The issue of the contrasting, and potentially conflicting, interests between the current economic model, and sustainability, has become more prevalent in recent years. It’s suggested by economists and ecologists alike, that under the western capitalist structure, economic growth cannot be achieved in a manner that is sustainable for natural habitats and ecosystems.
The industrial revolution gave rise to modern capitalism, and in turn greatly expanded the possibilities for the material development of humankind (Hawken, 2000). The benefits to humanity have been extensive, such as modern transport systems, developments in manufacturing, technological advancements, the discoveries in western medicine, and a general rise of the standard of living. However, this progress has come with a cost to the health of the natural world (Pearce, 1989). The economic system in the western world is late stage capitalism (Luke, 1999), which encourages of individualism, consumerism, and growth of profit, is often at odds with the needs of the environment. This topic is immensely relevant as we are losing natural habitat and environmental stability at a rate never before documented in human history (Pearce, 1989).
This discussion requires a clear definition of terms; “ecology can be defined as the study of the relations of animals and plants to their organic and inorganic environments, and economics as the study of how humans make their living, how they satisfy their needs and desires” (Common, 2005), thus, ecological economics is the study of interactions between economic and ecological systems. The word ‘sustainability’ has gained many connotations, but a commonly accepted definition goes along the lines of, ‘meeting the needs of today, without compromising those of tomorrow’, and that development can be considered sustainable “if it does not decrease the capacity to provide non-declining/capita utility for infinity” (Neumayer, 2007).
This essay will break down and examine the evidence on either side of the argument: is the pursuit of economic growth is possible in a manner that is ecologically sustainable? Analysis of the current economic system, the potential inevitability of ecosystem collapse under the status quo, and possibilities for a paradigm shift will be explored.
Firstly, an exploration of the current state of affairs is necessary. The Enlightenment period of the 18th century brought about a new set of ideals based on the demolition of feudalism and monarchy. The ideology now known as Liberalism developed and triumphed during this period, as a wave of industrialisation engulfed Europe, and advocated for the markets to be free from government intervention; businesses were encouraged to pursue profits and trade freely with one another, with the belief that free-markets are the greatest force of self-regulation, and will always achieve equilibrium (Heywood, 2003). This principle of Liberal Economics is largely accepted as the dominant system in the industrialised West (Heywood, 2003). As governments generally adopt a laissez-faire (hands off) approach to the economy, which allows the market forces of supply and demand to dictate the direction of profit.
The conflation of ‘economic growth’ and success of capitalism, is often accepted due to the dominance of this economic system. This essay will address whether this is the only possible definition of economic growth. As capitalism is the economic doctrine which places the most significance on the increasing of the individual’s wealth, (Heywood, 2003), and is most prominent in our society, when the topic of economic growth is discussed, it is usually done so under the paradigm of the current late stage capitalism.
Capitalism and Sustainability: Incompatible
The capacity for the capitalist system to regulate itself and avoid catastrophe has been disproven, due to the series of disastrous consequences of the human pursuit of unlimited profit, such as habitat destruction, and ultimately, climate change. A critical difference between natural processes and man-made production is the speed at which they develop; living systems are limited by factors such as seasons, weather, soil, and temperature, which are all governed by feedback loops. The production of fossil fuels is restricted by the chemical and environmental circumstances, as well as the extensive timeframe in which they occur, contrastingly, the human production of fossil fuel-based products faces no constraints other than our own will. Due to this, natural systems have no hope to keep up with the rate of human production and waste creation (Hawken, 2010). The Earth is, at its most basic level, a planet, inevitably meaning that it is a closed system, which does not allow transfer in or out. The resources and systems of the earth are encapsulated within our atmosphere, and are finite and interconnected. This is at odds with the aim of capitalism: continuous economic growth. The core question is how to ‘conciliate the profitability imperative with the necessity to reduce waste, pollution and carbon emissions’ (Lambin, 2009).
The rate and level commodity consumption has drastically risen in the last 200 years, as the perpetual growth and obsession with acquiring novel products is encouraged by the economic infrastructure (Robbins, 2002). Due to the mechanisms of capitalism, the driving force of demand dictates the product that the market supplies. As the consumer becomes deeper connected to a system which values the accumulation of possessions, the producers on the supply side of this interaction respond by manufacturing the products which quench the thirst of novelty.
