Green Capitalism
Can capitalism and sustainable development co-exist? At the Assembly on Apr. 17, MIT Professor John Fernandez cast doubt on the compatibility between the two, criticizing the political and economic system of capitalism for deceiving consumers and profiting off of the exploitation of the environment. Fernandez pointed to the smoking lobby, as well as the bogus statements of Republican lawmakers to demonstrate how special interests interfere with policymaking.
Although the status quo in the United States government is one of climate change denial, capitalism—with a small dose of government guidance—has the potential to change companies’ attitudes.
The emergence of green economies, like Sweden and Singapore, have brought green capitalism into the spotlight. To summarize its core tenets, green capitalism emphasizes the advertisement of the global warming crisis and public investment in renewable energy sources, as well as the development of carbon trading practices that would incentivize companies to reduce carbon emissions.
Critics of green capitalism claim that no capitalist system can prevent the greedy impulses of corporations. In his book Green Capitalism: the God that Failed, Richard Smith contends that “ecologically suicidal growth is built into the nature of any conceivable capitalism.” Emphasizing that rapacious consumerism and overconsumption are inherent to a market system that relies on profit, Smith instead proposes a transition to ecosocialism–an egalitarian, undoubtedly utopian society where local environmental priorities would transcend economic considerations.
Before even evaluating Smith’s reliance on the ecosocialist model, what these critics overlook in their attack on capitalism is that sustainable production can be profitable. In 2005, European firms committed to the Emissions Trading Scheme, which gave each firm a tradable allowance for greenhouse gases. Companies that wish to exceed the permitted level of emissions are able to purchase credits from more resource-efficient companies. These carbon-trading systems are now being implemented across the world.
Over time, as our education system adapts to the reality of climate change and begins to raise environmentally-conscious adults, consumers will demand high-quality goods that have been made with an eye for sustainability. Boycotts and demonstrations, especially those organized by millenials, will gradually compel companies to reconsider the fabrication of their goods. Cardinal Turkson, one of Pope Francis’ closest aides, asserted that the Pope had “suggest[ed] that social pressure can force businesses to consider their environmental footprint and patterns of production.”
Moreover, in a survey conducted by the marketing agency Cone Communications, nine out of ten consumers said that they would boycott a company if it lacked “corporate social responsibility.” The advent of social media has only made it easier for these boycotts and awareness campaigns to take root and gather followers. The de-stigmatization of environmentally-themed majors and courses will take time, but it will eventually shift consumer preferences and, consequently, the types of goods that firms will produce.
Under the green capitalism model, government can still play a role in setting the right incentives for companies. Ecosocialism, on the other hand, calls for the government to assume a more intrusive role, going as far as to shut down industries that have grown unsustainable. In addition to putting thousands out of the workforce, such regulations will stunt business innovation.
Rather than aggressively interfering in the free market, governments must financially incentivize firms to alter their business strategies—whether it be through carbon taxes, public-private partnerships or other constructive means. Perhaps more importantly, overbearing government presence in the economy will create barriers to innovation by cementing monopolies. For example, if a government takes control of car production, it impedes progressive entrepreneurs from entering the field.
This is not an argument against certain big government projects. Governments should continue to invest in climate research and free public transportation, which will alleviate carbon emissions by reducing our reliance on cars.
But on a larger scale, government policies can only do so much.
Only competition within the free market will promote innovation and reward companies that successfully blend the two pillars of green capitalism: environmental consciousness and profit incentive. New technologies, from solar energy to electric cars, have proven that those two pillars can co-exist.