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Chapter 3: Green Capitalism Is Not the Solution

3.2 The Growth Imperative

36 In short, I have tried to highlight capitalism’s peculiar relationship with fossil fuels and sought to illustrate that it can be described as a sort of dependence. I have also discussed the limited properties of renewable energy sources that are available to us today, and tried to make the point that they cannot just take over the role of their fossil counterparts in a green capitalist framework. As mentioned above, making use of renewable based energy on a global scale would mean that the overall energy consumption is to be reduced, which would be a problem when taking into account the process of my next section, namely that of the growth imperative of green capitalism.

37 of their framework, Hickel and Kallis argue that green growth theory is also promoted by leading multilateral organisations, such as the World Bank, the OECD and the United Nations Environment Program, and that it is assumed in national and international policy regarding environmental sustainability (Hickel and Kallis 2020: 469-470). Instead of regarding the growth imperative and the system of capitalist competition as a problem in relation to securing environmental sustainability, it is seen as the foundation of a green capitalist framework. As discussed in the previous chapter, the idea is that only capitalist competition can bring the innovations that are necessary to solving current and future environmentally-related issues. According to Foster, Clark and York, the framework of green capitalism is built upon the premise that a green industrial revolution based upon innovations and efficiency will produce an environmentally substantiable society in which economic growth will remail a real objective (Foster, Clark and York 2010: 19). In the previous chapter, I have already voiced my concerns with building a framework around the notion that the necessary green inventions are presumed to be a certainty, so I will now move on to discussing my arguments against the growth imperative in relation to securing environmental sustainability.

I believe the presence of a growth imperative in the framework of green capitalism to be one of the main reasons why it will never be able to secure environmental sustainability. Environmentally-related problems are some of the most pressing issues of our time. As I have discussed above, green capitalism assumes some form of growth imperative, but one that is presumed to be in harmony with nature’s resources and capacities. The problem with this growth imperative is, that in order to sustain economic growth within the green capitalist framework, high rates of dematerialisation and decarbonisation should be present in order for ecological impact of economic activities to decrease (Kenis and Lievens 2015: 11). Even when these levels of dematerialisation and decarbonisation would be reached, there would be no more room for the growth imperative to be sustained. This argument is backed up by Minqi Li (2008: 59), who showed that even in the most ambitious scenario within the framework put forward by the IPCC in 2007, which entailed a 445 parts per million CO2 equivalent, a reduction in emissions intensity of 2,7% and a decline in energy intensity of 2,0% were needed, but left no room for economic growth, and instead put forward an expected 0,7% shrinkage of the global economy. Even then, the 445 ppm CO2eq framework has been criticised for not being ambitious enough to actually be able to reach the necessary goals in order to reach a state of environmental sustainability and avert environmentally-related disasters (Kenis and Lievens 2015: 11). Thus, I conclude that economic growth is not possible when proper action is being taken in order to secure environmental sustainability.

However, that is not all. As described in my previous chapter, the green growth within green capitalism is to be accompanied by a new innovative measure of GDP, in which natural capital is taken

38 into account, as well as new technological innovations that have yet to be implemented on a large-scale. Hickel and Kallis argue that even when GDP is decoupled from emissions, both in the case of absolute and relative decoupling that was discussed in the first chapter, securing environmental sustainability “is unlikely to happen fast enough to respect the carbon budgets for 1.5°C and 2°C against a background of continued economic growth” (Hickel and Kallis 2020: 480). Their argument supports with the one provided by Li earlier, in that even in the best scenario, economic growth and protecting the natural environment do not seem to go together, and provide two overarching arguments for this: (1) the realisation of economic growth leads to an increase in energy demand, making the transition to more sustainable sources of energy even more difficult than I have already discussed above, and inevitably increases the emissions from land use change and industrial processes, and (2) models of green capitalism that assume green growth within the confines of the Paris Agreement rely heavily on negative emissions technologies, which could either be unavailable for large-scale use at this moment, or could not have been properly tested to assess the possible negative consequences of using them on such a scale (Hickel and Kallis 2020: 480).

