It’s the Economy, Stupid!

The following is a slightly revised version of my presentation at the annual Faith, Reason, and World Affairs Symposium held at Concordia College, Moorhead, on the topic of “Sustainability” on September 17, 2014. I still think that capitalism is incompatible with sustainability, but I don’t believe that it is the final root cause.

Some people believe that we can solve our environmental sustainability problem by such measures as technological innovations, energy efficiency, carbon taxes, recycling, regulations, and green lifestyles. Others believe that these measures are necessary but insufficient, and that we won’t be able truly address our environmental sustainability problem unless we bring about fundamental and far-reaching transformations in our political economy.

I am here to tell you why this latter viewpoint is the correct one.

But first, a little background.

There is a fundamental question that environmentalists are not very good at asking, let alone answering: “Why is this, the destruction of the natural world, happening?”​

~ Curtis White​

When we first become aware of the environmental sustainability problem, we feel an intense urge to do something about it, immediately, and that’s perfectly normal and natural. We all want to be part of the solution, and none of us wants to be part of the problem. The trouble is that in our enthusiasm to do something useful, we start talking about solutions without spending enough time and effort to figure out the root cause of the problem.

I very much like this quote from Walden:

There are a thousand hacking at the branches of evil to one who is striking at the root.​

~ Henry David Thoreau

Over the last fifty years or so, we have invested a tremendous amount of very sincere effort toward the goal of achieving sustainability. And yet, the problem has only gotten worse throughout this entire period. That’s not because of any lack of hard work. It’s because, for the most part, we did not direct our efforts at the root cause. And the reason we did not direct our efforts at the root cause is because we have not been sufficiently relentless in asking the most important question: 

If you ask people what they think is the cause of our environmental sustainability problem, you are likely to get some pretty standards answers.

One of the most common answers is that this is due to human nature. We are greedy and selfish; we don’t take personal responsibility for our actions; we don’t want to give up our conveniences and comforts.

These weaknesses and flaws do exist. But they’ve always existed. They are as old as humanity itself. So why is it that they have only recently gained such a decisive influence over our behavior? 

Some people blame consumerism. What they don’t ask is why does consumerism exist in the first place? Where does it come from? Whose interests does it serve?

Another common answer is overpopulation. There are simply too many people. What is rarely asked is why is there such a thing as overpopulation? Who benefits from overpopulation? And why is overpopulation seen as the major problem when it’s only 10% of the world’s population—some 700 million people—who’re consuming 60% of its resources?  

Another answer is big corporations because they care about nothing but profit. Well, why do we have these big corporations that can get away with trashing the planet? And why do we blame the corporations for maximizing profits when this is precisely what they are designed to do?

Some people blame the lack of effective government regulations. What they don’t ask is exactly why is it so hard to put effective regulations in place? And even where regulations do exist, why are they so easy to violate, so full of loopholes?

Some say that the problem lies in our alienation from nature. What they don’t ask is why have we become so alienated from nature in the first place? And who benefits from all this alienation?

Finally, some blame the fact that our approach to nature is based on a domination ethic. But the idea of human dominion is a very ancient one. So why did it become such a powerful, and destructive, force only during the past couple of centuries?

Don’t get me wrong. I do acknowledge that these are all issues that are relevant to the problem. In fact, these are all causal factors. But none of these is the root cause. These are merely “branches of evil,” to use Thoreau’s metaphor. To find the root cause of our predicament, we are going to have to dig deeper.

Sustainability

The word sustainability is often used as a synonym for “eco-friendly,” which it is not. 

The word sustainable means “able to maintain over time.” This raises two questions: What is it that we are supposed to maintain, and for how long? 

The object of sustainability should be understood in the widest possible sense. What is to be maintained cannot be a particular society, or a particular way of life, or a particular level of consumption; it is, rather, the survival and well-being of humanity. And we’d like to survive and flourish for as long as possible; in other words, indefinitely.

It’s true that humanity cannot last forever—our Sun will die in about five billion years, and life on Earth would come to an end much before that—but that doesn’t mean that we should hasten our own extinction. To live as if there is no tomorrow will only bring about the conditions in which there will be no tomorrow, at least for us humans.

The environmental sustainability problem is not hard to understand. It is the unfolding on a planet-wide scale of what is otherwise a very familiar phenomenon. Let me explain.

Imagine a process that normally takes place at a certain speed, but for some reason it suddenly accelerates so that it proceeds at an unusually high speed. Imagine also that this process takes place within a system that has a certain limit, or capacity, beyond which the process cannot go without causing serious harm. Moreover, there is some kind of delay inherent in the system, which prevents the damage from happening right away. This delay allows the process to overshoot the limit, followed by a collapse.

Think of shopping on credit as an example. Since credit card bills are not due immediately, you can spend more money than you have; the delay allows your spending to overshoot, followed by a financial collapse. Or think of alcohol. Since it takes a while for alcohol to go from your stomach into your bloodstream and then affect your brain functions, it’s possible for you to drink faster than your liver’s capacity to metabolize; the delay allows your intake to overshoot, leading to mental and physical impairment known as intoxication.

