19 July, 2024

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Capitalism On Life Support: Planetary Bounds To Market-Lead Growth

By Kumar David

Prof. Kumar David

Can economic expansion continue indiscriminately? Can humans plunder the resources of the planet and plunder their own ingenuity without limit to generate ever increasing wealth? Does their come a point at which humankind escapes from the realm of market-driven “necessity” into a realm of true freedom? I am not concerned with concepts like thanha because religion is of no intrinsic interest to me. In today’s essay I am making queries pertaining to the transition from the indiscriminate pursuit of wealth to a society of true plenty constrained by ecology, climate change and global warming.

Among my concerns is whether climate change and global warming permit humankind to pursue CO2 emissions demanded by profitable industrialisation, to indulge in deforestation demanded by the logging-for-profit in say the Amazon basin, to fire the forests of Indonesia and Malaysia for palm-oil business, and to wreck the Artic, Antarctic and Greenland ice-sheets at a frightening pace for commercial gain. The simple answer is NO, this cannot go on. The existential boundaries of commercial profit have reached planetary limits. Mercantilism, colonialism and capitalism that we have become familiar with in the last three centuries has reached existential boundaries.  A 2019 McKinsey report (Globalisation in Transition, Future of Trade and Value Chains) also argued that major structural changes are in progress and that world trade is declining as a percentage of world GDP. However, McKinsey’s arguments are couched in purely economic terms; changed networks, value chains, the alterations of global markets etc.   

The 2015 United Nations Sustainable Development Goals
Source: Stockholm Resilience Centre

Ecological considerations are another dimension. If you are a David Attenborough fan you would have heard the grand old seer drone on about the damage we are doing to the land and the seas, driving an untold number of species including birds, insects, ants and “pests” to extinction. But the old boy is careful not to get sucked into political debates; it would do no good for him to come down hard as a critic of capitalism and the rapacious pursuit of profit. He knows that his task is to mobilise the widest possible support to protect the planet. 

From 1850 to 2000 the temperature of the planet rose by 1.8 degrees C due factors such as use of fossil fuel and CO2 emissions. CO2, like a blanket, traps heat below it. Temperature records are now being broken and it is feared we are on course to a 3 to 6 degrees C hotter planet by the end of the century. Dr James Hanson who is now quite famous resigned from NASA 50 years ago to start a campaign against global warming and to get regulations enacted to reduce greenhouse gas emissions. His concerns were that rainforests are being cleared at an alarming rate for profit by the lumber industry and palm-oil producers and global warming is making it possible for methane trapped below the Artic to unfreeze and bubble up. Methane is twenty times more powerful in trapping CO2 in the atmosphere. 

The earth’s crust is melting and the Antarctic and Greenland are losing three times as much ice as 25 years ago. Sea levels are rising threatening more people than ever before with displacement. Even creatures and insects specifically adapted to the heat are dying out in Australia and Africa. The seas are being polluted and reefs destroyed. Japanese, Norwegian and Chinese trawlers deploy powerful mechanised techniques that deplete seas far away from their home waters including the rich waters of the Indian Ocean. Capitalism has reached the limits of unchecked irresponsible expansion. It has to be reined in. The planet is on its way to food and water shortages, destitution of the poor and the displacement of millions because a one metre rise in seal levels is forecast by year 2100. Capitalism in the sense of society driven by profit is pushing the world to a tipping-point. It is incompatible with survival of man, beast and the planet. 

The short-term solution is to diversify effort and investments. Immediate measures that can be taken is to invest in public transport and modify the structure of taxation to distribute burdens more equally. The structure of our (Sri Lanka) economy must be changed because export-import rebalancing is vital to overcome domestic and foreign debt traps. Exports must be prioritised and imports of luxury goods severely curbed; this is an immediate priority that must be imposed with unflinching severity for some years. Wealth and capital gains tax have become necessities. Belt tightening cannot be avoided since Sri Lanka has been living beyond its means (that is consuming more than it produces) for several decades. The poorer classes will be willing to accept belt-tightening only when they see the axe fall on the well to do as well. The alternative is social unrest – the aragalaya. 

Literature on the topic

The Limits to growth was written by Donella H and Dennis L Meadows, Jorgen Randers and William H Behrens as a Report for the Club of Rome project on the Predicament of Mankind (published by Potomac Books in 1972). Though published a long time ago the conclusions of this MIT research group continue to reverberate even today after half a century. I quote:

“Our conclusions are: 

1. If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached within the next one hundred years. The most probable result will be a sudden and uncontrollable decline in both population and industrial capacity. 

2. It is possible to alter these growth trends and to establish a condition of ecological and economic stability that is sustainable far into the future. The state of global equilibrium could be designed so that the basic material needs of each person on earth are satisfied and each person has an equal opportunity to realize his individual human potential. 

3. If the world’s people decide to strive for this second outcome rather than the first, the sooner they begin working to attain it the greater will be their chances of success”.

