Neoliberal Economics Causes Global Warming

Attempts by the New York Times to blame humanity as a whole for climate change let the real culprits off the hook.

Many zoos have an exhibit like this: a wall with a hatch, and under the hatch words like “Do you want to see the most dangerous animal in the world?”. Of course everyone does, and before they open the hatch they speculate as to what the animal behind the hatch will be. A lion? A crocodile? However, when you open the hatch there is a mirror, and you see yourself staring back. You are the most dangerous animal in the world.


Of course, this is nonsense. Not everyone who opens that hatch and sees themselves looking back is equally dangerous. We are not all equally responsible for destruction of the world’s ecosystems. Some humans who open the hatch probably are responsible for a great deal of destruction. Other are not. Many people bear the brunt of someone else’s destruction.

The idea that all humanity is equally and collectively responsible for climate change – or any other environmental or social problem – is extremely weak. In a basic and easily calculable way, not everyone is responsible for the same quantity of greenhouse gasses. People in the world’s poorest countries produce roughly one hundredth of the emissions of the richest people in the richest countries. Through the chance of our births, and the lifestyle we choose we are not all equally responsible for climate change.

Neoliberalism conned us into fighting climate change as individuals.

But we are not all equally responsible in a more fundamental way. Some people through the power they wield, have stood in the way of halting climate change. Not because they were stubborn or incompetent or failed to understand the seriousness. But because they acted in pursuit of a fundamental re-organizing of our economies during the 1970s and ’80s. And this shake-up militated against the kinds of policies and government intervention that might have halted – or at least slowed – climate change.

This is the point missed in ‘Losing Earth’, the New York Times’ 30,000 word feature on climate change. The piece charts the failure of the US government to act on climate change between 1979 and 1989. During this period we knew enough about the issue to act, but didn’t. The piece sets out to explain this failure.

Exxon has known about climate change since the 1970s.

‘Losing Earth’ presents the failure as one of political tragedy. Politicians and policy makers simply couldn’t agree. Not because of the undue influence of lobbyists, but because – as humans and politicians – they could not look far enough into the future. They could not take political risks now, in return for the long term safety of the planet.

As humans we cannot engage with complex long term problems. We favour short term comfort over long term safety, even when this is illogical. Our political systems are set up to favour short term political wins. Our politicians think only as far ahead as the next election. This failure to stop climate change was no one’s fault, ‘Losing Earth’ argues. It happened because we’re human, and because our electoral systems aren’t geared up for this kind of problem.

But is this really why the US didn’t act on climate change during the 1980s?

Neoliberalism: the idea that swallowed the world.

The late 70s and 80s were also a time when the economies of most developed countries underwent a fundamental restructuring.

Since the end of the Second World War the economies of Europe and the US had been growing steadily. Ordinary people had been taking home and ever growing slice of this new economic growth. In the US, unionised workforces were consistently negotiating better pay and conditions. In Europe people also began to see the benefits of nationalised healthcare and house building.

The very richest people in society had also been getting richer as developed economies grew. But the slice of the pie they were keeping was shrinking. In 1940 the wealthiest 0.1% kept about 20% of all the money earned. While the poorest 90% (almost everyone) kept about the same. By the mid 70s the slice kept by the 0.1% had dipped to around 7%, while the slice kept by the 90% had climbed to over 30%. The US economy was still vastly unequal, but it was becoming more equal. Many working people were gaining, at the expense of very rich.


US wealth inequality over time. Data from Saez and Zucman, Quarterly Journal of Economics, 2016, 131(2): 519-578. 

We should not pretend that the gains of working people were evenly shared. These figures disguise cruel inequalities amongst the 90% shaped by race, religion, gender and geography.

By the middle of the 1970s it was clear to the wealthiest in society that something had to change. More and more of the spoils of economic growth were going into the pockets of ordinary people. Across the Western world, governments were taxing growing profits and spending them on housing, healthcare and education – mainly for the benefit or ordinary people.

The economy, and people’s expectations of it, needed a shake up. Crucially, a shake up that reversed the growing trend of economic equality. A shake up which would return the 0.1% to the position they had been in during the 1930s and 40s when they were keeping a much greater cut of the all the money that was earned.

To do this they turned to a collection of political ideas that had been largely ignored since their formation in the 1920s. These ideas and the economies shaped by them have come to be known as neoliberalism.

These ideas held that the role of the state should shrink. Government – neoliberals believed – stood in the way of prosperity. The size of the state should be reduced, the number of people on the public payroll should go down. Areas that had been the domain of government – healthcare, house building, transport, energy – should no longer be. Instead these should become the domain of private enterprise.

Markets should decide what receives investment and what does not. If there is demand (say) for new energy generation then the price of electricity should provide the signal for power companies to build it and profit from doing so. The government should step back and let the market decide what happens.