That’s basically humanity’s predicament in a nutshell.

Ecological Footprint is an accounting tool that is used to quantify the human impact on the planet. It measures the amount of biologically productive land and sea area required to produce the resources we consume and absorb the waste we generate.

In this graph, the horizontal blue line represents the Earth’s capacity to support human activities. That’s our safe limit, or boundary, beyond which we are not supposed to go. But, as you can see, our consumption and waste exceeded the system’s limit in the mid-1970s. Currently, we are using the equivalent of one-and-a-half Earths, and we’re on track to reach two Earths by mid-century. 

What this curve show is that we are in overshoot. And overshoot is the exact opposite of sustainability.

What happens next? It is impossible for this state of affairs to continue indefinitely, or even for a long time. It simply can’t. We live on a finite planet, which means that this curve is going to come down. It has to. If we don’t bring it down ourselves, in a gradual and controlled way, then it’s going to come tumbling down on its own, in which case we’re going to experience a planet-wide collapse, that is to say, a rapid and severe decline in human numbers and human well-being.

The environmental sustainability problem is defined by the fact that we, as a species, are not living in a way that will allow us to survive and flourish for an indefinite period of time. What turns this problem into a predicament is that we are fully aware of our situation. We know that we are in overshoot; yet, so far we have found it impossible to bring our ecological footprint within the safe zone.

So why is this happening? What is the root cause of our predicament? Why has it been so hard for us to change course? Here’s the answer:

There is an inherent tension between the economy and the natural environment.

Here’s how this works: There are two sides to any economy. On the one hand, the economy uses raw materials and fuels. On the other hand, it generates waste and pollution. The raw materials and fuels are drawn from natural sources, while the waste and pollution are sent into natural sinks.

What this means is that any economic activity, at any scale, causes some degree of ecological damage. However, and this is one of the central points in my argument, the harm that humans have caused during most of their history was slow; it was localized; and it was limited. The kind of harm we have been seeing over the last couple of hundred years, and especially during the last half-a-century, is of an entirely different magnitude. This ecological destruction doesn’t take thousands of years to manifest, but decades; it doesn’t merely affect local or regional ecosystems, but the entire planet; it doesn’t threaten the survival of a few species, but that of all life on Earth.         

The root cause of our environmental sustainability problem is not the economy, as such, but the particular kind of economic system that is currently dominant all over the world. And this brings me to the C word.

The first thing to note when we’re discussing capitalism is that we’re referring to a system; we’re not talking about people. This is important for two reasons: First, a system does not function in accordance with the desires or intentions of those running it; it functions according to its own inner logic. Second, individuals, and even companies and institutions and governments , do not make their choices in a vacuum. Their choices are constrained by the larger system within which they are embedded. What is a system?

The behaviors produced by a system are collectively referred to as the “goal” of that system. The goal of a system is what that system is designed to achieve, and it is what that system actually achieves—not occasionally, not accidentally, but constantly and consistently. So, if capitalism is a system, what is its goal?

The goal of capitalism is the accumulation of capital. So long as capitalism exists, it will have the same goal, and the goal will remain unaffected by how much capital has already been accumulated. In effect, the goal of capitalism is an endless accumulation of capital.

Use Value & Exchange Value

Exactly how does capitalism seek to achieve its goal? It does so by means of profit from production. But profit has been around for millennia, and the production of commodities is not unique to capitalism. What is unique to capitalism, and what defines its essential nature, is that production takes place for the purpose of exchange, and not for the purpose of use. 

The use value of a thing has to do with its utility or usefulness for people, that is, its capacity to meet some human want or need. In contrast, the exchange value of something is the exchange equivalent by which it is compared to other objects in the market, and this function is typically served by money.

In precapitalist or noncapitalist production, whenever people buy or sell, their objective is to obtain something for use, and therefore it’s the use value that dominates. This can be expressed by a simple formula:

I produce a commodity (C). I sell that commodity in exchange for some money (M), and I use that money to buy another commodity (C’). The end is to obtain a particular commodity because of its use value, and money is merely the means to achieve that end.

In capitalism, on the other hand, it’s the exchange value that dominates. This is expressed by a different formula:

I have some money (M) that I use to produce a commodity (C), and I sell that commodity to get more money (M’). The end is to earn profit, that is, to have more exchange value at the end of the day than at the beginning, and the production of the commodity is merely the means to achieve that end.

Since the goal of capitalism is the accumulation of capital, the system has a permanent need to expand, both in terms of total production and profits and in terms of geographical reach. The logic of capitalism demands that the M⇨C⇨M’ circuit must be endlessly repeated. Money must be converted into commodities and commodities must be converted into more money, in a continuous spiral that has no logical end-point.

When you’re a capitalist in a marketplace, and you invest your money to produce a commodity, there is no guarantee that the money you’ve spent will actually find its way back to you. It can always go to a rival capitalist. Therefore, in order to survive in a capitalist marketplace, you must make profit every time the M⇨C⇨M’ circuit is repeated. Not only that, the logic of capitalism dictates that you must continually grow. For this to happen, you must continually reinvest your profits in the production process. Reinvestment of profits back into the production process completes the loop and generates a positive feedback of continuous expansion.

