Capitalism Versus Planet Earth: An irreconcilable conflict

By Fawzi Ibrahim

The dangerous intersection between ecological and economic crisis leaving humanity with a stark choice: maintain capitalism or save the planet.

• Language: English
• Publisher: Muswell Press
• Release date: Jun 14, 2012
• ISBN: 9780956892096

Book preview

C

APITALISM VERSUS

P

LANET

E

ARTH

An Irreconcilable Conflict

F

AWZI

I

BRAHIM

In memory of Reg Birch – a friend and comrade.

Contents

Title Page

Dedication

List of Figures and Tables

Preface

Foreword by Andrew Kliman

1 Introduction

2 From the Industrial Revolution to Global Pollution …

… traces the present environmental degradation back to the Industrial Revolution, the birth of modern-day capitalism and asks if our planet’s environmental woes are a result of human activity in general or the existing economic system.

3 The Illusions of ‘New Economics’…

… outlines the theoretical underpinnings of mainstream environmental movements such as ‘natural capitalism’. This chapter argues that by designating natural resources as capital, they become commodities and, like other commodities, are open to trading for profit.

4 Re-Claiming the Classicists: Adam Smith, David Ricardo and Karl Marx …

… takes issue with those ‘new economists’ who consider economic laws to be man made, contrasting their approach with the scientific analytical approach of Adam Smith, David Ricardo and Karl Marx. This chapter explains the basis of Marx’s theory of the tendency of the rate of profit to fall, extending it to modern-day capitalism and introducing the concept of the ‘critical zone’. Using a technique widely employed in science and engineering, it constructs a 3-variable graph of the ‘operating map of capital’ and goes on to explain how the toxic combination of vast capital accumulation and pressure on the rate of profit to fall inevitably leads the economy towards a ‘critical zone’ in which production for profit becomes unviable.

5 Saviours of the Environment or Apologists for Capitalism? …

… challenges those who wish to bypass the economic laws of capitalism with concepts like the ‘tyranny of the bottom line’ and the ‘post‑growth economy’, arguing that, far from being an optional extra, growth is an indispensible necessity for capitalism. It demonstrates that the ‘polluter pays’ principle is an excuse for passing extra costs on to the consumer, allowing the capitalist to make higher profit.

6 A Crisis Too Far …

… argues that the post-2007 financial/economic crisis is not the 1930s all over again, but far worse: it is a crisis of capital deficiency as capital approaches the ‘critical zone’. Contrary to popular conception, the post-2007 crisis was not caused by greedy bankers or incompetent politicians, but was a result of the inherent laws of highly advanced capitalism. In this economic quagmire, the belief that we can make capitalism constrain its behaviour for the sake of the planet is illusory.

7 Post-Capitalist Economy …

… maintains that, far from being the natural order of things, capitalism, like all economic systems that preceded it, is a passing phase that is waiting to be superseded. The chapter looks at the ‘cash-free’ internal economy of the pre-reform NHS as a blueprint for a post-capitalist, non‑commodity economy.

8 Capitalism versus Planet Earth – An Irreconcilable Conflict …

… argues that in the post-2007 financial/economic crisis, with capital in the ‘critical zone’, governments’ attention is focused on saving capitalism, leaving the environment a very distant second. The chapter concludes that it is not possible to reconcile the insatiable and expansive desires of capital with the need for renewable energy and sustainable living.

Appendix: The Critical Zone – Capitalism at the Edge of a Vortex …

… shows examples of the economic footprints of the UK and US for periods stretching back to 1880.

Index

Copyright

List of Figures and Tables

F

IGURES

2.1 Population growth and CO2 concentration, 500–2010

2.2 Per capita annual CO2 emission in metric tons

2.3 Average fertility rates, births per woman, 1980–99

3.1 Flow diagram for an economic process

3.2 Open system, reproduces the flow diagram for a typical economic process taking account of the natural environment

4.1 A straight-line trajectory representing a falling rate of profit as capital accumulates

4.2 Equal profit (EP) contours

4.3 Notional evolution of the operating map of capital

4.4 UK economic footprint (private non-financial corporations) 1965–79, gross

4.5 UK economic footprint (private non-financial corporations) 1965–2010

4.6 UK economic footprint (1965–2010) highlighting the sequence of privatisation and PFI contracts implemented by successive governments to prevent the economy entering the critical zone

5.1 Closed system incorporating pollution tax

A1 A theoretical economic footprint showing the expected downwards slope as capital accumulates

A2 UK economic footprint for private non-financial corporations, 1965–2005

A3 UK economic footprint for private non-financial corporations, 1965–2005, with RPI-adjusted figures showing capital retrenchment clusters

A4 Economic footprint for UK business, 1951–81

A5 Economic footprint, US manufacturing, 1880–1950

A6 Economic footprint for US business, 1951–81

A7 Economic footprint, US corporations, 1947–2007

T

ABLE

4.1 Capital investment (column 2) year on year, and its corresponding rate of profit (column 5) for private non-financial corporations (PNFCs) in the UK

Preface

We entered the 21st century with a widespread consensus of a potential environmental catastrophe if global temperatures were allowed to rise by more than 2°C. By the end of the first decade of the century, following the collapse of Lehman Brothers, an equally widespread consensus began to emerge. The post-2007 financial/economic crisis was no ordinary crisis; it was a crisis of a kind that the world had never experienced before. The ‘old normal’ of boom-and-bust cycles was replaced with the ‘new normal’ of a lost generation, unemployment and falling living standards.

