Climate Change

Reinventing Capitalism



Mankind is faced with a profound dilemma. To resist growth is to risk economic collapse. To continue to pursue growth relentlessly ensures collapse of our ecosystem which supports all life. For the most part, this dilemma goes unrecognized. All of our institutions continually point in the wrong direction. Those that do recognize the dilemma typically resort to magical thinking – “technology will step in and somehow save the day.”


The struggle to combat climate change brings out the best and worst of capitalism. Decarbonization of the economy requires alternatives for fossil fuel derived energy, and that plays to capitalism’s strengths. Innovation is what capitalism is all about, and there has been rapid progress in developing clean alternatives to fossil fuels. The cost of producing solar and wind-powered electricity decreased to where it is currently cheaper than either coal or oil, and it will continue to drop in price. The sun doesn’t send a bill. Great advances are also being made in battery technology. These technologies, along with many others, are essential components of the solution, but they won’t save the day.


Our current form of Capitalism (predatory, “trickle-down” capitalism) has trouble thinking beyond the here and now. It forces corporations to maximize profits in the short-term, even if that means causing irreparable damage to the world’s ecosystem. What’s more, corporate leaders believe they should be free to maximize profits by any means possible, without any interference from government. Their logical reaction (given the system they operate in) is to buy politicians to prevent regulations designed to protect the health and safety of people and planet.


We need to reinvent our current economic system. It’s going to be tricky to accomplish in time to avoid ecosystem collapse, while also avoiding economic collapse. It is vital that capitalism’s Dr. Jekyll emerges victorious over its Mr. Hyde.


Politicians easily fall for the argument that there is a trade-off between growth and greening the economy. There isn’t. Companies account for capital depreciation when they draw up their profit and loss statements. If governments adopted the same principle and accounted for the depletion of natural capital when drawing up their national accounts, reported GDP growth would be much lower. In our current form of capitalism, a healthy forest, which draws down carbon dioxide from the atmosphere and emits oxygen, shelters a diversity of plant and animal life, minimizes potential flooding from heavy rainstorms and prevents landslides, adds nothing to economic growth. Cutting down that same forest to turn standing timber into millions of board feet of two by fours, counts as healthy growth.


Winning the race against time requires political leadership. It means acknowledging that transitioning to a system of managed and regulated capitalism is more appropriate to our situation than our current version of capitalism. It also means scaling up the lending of the World Bank and regional development banks to help poorer countries build wind and solar capacity. And a global carbon tax set high enough to keep the remaining fossil fuels in the ground.


The most fundamental transition that needs to happen is a change in consciousness. R. Buckminster Fuller characterized it as an evolution from being passive passengers on Spaceship Earth, to being active crew members tasked with maintaining the health and well-being of the spaceship. There are no resupply ships coming. There are no repair ships coming. Meanwhile we have been taught from infancy to regard ourselves as consumers. To equate well-being to the amount of things and money we accumulate. He who dies with the most toys, still dies.


What if we transitioned to a consciousness that measured well-being in how much we contribute to society? How much we enjoy the respect of our family, friends and co-workers? How much we have a feeling of belonging and trust in our community? How we preserve Nature? That would result organically in a desperately needed systems change. That is exactly what a Finite Earth Economy is designed to do.




Comments are closed.


stay connected

The best of the Institute, right in your inbox.

Sign up for email notifications