I have introduced the argument that one of the reasons why green capitalism will not secure environmental sustainability is because of the growth imperative: the consequences of seeking to achieve infinite growth cause large-scale destruction of natural resources and degradation of the environment, for which this growth imperative is to blame, and that a model that assumes economic growth in a green context are not a possibility. The way that the growth imperative paired with efficient technological innovation can actually increase the impact caused by economic activities instead of decreasing them can be best illustrated along the lines of Jevon’s Paradox. W.S. Jevons argued that more efficient technological use of coal in engines actually caused the overall consumption of coal and other natural resources to increase (Jevons 1905: 8-9). When the use of a natural resource becomes more profitable through efficient innovations, the demand for using said resource will naturally go up.

An increase in efficiency is usually paired with a cheaper availability of the resource, meaning that it is more profitable to make use of it in the production process. Thus, Jevons concluded that an increase in technological efficiency could actually increase overall production and consumption of natural resources. What this means in relation to environmental sustainability is that even if the necessary technological green innovations are invented, it could make the production process cheaper, which could then increase production and consumption, and increase the impact made on the environment again. The efficiency gains would not actually be enough to counter this increase in production and consumption. This has led some to argue that efficiency policies related to environmental sustainability are counter-productive (Alcott 2005: 19).

Closely related to this is final the reason for why I believe the growth imperative to be one of

39 the leading reasons why a green capitalism framework will not be successful in securing environmental sustainability is that this assumed infinite growth is not actually a feasible goal in and of itself. In the case of non-substitutable resources, such as s land, water, raw materials and energy, Ward et al. (2016:

4) have argued that efficiency gains are possible to a certain extent, however, there are natural limits to the extent of increase in efficiency that can be obtained. They make use of a few examples of natural resources whose physical capabilities make it so that infinite efficiency gains cannot be reached: “the photosynthetic limit to plant productivity and maximum trophic conversion efficiencies for animal production govern the minimum land required for agricultural output; physiological limits to crop water use efficiency govern minimum agricultural water use, and the upper limits to energy and material efficiencies govern minimum resource throughput required for economic production” (Ward et al. 2016: 4). Thus, at the point where the physical limits of a resource’s efficiency are reached, economic growth and an increase in GDP will continue to increase the depletion of natural resources (Hickel and Kallis 2020: 475). To summarise, I believe that the growth imperative is to blame for the damage that has already been done to the environment, and is also a reason why green capitalism will not be able to secure environmental sustainability.

Hahnel and the Growth Imperative

Before moving on to the next part of this chapter, where I discuss the feasibility of market-based solutions in a green capitalism framework, I seek to strengthen my argument on the growth imperative being one of the causes of environmental degradation by incorporating the arguments of a scholar arguing against this point. Here, I wish to highlight Robin Hahnel’s work on economics and environmental sustainability. He does not necessarily agree that “there is an unhealthy growth imperative inherent in private enterprise market systems that is threatening the environment” (Hahnel 2012: 40). Instead of dismissing the growth imperative argument as a whole, he proposes that certain kinds of aspects within the capitalist system, combined with this unhealthy growth imperative, are able to explain the environmentally unsustainable practices that are commonplace in capitalist systems.

Hahnel argues that:

In sum, the problem is not that human beings have become more and more economically productive, which is what someone should mean when they say that human economic wellbeing can grow, at least in theory, without limit. (…) Instead the problem is (1) what we do with increases in our productivity, (2) the expansion of economic needs into desires whose satisfaction does little or nothing to increase economic wellbeing, and (3) biases in our major economic institutions that discriminate against throughput efficiency. (Hahnel 2012: 31).