The 1970s launched an environmental reckoning across the America. Spurred by rising public concern, corporations and national leaders pledged to protect resources and created new laws and agencies to lead that effort. Amid these discussions these MIT researchers asked the far-reaching question “Can humanity keep growing and consuming at its current rate?” Using computer modelling they came up with an ominous answer:

“If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached within the next one hundred years. The most probable result will be a sudden and uncontrollable decline in population and industrial capacity.”

The Report was an extension of biologist Paul Ehrlich’s 1968 “The Population Bomb,” which predicted that aggregate world demand for resources driven by population growth would lead to future starvation. He identified five choke points:

* Natural Resources and pollution

* Physical capital (Industrial & agricultural production)

* Population, Human Capital and Labour

* Technology.

* Erosion of justice and social breakdown

Conventional (bourgeois) economist are  sceptical that no model can explain how the global economy operates, let alone predict global conditions in 2100. Nonetheless, even they concede that the model got a larger point right: Humans must reduce their greenhouse gas emissions. The world must shift to cleaner sources of energy. But these economists say that the assumption that developing nations such as India will mimic U.S consumption and income levels is false as it assumes that a developing nation’s future consumption patterns will copycat patterns in rich countries today.

They claim that “for-profit” firms constantly design new products to attract consumers. Some goods, such as smartphones, may deplete natural resources, but others have smaller environmental footprints than the products they replace, and those eco-benefits can help attract customers. For example, affluent people are choosing to eat less red meat to improve their health. Innovative firms are designing “fake meat” to cater to them. If more consumers substitute fake for real meat the perverse environmental impact of global caloric intake will decline. Worldwide, people are moving to cities and their earnings rise, they tend to marry later and have fewer children. Choosing to have fewer children is prioritising quality over quantity and reduces population growth.

The limits that matter today

Scientists and policymakers agree that climate change is an overriding challenge. But now they say that the risk isn’t just running out of resources. Rather, it is something more alarming; a warming planet causes drastic heat waves, wildfires, floods and such impacts on a catastrophic scale.

One conventional economic policy prescription for cutting greenhouse gas emissions is to adopt a carbon tax – much promoted by the market-crazed Economist magazine. This will give “customers” an incentive to use less fossil fuel and businesses an incentive to produce better low-carbon technologies like electric vehicles and green power. Market aficionados say if nations enacted carbon taxes that rises over time, we could avoid the most severe negative effects of global economic growth. A great downhill race would unfold between declining carbon emissions per dollar of global gross domestic product and declining economic growth per dollar of global emissions. Bourgeois market economists and craven apologists swear that capital-led economic growth is essential for improving the world. Energy efficiency will increase as energy prices change over time due to market innovation they swear. May the prophet be praised; may all beings be well and happy; may the light of the risen lord shine upon you and three-cheers for Father Jerome. All a load of craven bunkum! 

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Latest comments

  • 2
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    One question David did not touch is: Can the Science and technology expansion will contnue to meet the challenges of Climate change and Global warming? The Science and technological development in the recent past helped the population growth and economic growth. I don’t know whether the world ever had a similar Science and Technological growth happened since the human beings joined in the world. We talk about 3000 to 4000 years of history, civilisation, arrival of God and religions etc. As far as I know my birth was in a hut not built by cement but with the soil and roof was with Palmyrah or Coconut leaves and the toilet was an area covered with Coconut leaves. There was few buses and cars and most of the tranport of goods are using bull carts by bulls. This is after 1948 independence by most of the people. The population of Sri Lanka in 1800 was just 1 miilion. So, what would be the population of Sri Lanka before 3000 years ago and what would the level of civilisation we should have then?

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      “…what would be the population of Sri Lanka before 3000 years ago and what would the level of civilization we should have then?”
      Population is anybody’s guess, but civilization: certainly a lot more civilized than now.

    • 1
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      Ajith,
      “So, what would be the population of Sri Lanka before 3000 years ago and what would the level of civilisation we should have then?”
      I can’t give you any figures, but all would have been planting, hunting, or fishing. Definitely there wouldn’t have been CT to ask questions.

      • 1
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        old codger,
        The fact is that nobody knows the historical facts beyond our limits rather than making assumptions using our limited knowledge.

        • 1
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          Ajith,
          Watch this from about 40.00.
          https://youtube.com/watch?v=kFFsKC-I9PE&feature=share7

        • 1
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          There are reasonable assumptions which fit into historical records and archaeological data.
          Then there are the ones bout the age and purity of certain languages and such things.

