Buch-Hansen, 2021: 1220).

This terminology is misleading, as what is meant is a social, political and environmental shift that reduces ecological impact and inequality by slowing the throughput of resources (including human labour); reducing waste by reducing, reusing and recycling materials; improving well-being by expanding the public service sector; and using fiscal policy to reduce inequalities nationally and globally through measures such as a living wage, shorter working week and lifelong training opportunities (Hickel, 2021: 1107-1108). 

Such action can be extended beyond national borders, by supplying aid and expertise to assist global South nations to introduce green policies and infrastructure, and scale-up their own scientific and technological development free from a new environmental colonialism by the global North.

While this approach does not put an end to the growth and waste of a market economy at a stroke, it is politically achievable and incremental.  Unlike green capitalism, it is inclusive: enabling citizens, universities, technology companies and other commercial interests, government agencies and not-for-profit organisations to work collectively toward an internationally-shared and achievable programme.

Nick J Fox is professor of sociology at the University of Huddersfield and co-convenor of the BSA Applied Sociology Group.

References

Baer, H. (2012) Global Capitalism and Climate Change, Lanham MA: AltaMira Press.

Benda, N. C., Veinot, T. C., Sieck, C. J., & Ancker, J. S. (2020) Broadband internet access is a social determinant of health!  American Journal of Public Health 110(8): 1123-1125.

Boka Raton Historical Society (2021) IBM: Boca Ratonhttps://www.bocahistory.org/our-history-ibm/

Coburn, D. (2004) Beyond the income inequality hypothesis: class, neo-liberalism, and health inequalities. Social Science & Medicine, 58(1), 41-56.

Harris, J. (2014) Can green capitalism build a sustainable society?  Perspectives on Global Development and Technology, 13(1-2), 43-60.

Hickel, J. (2021) What does degrowth mean? A few points of clarification, Globalizations, 18(7), 1105-1111.

Keen, S. (2021) The appallingly bad neoclassical economics of climate change, Globalizations, 18(7), 1149-1177.

Koch, M. and Buch-Hansen, H. (2021). In search of a political economy of the postgrowth era. Globalizations, 18(7), 1219-1229.

Kovel, J. (2008) Ecosocialism, global justice, and climate change. Capitalism Nature Socialism, 19(2), 4-14.

Paterson, M. (2020) Climate change and international political economy: between collapse and transformation. Review of International Political Economy, 28(2), 394-405.

Skeggs, B. (2019) The forces that shape us: The entangled vine of gender, race and class. Sociological Review, 67(1), 28-35.

Thompson, A.A. and Strickland, A.J. (1997) Dell Computer Corporation Case Study.  http://www.mhhe.com/business/management/updates/thompson12e/case/dell10.html

van Deursen, A. J., & Van Dijk, J. A. (2019). The first-level digital divide shifts from inequalities in physical access to inequalities in material access. New Media & Society, 21(2), 354-375.

Xu, X., Watts, A., & Reed, M. (2019). Does access to internet promote innovation? A look at the US broadband industry. Growth and Change, 50(4), 1423-1440.

Picture by Nick J Fox: City of Melbourne from Albert Park.


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