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Climate Change: The Unsolvable Crisis of Capitalist Governance

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Authored by Joseph Iafrati
Published on 19th May, 2022 11 min read

Climate Change: The Unsolvable Crisis of Capitalist Governance

A cracked ground where a small plant tries to grow. Edited on top is the word "Capitalism" with its definition.

Framing climate change as the latest in a long line of capitalist disasters, rather than the isolated relationship between man and nature, uncovers unavoidable barriers between national governments and capital in ordering global governance. Consequently, doubt is cast on the capacity of contemporary global governance to implement climate mitigation policy. 

The link between capitalism and climate change is well-documented from diverse angles, from the ‘largest ever market failure’ to markets being ‘too efficient’ (Wright and Nyberg, 2015: X). But it is the words of Karl Polanyi, ‘[t]o allow the market mechanism to be sole director of the fate of human beings and their natural environment … would result in the demolition of society’ that captures the dominant thought behind this essay (Polanyi, 1944: 76). The above arguments suggest the potential for reform through tweaking the market ecosystem: as Hejeebu and McCloskey note, Polanyi saw the adoption of laissez-faire market economy as a deliberate act of government that could likewise be deliberately reversed (Hejeebu and McCloskey, 1999). However, this essay argues that the ubiquitous marketisation within late capitalism dictates that the implementation of laissez-faire policy is irreversible; far from being a conscious policy pathway to facilitate rationality within society, it has superseded national governments’ authority and curbed its ability to impose regulation. This is evident in international climate policy and its increasing impotence throughout the last two decades. This essay concludes that the logic of contemporary global governance is unable to justify policies of conservation on a global scale that come at the expense of short-term profit and continuous growth. Thus, numerous avenues for climate mitigation within our current iteration of the global market economy are rendered unachievable.

The Great Depression and the New Deal, the Second World War and the British Welfare State, the 2008 financial crisis and the subsequent bailouts: a pattern emerges when we look at historical crises. A trend of government intervention in the form of regulation and financial support, justified as a public good. The undoing of New Deal banking policies and the recession of the British Welfare State during the 1980s show the product of these interventions to be largely temporary: introduced to remedy market failure by governments arbitrating between market and society, only to later dissipate.

However, there are structural, and unprecedented, differences that inhibit the implementation of similar solutions to the climate crisis. If climate change is the epitome of a ‘global public bad’ (Storm, 2009: 1012), it consequently requires intervention on a global scale. In previous crises, even those with global scope like the 2008 financial crash, intervention through bailouts were largely administered at a national level (Tooze, 2018). However, the potential success of localised climate policy is undermined by the enforced competition present within a global market economy, where the act of burning fossil fuels and other exploitative practices remain lucrative. Successful reform must also be permanent. It is well argued by Max Koch, from a Marxist perspective, that ‘it is an anthropological constant that human beings need to interact with nature through labour for their subsistence’ (Koch, 2012: 179). With the permanence of this relationship in mind, along with the long term and delayed impacts of climate change, the familiar model of temporary remedy for a temporary problem proves insufficient. 

Whilst the requirements for successful intervention are already challenging, the most significant barrier is the relationship between national governments and the major polluters - multinational corporations. Unlike in previous crises, climate change does not harm the short-term bottom-line figures of its propagators, enabling resistance to the metaphorical stick of regulation. That financial strength translates into political power is similarly recognised by Steve Coll in his research of oil giant, ExxonMobil, found to hold more economic and thereby political power than many of the nations that it operates within—Chad being a noted example (Coll, 2012). However, the strength of corporations is by no means limited to overt displays of power in the most exploited nations on earth. Corporate power within think tanks, political campaign donations, and research funding penetrate the sovereignty of government within all nations (e.g. Woodiwiss, 2017: 196). 

This redistribution of power within global governance is complex but can largely be viewed as the product of the latter decades of the 20th century. During this period, global markets enabled a move away from the ‘embedded’ corporate capitalism of the mid-century to a model of finance capitalism that transcended the local, characterised by the pursuit of profit through investment - in doing so, distinguishing potential profit from its labour. In the context of climate-harming practices, this equates to the disconnecting of environmental damage from the decision-making process. Crucial to this development in capital was the adoption of market-friendly policy facilitated by the triumph of neoliberal thought towards the end of the 1970s. (By neoliberal thought in this context I refer mainly to its role as an intellectual project and cultural regime as described by Rodgers (2018)). This transition has ushered in an irreversible dynamic where markets and capital have become disembodied from national economies and therefore national jurisdiction, whilst simultaneously granting wealth holders significant influence in political and economic policy (Johnson, 2009). In turn, national governments and their affiliated institutions are increasingly reliant on corporations, highly streamlined for profit, rather than the relatively localised electorate to prosper in a global economy, subsequently influencing the role, status, and priorities of government. This is a point that is reflected in the diminishing influence of public organising in society, shown through the consolidation of political power in energy production among the handful of owners rather than workers during the transition from coal to oil (Mitchell, 2011). Or in the acceptance that protests too must operate within the market, taking the form of boycotts as seen with Nestle in the 1970s, to achieve some limited short-term success (Sasson, 2016). 