It is puzzling that, so far, there has not been any consideration as to whether it is just a coincidence that the environment is heading towards a tipping point at the same time as capitalism faces a crisis of equally serious dimensions, or whether the two crises are related in some way. Is there cause and effect; a relationship between the crisis in global capitalism and that of the planet’s environment? This book considers these questions and asks if planet Earth is safe with capitalism. Can there be a cohabitation between expansive, profit-at-any-cost capitalism and the Earth’s delicately balanced ecosystem? Can capitalism be tamed, regulated, humanised, to take care of the future of the planet? Can there be harmony between Mother Nature and capitalist predatory instinct? The answer is an emphatic ‘no’. In the process of this analysis, the theories that underpin what is generally referred to as the environmental movement are challenged and their solutions questioned. It isn’t that some of the solutions are without merit; they are just ineffective in a capitalist system – a system that is more occupied with saving itself than saving the planet.

With the exception of the ‘critical zone’ theory and its associated economic operating map of capital, I do not claim originality. For this reason, comprehensive and detailed references are provided to acknowledge the sources of other ideas and theories. The concept of the ‘critical zone’ is a derivative of Marx’s theory of the tendency of the rate of profit to fall as technology advances and capital accumulates. I arrived at the ‘critical zone’ theory as far back as 1970. It remained in a manuscript form, gathering dust, for 37 years. It was aired in public for the first time at a seminar with a small Marxist gathering at The Calthorpe Arms, Kings Cross, on 1 September 2007 and subsequently published in Communist Review (Autumn 2008).

I wish to record my thanks to the small group of Marxists that I have been associated with for a number of years and, more especially, for the exchanges that I have had with John Haywood, Geoff Woolf, Don Kirkley and Akan Leander, usually in a pub over a pint or two of real ale, for their willing engagement, intelligent enquiry and critical encouragement, without which this work would have been the poorer. And finally a very huge ‘thank you’ to my wife Valerie for her consistent, unequivocal and unqualified support.

Fawzi Ibrahim

May 2012

Foreword

This book is unique and, if you care about the planet that sustains us, required reading. It is about the dangerous intersection of ecological crisis and economic crisis. Fawzi Ibrahim argues persuasively that the laws that govern capitalism make it unable to combat climate change and its life-threatening effects; that the latest economic crisis has raised the conflict between capitalism and planet Earth to a whole new level, since the very survival of the socioeconomic system is now at risk. And so we face a stark choice: save capitalism or save the planet.

Yet isn’t the choice between capitalism and our future a false choice? Aren’t capitalists people? And so, when push comes to shove, won’t capitalists and politicians refrain from intentionally doing irreversible damage to our prospects for survival? These questions assume that saving capitalism is the same thing as saving capitalists. Many on the left tell us that the conflict is between ‘the 1%’ and ‘the 99%’, and that the banks were bailed out in order to make the rich richer. However, policy makers have shown no compunction about crushing businesses and individual capitalists under the wheels of the juggernaut in order to save the capitalist system. When the Federal Reserve ‘bailed out’ Bear Stearns, Wall Street’s fifth-largest firm, it kept the firm from going bankrupt by forcing its owners’ shares of stock to be sold off for a small fraction of their market value. And when the US government ‘bailed out’ the giant mortgage-loan guarantors Fannie Mae and Freddie Mac, their owners received none of the money, and their shares of stock have lost more than 99% of their value since the crisis erupted. In these and other cases, the government has been acting to prevent the failure of ‘systemically important institutions’ and to restore confidence in the system. If the institutions’ owners have to be sacrificed, so be it.

The difference between the interests of capitalism and the interests of people, including the capitalists and the 1%, is what makes the intersection of ecological crisis and economic crisis so dangerous. It is why Ibrahim’s analyses and proposals demand our attention. The total alienation of an economic system from human interests of any sort is a clear sign that it needs to perish and make way for a higher social order.

Andrew Kliman, New York City

February 2012

Andrew Kliman is Professor of Economics at Pace University in New York and author of The Failure of Capitalist Production: Underlying Causes of the Great Recession (2011) and Reclaiming Marx’s Capital: A Refutation of the Myth of Inconsistency (2007). 

CHAPTER 1

Introduction

While the actions of mankind over the past thousand years have had a detrimental effect on the environment, it wasn’t until the Industrial Revolution that such effect became geologically significant – so much so that two eminent scientists, Paul Crutzen and Eugene Stoermer, proposed in a paper published in 2000 that this age be called the ‘Anthropocene’, ‘the recent age of man’, on the grounds that human activities have brought about profound and fundamental changes to the planet.