The value which modern societies place on economic growth of profit and assets is directly incompatible with sustainability: this culture of accrual is seen as limitless, the number and levels of new products has no ceiling. But in reality, the resources, fuels, and land available for production is finite and subject to limitation. Essentially, the dilemma we face is ‘infinite needs versus finite resources’ (Kissick, 1994).
There is overwhelming evidence which shows that human activity and its desire for unfettered economic growth is the primary reason for the number of environmental issues the Earth is currently facing, such as habitat and biodiversity loss, climate change, and degradation of resources, thus making these actions unsustainable. The global depletion of naturally occurring resources has been widely documented (Magdoff, 2013). There is a finite quantity of each non-renewable resource: oil, gas, all fossil fuels, some naturally occurring metals and minerals, and chemicals such as Phosphate, etc. Countries with a huge input into the global economy, such as China and the USA are responsible for over 95% of the worlds production (Magdoff, 2013), contribute hugely to the degradation of natural resources, and simultaneously have the most profitable economies in the world. It has not yet been achieved in modern history, for a nation to be a front runner in the world economy, and simultaneously be sustainable (Hoel, 1996). This statement proves to some, that it is the economic model at fault, and that capitalism, its ideals, and the ceaseless pursuit of economic growth, is directly antagonistic to sustainable management of the environment. Under this opinion, the solution would seem to be an overthrow of the current economic system, for the benefit of the longevity of the planet. The next section of this essay examines the opposing ideas that aim to merge capitalism, economics, and ecologism into one system, will demonstrate that economic growth can be environmentally sustainable. But can the system that put us into this mess, also be the one that brings us out of it?
Capitalism and Sustainability: Compatible
A movement commonly named Natural Capitalism (Hawken, 2010) or the ‘light green ecologists’ (Heywood, 2003) have presented many ideas of methods to make the pursuit of economic growth beneficial to the environment, rather than detrimental.
Natural Capitalists liken their economic beliefs to the structure of the natural world, stating that capitalism is the most fundamental paradigm, due to the principle of Social Darwinism (Klein, 2003), and therefore will always be the most successful and appropriate economic model. This follows the thought that, an atmosphere of competition will allow the most ‘fit’ competitors to rise to the top and to survive in the struggle for existence, and this process of rivalry leads to both material and social progress. Although this is scientifically accepted in the world of nature, the concept of survival of the fittest can be dangerous to apply to economics, due to the implications of consequences for those with disadvantages. Nevertheless, the idea of social Darwinism can be applied in many ways to capitalism, as both systems encourage competition, individualism, and a system of winners and losers. The estimated result of this is that the ‘best adapted’ or ‘fittest’ company/ individual/ technology will become successful or prevalent, because it is most suitable for the niche in the market (Klein, 2003).
Consequently, as the global population required industrial advancements to raise quality of life in the 1800’s, the market responded to this demand, and new technologies and businesses rose to success. So, as we are entering the new era of Anthropocene, the natural capitalists predict that the market will respond in a similarly adaptable way; as the public and global interests begin to favour more sustainable products and production methods, the market will respond in kind, not only in the interests of human longevity, but also for their pursuit of profit.
Light Green Ecologists have a different set of ideals, but essentially similar results. They are less focussed on making human development the priority, as their core belief is ecologism (Heywood, 2003), but instead estimate that with human development, will come advancements and solutions to environmental issues. As such, they believe that the necessary incentives for behaviour change will come from a combination of ethical values and economic benefit.
Whichever belief system is followed, it is undeniable that ‘big business’ and the pursuit of profit are the main driving forces for change in the modern world (Fisk, 2010). No single company or government could possibly face the global problems of environmental degradation, exploitation, and climate change. Yet, global market forces have the power to influence government funding, development of new technologies, and changes in production methods and rates (Fisk, 2010).
The conclusions gained from the ideas previously discussed, is realisation that business and profit can be manipulated to benefit the environment. The market forces of supply and demand are beginning to respond to consumer mandates of sustainable lifestyle choices, such as the new focus on recyclable materials, vegan products, and renewable resources.