When you’re a capitalist in a marketplace, and you invest your money to produce a commodity, there is no guarantee that the money you’ve spent will actually find its way back to you. It can always go to a rival capitalist. Therefore, in order to survive in a capitalist marketplace, you must make profit every time the M ⇨ C ⇨ M’ circuit is repeated. Not only that, the logic of capitalism dictates that you must continually grow. For this to happen, you must continually reinvest your profits in the production process. Reinvestment of profits back into the production process completes the loop and generates a positive feedback of continuous expansion.

The Treadmill of Production

The logic of capitalism gives rise to an interesting phenomenon called the “treadmill of production,” and this is worth looking into.

The best way to increase profit is to reduce cost, and there are three main strategies for doing so: First, you want to expand production in order to take advantage of the “economies of scale.” The larger the scale of your operation, the lower will be your cost per unit of output. Second, you want to improve the efficiency of your production by investing in productivity-enhancing technologies. The higher the productivity of workers per unit of labor, the lower will be your cost per unit of output. Third, you want to externalize as much of your cost as you possibly can.

Each of these three strategies has unintended negative consequences for society and for the environment. But let’s focus on how the second strategy.

Increase in efficiency leads to improvements in productivity. But significant improvements in worker productivity causes unemployment, because now more work can be performed by fewer workers. When unemployment rises, there is decline in the number of consumers who’re willing to buy the commodities being produced. When consumer spending falls, sales go down and so do profits, and therefore the rate of capital accumulation falls. The system responds in the only way it can: by increasing production. But an increase in production does not lead to an increase in profits unless consumption is also increased. 

In effect, we end up with not one but two treadmills. The treadmill of production and the treadmill of consumption are interconnected in ways that they continually propel each other. Since exchange value dominates under capitalism, it’s really the treadmill of production that acts as the engine for the entire economy, increasing the accumulation of capital by increasing consumption, while destroying natural resources and human community as unintended side-effects.

You can now appreciate why, under capitalism, both individual companies and the total economy must grow, continually and exponentially. When companies fail to grow for prolonged periods, they may go out of business and be replaced by other companies that are growing. It is generally believed that a mature industrial economy, such as that of the United States, must grow by approximately 3% per year, which means it must double in size every 23 years. The system can tolerate a variety of shocks; what it cannot tolerate is a lack of economic growth, which is seen as a “crisis.” Since economic growth is a rough measure of the accumulation of capital, the system does not care as to what kind of economic growth is taking place, through what means, for what purpose, at what cost to the community, at what cost to the environment.

What has happened over the last couple of centuries is that the tension that has always been part of the relationship between the economy and the natural environment—that tension has increasingly become something much more sinister and monstrous: it has turned into a fundamental contradiction. To understand this contradiction is to understand the root cause of our environmental sustainability problem.

The economy is a system that is embedded within another, much larger system, that is to say, the entire ecosystem of our planet. The goal of the Earth’s ecosystem—and therefore the goal of humanity—is to survive and flourish for an indefinite period of time, also known as sustainability. The goal of the dominant economic system, capitalism, is the endless accumulation of capital, which requires an exponentially growing and continually expanding economy. As the economy grows and expands, it puts more and more stress on natural sources and sinks, thereby increasing the ecological footprint and undermining the goal of sustainability.

Every success that capitalism achieves in pursuing its goal of accumulation is basically a defeat for sustainability. The effort to achieve sustainability through such measures as technological innovations, energy efficiency, carbon taxes, recycling, regulations, and green lifestyles may succeed in reducing our ecological footprint, but only if the size of the physical economy is either stationary or declining. But if the size of the physical economy is growing, then any gains that we might make through these measures are swept away by the inexorable logic of capitalism.

What all of this means is that sustainability and capitalism are mutually exclusive. We can choose sustainability or we can choose capitalism. But we cannot choose both. 

The main reason that we’ve been unable to change our course is because we’ve been trying to achieve sustainability while also maintaining our allegiance to capitalism. But no one can serve two masters. We can’t keep our planet and destroy it too. 

Here’s the real contradiction: Since the economy is absolutely dependent on the planet’s ecosystem, capitalism is not only jeopardizing our survival and well-being, it is systematically undermining the very conditions that make its own existence possible.

This means that if we choose capitalism over sustainability, we’ll end up with neither.

So the choice we face is not between sustainability and capitalism; it is between sustainability and collapse. And there is no way to avoid making that choice either. Since we are constantly moving further and further into overshoot, not doing anything basically amounts to endorsing the wrong choice. And if this wasn’t enough of a burden, consider the fact that we must make this choice not only on our behalf, but also on behalf of the entire planetary ecosystem, on behalf of life itself.

Final word: There is so much at stake that we can no longer afford to keep hacking at the branches of evil. We need to strike at its root.