40 Thus, not the growth imperative in itself, but instead the way in which economic productivity is increased, the way this increase in productivity translates to the changes in people’s needs and desires and the biases that are present in our current economic system that are not favourable towards more sustainable solutions. To clarify, Hahnel uses the term throughput to describe the process in which

“physical matter of one kind or another that enters the economic system from the natural environment, and physical matter than exits the economic system as waste to be absorbed back into the natural environment” (Hahnel 2012: 24-25).

Let us break down Hahnel’s argument a bit further. His arguments are formed around the notion that within different types of capitalist systems, there are non-capitalist institutions and political forces in place that have a large say regarding environmental sustainability and the extent to which damage is inflicted on the environment in order to achieve economic goals (Hahnel 2012: 31-32). Instead of the growth imperative in and of itself, he lies the blame with private enterprises and markets, who, by necessity, create “perverse incentives with anti-environmental biases”, which makes it so that every society who continues to organise production and consumptions around said institutions will not be able to entirely escape the unhealthy growth imperative they create (Hahnel 2012: 31-32). Thus, not capitalism itself, but the defining institutions create a framework that is inherently unfriendly to the environment. This statement alludes to the fact that Hahnel believes a greener capitalism to be a possibility, as long as the bias against environmentally-friendly options in the major economic institutions is taken care of.

First, Hahnel believes that it is not the increase in economic productivity per se that threatens the security of environmental sustainability, instead, the problem is whatever induced us to take so much of our productivity gains in the form of goods whose production and consumption required huge increases in throughput (Hahnel 2012: 32). What is identified as the cause of this problem is a market bias: human beings are steered to engage in individual consumption and not collective consumption, even though the latter puts far less strain on the environment per unit of social benefit. Then, Hahnel looks at the question of why humans tend to over-exploit our resources in our current economic systems. He starts off by explaining the theory of the tragedy of the commons. The idea is that with open access to a common-pool resource, self-interested users tend to over-exploit them. If one accepts this argument, a logical step could be to privatise these resources as a means to protect them from self-interested users. However, Hahnel shows that the increase in private ownership of natural resources has shown to be more of a problem to environmental sustainability than a solution, stating that “private owners of natural resources overly discount the benefits of leaving resources in the ground to be available for extraction in the future; as a general rule, they have been over-discounting, and therefore over-exploiting our natural resources, to a greater and greater extent ever since 1980 ” (Hahnel 2012:

41 36).

Hahnel’s last argument seeks to explain how endogenous preferences aggravate biases. He starts off by rejecting the theory of consumer sovereignty that neoliberals often bring up in response to environmentally sustainable alternatives. The idea is that one can blame consumers for problems related to the economy and economic activities, since they are regarded as a sovereign force; it is presumed that in a market economy, producers only follow the wants, needs and desires of the consumer (Hahnel 2012: 36). The notion of an economic democracy suggests that everyone has an equal say in what happens on the marketplace, however, as Hahnel points out, this is not the reality, since rich individuals haver more means to partake in the ‘democratic’ process than the poor ones, which inevitably leads to an undemocratic situation (Hahnel 2012: 37). Another reason to reject the notion of consumer sovereignty is that large corporations undoubtedly have influence over the wants, needs and desires of consumers. Not all products are equally profitable on the marketplace, so corporations have good reasons to steer consumption demand in strategic ways. Hahnel treats human preferences as endogenous, meaning that they can change over time and people have at least some form of influence over them. Hahnel argues that endogenous preference formation aggravates the destructive effects of biases, stating that: “it is individually rational for people to dampen their preferences for leisure, collective consumption, and environmental preservation and enhance their preferences for natural resource and pollution intensive goods, even though this behavior is socially irrational because it aggravates the biases and increases environmental destruction over time” (Hahnel 2012: 40).