An additional example of how capitalism/ the pursuit of profit can be compatible with the quest for sustainability is the implementation of so-called ‘Green Taxes’. There are enormous revenue possibilities that come with green tax reforms (Oates, 1995), in fields such as carbon tax and pollution disincentives. Real-life examples of such taxes which give citizens and corporations an incentive to reduce unsustainable behaviour include: “pay-by-the-bag household collection charges to reduce the amount of solid waste that municipalities must dispose of; rush-hour tolls to reduce congestion and air pollution on urban highways; and carbon taxes to reduce carbon dioxide emissions and encourage energy-efficiency” (Repetto, 1992, p. 5 ). It was estimated by Repetto et al. that these three environmental charges had the potential to yield at least $100 billion in annual revenues for federal, state, and local governments (Repetto, 1992).
A modern example of success in this field was an ambitious scheme implemented in Norway in the 1990’s (Kasa, 2007). All offshore petroleum companies had to accept an increasing tax burden, and after 1998 the government began to phase out exemptions from green taxes to their mainland industrial companies, with the end goal of implementing a country wide tax incentive for more sustainable fuels. These policies from the Norwegian government highlighted the interconnectedness of government, business, and profit (Kasa, 2007), and the necessity for these forces to be united in the same direction, in order to achieve sustainability.
The ideas discussed in this section examined the possibility of achieving sustainable growth, while still maintaining the capitalist focus of the pursuit of profit. The following final passage will analyse the possibility of a paradigm shift, away from the traditional notion of capitalism. Perhaps the only true path to sustainability would involve an overthrowing of the current economic model?
Alternatives to Capitalism?
Due to the historical consequences of traditional economic growth under the current capitalist system (exploitation, degradation, pollution), it has been suggested by political ecologists (Heywood, 2003) that under the current paradigm, the pursuit of profit, and sustainability will never be compatible. This implies that a drastic and complete overhaul of the current paradigm may be necessary, as although the system of capitalism and market forces can be manipulated, its core values will always remain the same, and these appear to directly contradict the interests of sustainable development in the future. But will a fundamental shift ever be attainable, or have we gone down too far down the capitalist rabbit-hole to turn back?
The radical ecologists calling for reforms do so for many different reasons. It is obvious that the ecosystems that sustain our economies are disintegrating under the impacts of rising consumption (Jackson, 2009). Some believe that a more left-wing approach to economics could be the solution to sustainable human progress. A shift towards a socialist world-order would aim to decrease the emphasis on individual resource accumulation, and instead establish an ideal of communal ownership of resources (Heywood, 2003). One of the core values of traditional Marxist socialism is the principle of collective assets, which is the belief that the wealth of a community being shared between all members equally. This would result in the dismantling of the climate of competition, as every individual would have a stake in natural capital (Leff, 2009). When socialist principles are applied to environmental issues, the solution would be focus into causes that further humanity’s happiness and fulfilment, rather than the accumulation of products and ownership of lands. Socialism views the obsession with novelty and ownership as fundamentally damaging to the individual (Heywood, 2003), as it is a never-ending cycle that will only lead to destruction and dissatisfaction. Potentially, this shift diminishes the importance of individual wealth and resources, as the atmosphere of ‘survival of the fittest’ is removed. In the place of this, society can pursue causes for human equanimity, removing the need for excessive production, therefore reducing the current degradation rate.
However, the alternatives to capitalism are not limited to traditional ideologies. Many staunch ‘dark green’ Ecologists (Heywood, 2003) claim that any focus or pursuit of economic growth is doomed to lead society down the path of exploitation. If all economic value is inherently individualistic, there is no incentive to act for the benefit of anyone else and certainly not to ensure the sustainability of future generations (Ikerd, 2008). In response to this, these ecologists call for a return to a more nature-centred paradigm. Understanding that the Earth is indeed a ‘spaceship economy’: a closed system, where special care must now be taken for resources that were previously treated as free, such as air, water, and natural beauty (Nordhaus, 1974). Humanity believes that it has more control over the ecosystem services than we can, when in reality we are merely another species on Earth who, in trying to understand our surroundings, applied our own definitions of value and capital to resources that existed before us (Kadekodi, 1992). In response to these beliefs, the dark green ecologists hypothesise that the pursuit of profit is inherently unnatural, and therefore will always result in unsustainable systems, regardless of the political leanings of the economic system.