Capitalism Killed Our Climate Momentum, Not “Human Nature.”

In addition, regulation and corporate taxes of all kinds should be stripped back. This – they argued – would drive more investment. Environmental regulation controlling pollution simply prevented businesses providing energy to people cheaply, they argued. Taxes on polluting substances did the same. Stripping these away – they argued – would give people what they wanted. In place of regulation the proposed consumer choice. If people wanted non-polluting products – if that mattered to them – they would pay extra for them. And businesses would respond to this demand by providing them.

The ideology and the practice of neoliberalism were not always consistent. While the ideology demanded the withdrawal of the state, many private businesses continued to demand (and receive) vast government subsidies. In the US during the 1980s the government continued to sponsor billions of dollars worth of research into fossil fuel extraction.

America spends over $20,000,000,000 per year on fossil fuel subsidies. Abolish them.

For an introduction to the rise of neoliberalism these podcasts are very good.

The impact of these changes on the overall economy was also well understood by those who proposed them. As responsibility for infrastructure, energy, housing and the other usual domains of the state – moved to the private sector so did the money. These became new areas in which to make profit. The lack of regulation, lower taxes and subsidies meant making these profits was easier.

The wealthiest 0.1% began to see their share of the society’s wealth increasing. Starting around 1974 the economy swung around in favour of the richest. Their slice of all the money earned began to climb, while the slice taken home by the 90% began to fall. This trend has continued until now. In the US levels of income inequality have returned to where they were before the Second World War. This was the drive behind this vast shake up, and it worked.

The reshaping of the US economy took place during the period covered by ‘Losing Earth’. It was during the decade – 1979 to 1989 – neoliberalism truly entered the political mainstream.

As Climate Turns Deadly, Media Are Stuck in Denial

In order to address climate change the US (and other nations) needed to do things that were no longer politically possible. Fossil fuels needed to be taxed in order to reduce their consumption. Carbon emissions needed to be taxed, or capped. The government needed to invest heavily in renewable energy. Or it needed to force energy companies to do so through legislation.

These things might have been possible in previous decades, when governments saw this kind of investment and legislation as their job. But in this new neoliberal era, these kind of interventions were impossible – especially for the US.

Neoliberalism – the ideology at the root of all our problems.

So the US government’s failure to act was not a political or human accident as ‘Losing Earth’ holds. Rather, the economy of the US had very deliberately been re-shaped. It had been re-shaped in order to return economic advantage to the very wealthiest people, who had been losing that advantage over several decades. However in doing this, the US government had stripped itself of the tools it needed to address climate change – regulation of polluting businesses, taxation of carbon emissions and state investment in energy alternatives.

We did not lose the earth in the 1980s. Rather, the tools governments needed to act had be taken from them.

Neoliberalism drives climate breakdown, not human nature
~ Alex Randall
Open Democracy

BY SHIFTING TO a “wartime footing” to drive a rapid shift toward renewable energy and electrification, humanity can still avoid the apocalyptic future laid out in the much-discussed “hothouse earth” paper, a lead author of the paper told The Intercept. One of the biggest barriers to averting catastrophe, he said, has more to do with economics than science.

When journal papers about climate change make headlines, the news usually isn’t good. Last week was no exception, when the so-called hothouse earth paper, in which a team of interdisciplinary Earth systems scientists warned that the problem of climate change may be even worse than we thought, made its news cycle orbit.

The actual title of the paper, a commentary published in the Proceedings of the Natural Academy of Sciences, is “Trajectories of the Earth System in the Anthropocene.”

Coverage of the paper tended to focus on one of its more alarming claims, albeit one that isn’t new to climate researchers: that a series of interlocking dynamics on Earth — from melting sea ice to deforestation — can feed upon one another to accelerate warming and climate impacts once we pass a certain threshold of warming, even after humans have stopped pouring greenhouse gases into the atmosphere.

The best chance we have for staying below that catastrophic threshold is to cap warming at around 2 degrees Celsius, the target enshrined in the Paris Agreement.

That’s all correct and plenty daunting. Yet embedded within the paper is a finding that’s just as stunning: that none of this is inevitable, and one of the main barriers between us and a stable planet — one that isn’t actively hostile to human civilization over the long term — is our economic system.

Asked what could be done to prevent a hothouse earth scenario, co-author Will Steffen told The Intercept that the “obvious thing we have to do is to get greenhouse gas emissions down as fast as we can. That means that has to be the primary target of policy and economics.

You have got to get away from the neoliberal economics.” Instead, he suggests something “more like wartime footing” to roll out renewable energy and dramatically reimagine sectors like transportation and agriculture “at very fast rates.”