  • 0
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    Kumar David’s article sadly reminded me of the man-made destruction of the seven decades old Nova Kakhovka dam on Dnieper River in Southern Ukraine. The collapse of the dam released approximately 8 cubic kilometers of water causing high tide flooding downstream inundating hectares of farmlands, national parks, forests, wetlands, roads and houses, and displacing humans and animals. Ukraine’s President says the ecological disaster caused by the breach of Nova Kakhovka dam is a war crime. Indeed, it is.
    The 1 billion dollar question is who destroyed the Nova Kakhovka dam. From what I read, it is not difficult to prove that it is the Ukrainian military which destroyed it.
    1. “The destruction of the Nova Kakhovka dam in Southern Ukraine may deprive Russian-occupied Crimea of vital freshwater supplies for more than a decade.” – Head of the Ukrainian Ecological League (“Ha ha ha, we did it, Joe!”)
    2. “We witnessed Russian soldiers being swept up in flood waters after the Nova Kakhovka dam burst.” – Ukrainian military (“Ha ha ha, we did it, Joe!”)
    Contd’……

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      3. “No one on the Russian side was able to get away. All the regiments the Russians had on that side (on the east bank of the Dnieper River) were flooded.” – Ukrainian Army Captain Andrei Pidlisnyi. (“Ha ha ha, we did it, Joe!”)
      4. “Ukrainian officials have twice discussed plans to blow up the Nova Kakhovka dam last year, with Major General Andrey Kovalchuk admitting to the plan, as a last resort.” – Washington Post dated December 29, 2022 (“Ha ha ha, we did it, Joe, after we lost 3,715 of our best soldiers and 52 tanks including Leopards, Bradleys and Abrams (?), within the first three days of ‘your’ counter-offensive against Russia.”)
      5. Moreover, in retaliation to Mr. Putin’s lightning-quick annexation of Crimea after the 2014 Euromaidan protest in Kiev, Ukraine built a concrete dam on the North Crimean Canal in the Kherson Oblast depriving at least 85% of water to Crimea. After 8 years, on the first day of Russia’s special military operation in Ukraine, Russian forces restored water to Crimea by removing the blockage on the canal. After 9 years, in June 2023, Ukraine did it again.
      Contd’…….

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        6. Some wicked people were of the view that the Kakhovka catastrophe gives much needed time for Ukraine to have more combat power while others say the “blowing up the Kakhovka dam hurts Russia more than Ukraine as the 65% of the flooded lands are on the Russian side”.
        7. My heartfelt condolences to the families of fallen soldiers from both sides and the families of those who have died because of the sudden surge of flooding. It is estimated that 700,000 people will be at risk from lack of clean water while tens of thousands of people and animals are still stranded in the flooded towns and villages. I hope the flood water will recede earlier than predicted, so that humanitarian aid can reach stranded and displaced people without any delay.

    • 1
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      Champa,
      “From what I read, it is not difficult to prove that it is the Ukrainian military which destroyed it.”
      You mean this is like “it is not difficult to prove that it is the ………………………which it master ind the Easter Bomb”?

  • 1
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    Dear Kumar,
    .
    I saw the article yesterday, read it more carefully today. Thank you very much for discussing the affairs that ought to matter most to us, but which most of us ignore.
    .
    In a sense your focus here is at the middle level; let those who want to concern themselves with where the entire universe is going imagine that they are not talking absolute rubbish; meaningless stuff of what is beyond our ken.
    .
    What we clearly know is that we humans living today have been fortunate to have had the chance to live responsibly for a certain space of time, and allow life to continue after us by living sensibly within the boundaries that we must observe. There are a few days left for others to read this and contribute just a few words to say that we know that this broad view of what is happening to our planet is necessary whilst some are concerned with more petty bickering, and others are talking “bunkum”.

  • 0
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    ” Wealth and capital gains tax have become necessities .”
    There’s something called Capital Flight or Capital Outflaw in economics .
    Simply put , money or assets move out of the country . In recent years
    this happened both in developed and emerging economies when wealth
    was taxed . Since 1998 to 2006 France had a Capital Flight of more than
    $ 125 billion against a tax collection of $ 2.6 billion a year according to
    reports . In Venezuela , early 1980s , whole of one year export income left
    through illegal Capital Flight . UK , Spain , Argentina , Russia and Thailand
    all have this experience . Easy to cry foul at the wealthy every time there’s
    some economic , financial or political blunder through careless and
    corrupt governance by corrupt individuals of all hues . Wealth tax is not the
    panacea for all ills , in my view and overall , it is a good article .

    • 1
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      Dear whywhy,
      .
      You have responded to my comment by reminding me that we will ultimately have to accept the realities of Sri Lanka’s economic mess by accepting even wealth tax.
      .
      However, by saying that, overall, Kumar’s article is a good one, you’re telling me that we also need to be aware of how everything that we do has to take account of much wider issues relating to the planet.
      .
      How to balance all those considerations is, indeed, a challenge, and we must keep all that in mind. Thanks for drawing attention to that aspect.

      • 1
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        My dear S M ,

        I think some mistakes have happened here . The first one is that
        my comment is not really coming as a response to yours . It is
        possible I pressed the reply button by mistake and if that is the
        case I am sorry about it . And the next is , I have my reservation
        about wealth tax . That is what I do with examples in my
        comment which is directly aimed at Kumar David and the winding
        line says how I take it . Thank you for your reply .

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