The restructuring of global governance around capital exposes the reduced ability of elected governments to act in a regulatory role in the climate crisis. In the absence of an able and willing regulator, the traditional policy crossroads of market vs. intervention become redundant. Market policies are dictated through incentives and ‘green entrepreneurism’ is the only available mitigator. Subsequently, a culture has emerged within policy-making circles where all solutions are based on market fundamentalism and therefore a logic that by being part of the problem, the planet's largest polluters are actively part of the solution.  

This is evidenced in international climate policy of recent decades. The 1997 Kyoto Protocol (active from 2005) pursued two avenues, incorporating both binding regulation and market policies based on a ‘simple economic insight’ (Storm, 2009: 1017). It is to date the only international climate agreement to be legally binding on emission reduction. Moving on to 2016, the Paris agreement introduced self-set targets for emission reduction in a UN document filled with ‘requests’ and ‘urges’ (UNFCCC, 2016). The binding portion of the agreement was reduced to a requirement to publish data rather than any emission reduction (MacLellan, 2021). The recent COP26 conference continues the downward trend of government ability to act globally, proving underwhelming in its success of just about keeping the promises of Paris 2016 alive (Hill and Babin, 2021). It also demonstrated the triumph of short-termism in national thought and its implications on international cooperation in an increasingly unequal world, through failure to reach agreements on ending coal consumption. The result of these attempts at international cooperation is a 12% increase in carbon dioxide emissions since 2000 (Lindsey, 2020). Even small wins, such as the Kyoto Protocol’s 1% reduction in European emissions, are easily discredited when considered in a global context, where their export rather than reduction becomes apparent (Clark, 2012).

In conclusion, national governments and their traditional models of international cooperation are increasingly less able to intervene at a global level to address the shortcomings of economic short-termism and the hunt for profit. Unlike in the crises of previous decades, familiar policy pathways for mitigation become difficult due to the changing dynamic between government and multinational corporations ushering in an iteration of governance containing highly streamlined actors, prioritising continuous economic growth only. 

The ensuing conflict of interest between late capitalist logic and the requirements of humanity is at its most apparent when considered alongside the climate crisis. The unique challenges presented by the climate crisis, its requirement of global, permanent policy based on conservation, cannot be implemented within the model of globalised governance that late capitalism has manifested. Whilst globalised markets are partially creditable with the increased influence of capital in selecting governors, the inherent competition of global market economies inversely entrenches the idea of national sovereignty as a mode of self-preservation to the detriment of international cooperation, further handing the reins of global governance to market fundamentalists. 

Therefore, the limiting factor in the climate crisis does not lie with science, technology, or ability to innovate. Instead, it lies with the constantly diminishing ability to implement known policy solutions globally, underpinned by short-termism and self-interest. As has been demonstrated in this essay, the requirements for successful climate mitigation are not feasible within our present iteration of global governance. Globalisation and late capitalism have opened the door to a governance that can be described as working for different constituents than before, not necessarily out of malice but as the endpoint of a conflict of priorities. 

Unlike the scholars initially mentioned, this essay argues that this development is irreversible and cannot be overcome through tweaking or appeasement. The omnipotence of capital and its evolution, as previously mentioned, has seen the isolating of profit opportunity from all other metrics, culminating in a logic that therefore cannot justify reductive policies or those of conservation. Whereas traditionally the role of government would be as a regulator in this scenario, the overshadowing of the authority and jurisdiction of the nation state, through the expansion of the world around it, removes its authority to act as an effective arbitrator. Whereas the introduction of market policies at a national level can be seen as a conscious decision, the rapid expansion of the global economy in the 20th century has eroded the boundaries that had allowed a degree of control. Therefore, rather than a conscious decision that can be reversed, it takes the shape of Pandora’s box, consciously opened but with subsequently irreversible ramifications in governance. This permanently alters the dynamic between capital and state, increasing state dependence on capital over the electorate whilst also promoting international competition and self-preservation, diminishing the desire to cooperate on a global level. This is therefore why this essay argues that the climate crisis is the unsolvable crisis of capitalist governance as we understand it.


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Authored by Joseph Iafrati

Joseph Iafrati

Joseph is a postgraduate student at the University of York studying the MA course Culture and Thought After 1945.

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The British Online Archives blog is a platform for scholars to present their research to students and the general public. The posts cover a range of historical themes and debates from around the world. The opinions expressed represent those of the authors, not British Online Archives or Microform.

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