That “wartime footing” Steffen describes is a novel concept in 2018, but hasn’t been throughout American history when the nation has faced other existential threats. In the lead-up to World War II, the government played a heavy hand in industry, essentially shifting the U.S. to a centrally planned economy, rather than leaving things like prices and procurement of key resources up to market forces.

By the end of World War II, about a quarter of all manufacturing in the United States had been nationalized. And while governments around the world continue to intervene heavily in the private sector — including in the U.S. — those interventions tend now to be on behalf of corporations, be it through subsidies to fossil fuel companies or zoning laws that favor luxury real estate developers.

Contra much of the apocalyptic coverage around “Trajectories,” runaway climate change of the kind described in Steffen and his co-authors’ paper is very likely preventable. The ways to prevent it just happen to go against the economic logic that has dominated the world economy for the last half-decade, to scale back regulations and give major industries free reign.

Climate modeler Glen Peters saw a gap between the relatively measured perspective provided in the paper and the doomsday tone of press coverage, where headlines — like “No Existing Policies Will Be Enough to Prevent a Future Hothouse Earth,” per Futurism, and “Earth at Risk of ‘Hothouse’ Climate Tipping Point Even If Emissions Are Reduced” — make the end of days seem like a foregone conclusion.

“I don’t think many scientists think that if we met our Paris commitments, we would end up in a hothouse,” Peters said. “I think at least the media coverage went too far. The final paragraph in the paper says these are all speculative and that to sure it up, we will have to do lots of research on these questions. … The media takeaway is that we’re heading to a hellhole.”

The end isn’t quite so nigh. On top of rapidly phasing-out greenhouse gas emissions, “Trajectories” notes that humans have to create their own negative feedback mechanisms so the Earth can maintain a stable level of carbon in the atmosphere. That means expanding and repairing the Earth’s natural “carbon sinks,” like big forests that can effectively suck emissions out of the atmosphere and store them naturally.

“We need to immediately stop deforestation of the Amazon rainforest and other tropical forests, and start reforesting them. That means a U-turn in terms of how we operate the world’s economic systems,” Steffen told me via Skype. “The only way you’re going to change that is if you actually change value systems, perhaps even changing the way political systems operate and so on. The social scientists in our group have said this really is a fundamental change in human societies we need to have if we’re going to solve this problem.”

Mind, none of this is terribly unique for scientific papers on climate change. Peters notes that upon first read, he skimmed over the section in the paper describing what humans can do to prevent climate change. “I’ve read that a billion times. I don’t need to read it a billion and one,” he joked.

That reining in emissions will require massive transformations in the Earth’s productive systems isn’t controversial within the scientific community, which has long argued world economies need to decarbonize by midcentury at the absolute latest — and that’s a assuming a best-case scenario in which so-called negative emissions technologies can by that point be deployed at scale.

The paper itself put it in fairly direct terms:

“The present dominant socioeconomic systemis based on high-carbon economic growth and exploitative resource use. Attempts to modify this system have met with some success locally but little success globally in reducing greenhouse gas emissions or building more effective stewardship of the biosphere. Incremental linear changes to the present socioeconomic system are not enough to stabilize the Earth system; these include changes in behavior, technology and innovation, governance, and values.”

For high-emitting countries like the U.S., Steffen says the first step to avoiding planetary apocalypse is basically self-evident: “absolutely no new fossil fuel developments. None. That means no new coal mines, no new oil wells, no new gas fields, no new unconventional gas fracking. Nothing new. Second, you need to have a rapid phase-out plan for existing fossil fuels,” starting with coal.

Many of the solutions to climate change, Steffen and his co-authors argue, already exist and are starting to work; the appendix to their paper lists out several such measures. “It’s not that the solutions aren’t there. It’s that we don’t have the economic and policy setting right to really ramp those up,” he said.

The main constraints on action are “our value systems, politics, and legal systems,” Steffen told me. Taking climate change seriously also means taking “a completely different view of economics, going away from viewing the natural world as resources to viewing it as an essential piece of our life support system that needs to be maintained and enhanced.

“I think you simply have to go right back to the fundamental science of who we are, the planet we evolved into, how that planet operates, and what’s happening to it,” Steffen maintains, “and that will tell you immediately neoliberal economics is radically wrong in terms of how it views the rest of the world.”

From Europe’s emissions trading system to recurring talk of pricing carbon in the United States, climate policy making conversations around the world have tended to focus on market-based instruments for reducing emissions, premised on the idea that setting the right price will encourage polluters and consumers to change their behavior — so-called sin taxes.

Asked what he thought the balance should be between those sorts of market-tweaking measures and regulations, Steffen cautioned he isn’t an expert in the field.

“Naively from the outside as a non-expert,” he said, “I would say regulation every time: throw people in jail, fine them, do whatever you need to do. But make sure you get the biophysical outcome. From what I’ve seen, market mechanisms don’t deliver that.”


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