Although there has been a many of alternative systems theorised, that examine the possibility of economic growth and sustainability coinciding, it is questionable whether they will remain just that: theories. A dramatic turn away from the status quo is historically uncommon, and would require a radical catalyst to motivate those with a stake in the current system to allow such a change.
Many questions were addressed in this essay, perhaps the most fundamental of which being, is economic growth possible without capitalism, both theoretically and in reality? Would a socialist or nature-centred system be a more appropriate alternative, and would this ever be plausible? If not, are there methods to manipulate the systems of capitalism to encourage more sustainable decision making, through monetary incentives?
Overall, I believe that the evidence suggests the most realistic solution to the issue of sustainability is the remodelling of our current economic system. Although the adoption of socialist or fundamentalist ecologist paradigms may allow a faster recovery from the damage that excessive human consumption has caused, these approaches would not be as readily accepted by the masses, unless faced with an environmental emergency. Methods such as Green Taxes and incentives have proven to improve the relationship between profit and sustainability, and would be a suitable first-step in reducing the footprint of human activity on the planet. Therefore, I suggest that in certain, specific and controlled conditions, the pursuit of economic growth and profit, can be compatible with sustainable development, but when left unregulated, the obsession with novel assets and wealth with inevitably lead to environmental degradation and the exploitation of resources.
Common, M., 2005. Ecological Economics: An Introduction. Cambridge: Cambridge University Press.
Fisk, P., 2010. People, Planet, Profit: How to embrace Sustainability for Innovation and Business Growth. 1st ed. London: Kogan.
Hawken, P., 2000. Natural Capitalism: The Next Industrial Revolution. London: Earthscan.
Hawken, P., 2010. Natural Capitalism: The Next Industrial Revolution. 2nd ed. London: Routledge.
Heywood, A., 2003. Political Ideologies : An Introduction. Third Edition ed. London: Palgrave Macmillan.
Hoel, M., 1996. Depletion of Fossil Fuels and the impacts of Global Warming. Resource and Energy Economics, 18(2), pp. 115-136.
Ikerd, J., 2008. Sustainable Capitalism: A matter of ethics and morality. Problems of Sustainable Development, 3(1), pp. 13-22.
Jackson, T., 2009. Prosperity without Growth. 1st ed. London: Routledge.
Kadekodi, G., 1992. Paradigms of Sustainable Development. Development, 3(1), pp. 72-76.
Kasa, S., 2007. Policy networks as barriers to green tax reform: The case of CO2 taxes in Norway. Environmental Politics, 8(4), pp. 104-122.
Kissick, W., 1994. Medicine’s Dilemmas: Infinite Needs versus Finite Resources. New York : Yale University .
Klein, S., 2003. The Natural Roots of Capitalism and Its virtues and values. Journal of Business Ethics, Volume 45, pp. 387-401.
Lambin, J., 2009. Capitalism and Sustainable Development . In: Emerging Issues in Management . s.l.:symphonya.
Leff, E., 2009. Marxism and the environmental question: From the critical theory of production to an environmental rationality for sustainable development. In: Capitalism, Nature, Socialism. s.l.:Routledge, pp. 44-66.
Luke, T., 1999. Capitalism, Democracy, and Ecology: Departing from Marx. s.l.:University of Illinois Press.
Magdoff, F., 2013. Global Resource Depletion. Monthly Review, 64(8), pp. 13-28.
Neumayer, E., 2007. Weak and Strong sustainability in the SEEA: Concepts and Measurement. In: Ecological Economics. s.l.:s.n., pp. 617-626.
Nordhaus, W., 1974. Resources as a Constraint on Growth. The American Economic Review, 64(2), pp. 22-26.
Oates, W., 1995. Green Taxes: Can we protect the Environment and Improve the Tax System at the Same Time?. Southern Economic Journal, 61(4), pp. 915-922.
Pearce, D. e. a., 1989. Blueprint for a Green Economy. London: Earthscan.
Repetto, R., 1992. Green Fees: How a Tax shift can work for the environment and the economy. 1st ed. s.l.:World Resources Institute.
Robbins, R., 2002. Global Problems and the Culture of Capitalism. Second Edition ed. Boston: Allyn & Bacon.