To summarise, Hahnel does not completely agree with the growth imperative argument, but he does not reject it altogether. Instead, he believes that non-economic institutions have influence to such an extent that a green capitalist framework is a possibility when these institutions are properly corrected (Hahnel 2012: 40). Hahnel is thus said to propose that in order to reach a state of environmental sustainability, adapted mainstream policy measures can effectively and equitably deal with environmentally-related issues (Chester 2014: 408-409). Here is where I disagree with him. As I have shown in the first chapter, capitalism goes beyond the scope an economic system, but should rather be regarded as an institutionalised social order, meaning that seeming separations between the economic and social spheres are actually false and that capitalism and its goals are all interwoven in the economic, social and political spheres of life in complex ways. Thus, even the spheres that are not seemingly economic on first glance are all influenced by the many faucets of capitalism. As Hahnel describes himself, there are “perverse incentives inherent to the capitalist economic system”, which result in biases in the market mechanism, which then leads the world towards environmentally destructive directions (Hahnel 2012: 40). Still, I do believe these mechanism to be inherently linked to

42 the growth imperative of capitalism. The growth imperative should not be regarded as an aspect that is confined solely to the economic realm of capitalist systems, like Hahnel implies, but as an integral part in our institutionalised social order. Instead of treating Hahnel’s ‘perverse market incentives’ as a separate realm from the growth imperative, I actually believe them to be symptoms of it.

Allow me to shortly explain why. First, let us recall Hahnel’s argument that there is a bias towards private consumption and against collective consumption. So, he alludes to the fact that it is not the economic growth per se that is the problem, but rather what we do with it. However, the reason why there is such a bias towards private consumption is very clearly explained in Hahnel’s third argument: large corporations have influence over the wants, needs and desires of consumers. As I discussed in the first chapter, one of the most important defining features of capitalism is the accumulation and expansion of capital with the orientation towards making a profit. This is exactly why businesses would benefit from steering the people’s wants towards private consumption, since this is a way for them to generate profits. An increase in collective consumption would be more beneficial for the environment, but there is very little profit to be made here for those who seek to expand their capital. This argument directly relates to Hahnel’s second point that the increase private ownership of natural resources has increased the depletion of said resources. Hahnel himself points out that these private owners over-exploit their resources. The main reason for them to do this, going back to the Jevons paradox that I discussed above, is that a large availability of cheap resources for these owners means that they can increase production and subsequently consumption of their goods.

The driving force behind all of this is thus the growth imperative.

To close off this second part of this chapter, I believe the growth imperative to be one of the reasons why green capitalism will not be able to secure environmental sustainability. As I have shown above, economic growth is not possible when one seeks to protect natural resources to avert environmental degradation and climate crises. Even in the relatively unambitious framework of environmental protection as put forward by IPCC, the most ambitious scenario within this given framework predicts that economic growth is not a possibility. If we thus conclude that in this scenario, which can be seen as doing the most minimal intervention that is possible, economic growth is not a possibility, I will conclude that economic growth is inevitably not a possibility when one tries to achieve environmental sustainability goals that are actually more ambitious. Thus, one of the defining reasons why I believe green capitalism to be incompatible with environmental sustainability is the growth imperative that serves as one of the defining features of any green capitalist framework. On the one hand can it be argued that the growth imperative in itself is damaging to the natural environment, and should thus not be included in any framework that seeks to secure environmental sustainability, on the other hand, it can be argued that green growth – economic growth in harmony

43 with the available natural resources, is not even a theoretical and empirical possibility.

Whereas opponent of the growth imperative argument Hahnel points out that not the growth imperative, but other non-economic factors within capitalist systems are to blame for environmental degradation and that the key to implementing a greener capitalism lies exactly in these factors, I have argued that these factors still relate to the growth imperative. Capitalism should be seen as an institutionalised social order, meaning that there is no actual divide between the economic and social realms in that they are both interconnected and seek to achieve the same goals within the capitalist framework. As explained in the first chapter, one of the defining features of capitalism is the accumulation and expansion of one’s capital through the process of gaining a profit – the growth imperative. I tried to illustrate that Hahnel’s argument does not hold up when one considers that the alternative explanations he offers are all still driven by this growth imperative.