It is no coincidence that environmental degradation should have reached the crisis level it is at today at the same time as capitalism experiences one of the worst crises in its history. As CO2 pollution rose to its highest recorded level,¹ Lehman Brothers filed for bankruptcy and the crisis that has been dubbed the ‘Credit Crunch’ took hold. But the Credit Crunch (and the subsequent economic and sovereign debt crises) is no ordinary crisis.

This book will demonstrate that, unlike past crises (which sooner or later blew away), the crisis that the global economy faces as it enters the second decade of the 21st century is not a passing phase, but a permanent feature in which governments continuously ensure capital’s profitability through austerity measures, bail-outs and quantitative easing. It is like a boat that has developed a leak; it may not sink, but you forever have to bail the water out – calmly in placid seas, frantically in choppy waters.

Any capacity that capitalism may have had to save the planet is today highly compromised by its need to extricate itself from a deepening economic and financial crisis, the like of which has never been witnessed.² ‘For the better part of 200 years, industrial firms engaged in what might be described as take, make, waste as an organising paradigm’ wrote Stuart Hart of Cornell University.³ This organising paradigm becomes even more entrenched at times of crisis, and if it is a choice between saving capitalism and saving the planet, protection of the capitalist economy is deemed top priority. Witness how agreements limiting CO2 emissions have been so readily forgotten and abandoned following the 2008 financial crisis.

* * *

There is now widespread scepticism about capitalism’s ability to combat global warming. The Credit Crunch and the subsequent sovereign debt crisis have dented people’s belief in the market. George Monbiot, one of the more prominent environmentalists and Guardian columnist, made no bones about his disillusionment. In 2008 he wrote: ‘the government could set, by a certain date, a maximum level for carbon pollution per megawatt-hour for electricity production… Then … it could leave the rest to the market.’⁴ A year later, and anticipating the failure of the UN Climate Change Conference at Cancun, he wrote:

‘All I know is that we must stop dreaming about an institutional response that will never materialise and start facing a political reality we’ve sought to avoid.’⁵

The consensus that the market is the vehicle through which reduction in greenhouse gas emission is achieved is in serious doubt. The market that can’t secure its own creations (Barings and Northern Rock among many others) can hardly be expected to save ‘God’s’ creation – the planet itself. Far from saving the planet, the market, faced with a financial and economic meltdown, has no choice but to exploit the planet in a more intensive and comprehensive manner to save itself.

There is abundant criticism of the market. It ranges from inequality, unemployment and poverty to colonialism, imperialist wars and over-exploitation of natural resources. It comes from Marxists and socialists as well as those on the right who talk of the ‘excesses’ of capitalism. Yet it is not criticism that is required, but a critique.

* * *

The recently observed phenomenon of global warming is a result of an incremental quantitative increase in the concentration of greenhouse gases in the planet’s atmosphere, which reduces the amount of the Sun’s energy radiating back into space. The Earth’s atmosphere, which contains CO2 and other greenhouse gases, is transparent to sunlight, and sunlight passes through it largely unhindered, warming the Earth’s surface. The warm surface then radiates heat back towards the atmosphere. However, the wavelength of this radiation is much longer than that of sunlight and cannot readily pass through the atmosphere. Some of this radiation is absorbed in the upper atmosphere and re-emitted, with about half of the re-emitted energy returning to the Earth’s surface. The concentration of greenhouse gases in the atmosphere determines the amount of radiation returning to Earth.

‘It is estimated that in the absence of carbon dioxide in the atmosphere, the temperature of the Earth’s surface would be about twenty degrees Celsius less than it is today, while if the present amount of carbon dioxide was to be doubled, the Earth’s temperature would rise between five and ten degrees Celsius which would endanger the delicate balance on which life depends.’⁶

The global ecosystem requires a certain presence of greenhouse gases – mainly water vapour (H2O), carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) – to act as an insulating blanket, trapping sufficient solar energy to keep the global average temperature in a pleasant range; not too cold like Mars or too hot like Venus. It isn’t greenhouse gas emission as such that’s the problem (cows after all have been producing methane gas for centuries), but its quantity. As the release of these gases into the atmosphere quickens its pace, a tipping point is reached at which a qualitative change begins to take place.

In the field of the environment, there are several examples of where small but unremitting incremental quantitative changes have led to a qualitative transformation. Air pollution, for instance, was at the beginning localised to the immediate vicinity of a cotton mill or a coal mine. However, over the years the atmosphere of towns and cities has been transformed, the most striking examples being the London smog of the late 1950s and early 1960s, and today’s car pollution, causing smog over cities such as Beijing and Los Angeles.

* * *

The science behind the causes of global warming and climate change is indisputable and clear. Since the Industrial Revolution – a miniscule period of time in ecological terms – energy that has been stored in fossil fuels over hundreds of millions of years has been released. Since energy cannot be dissipated (just transformed) it has to go somewhere, so it goes into the atmosphere, creating the conditions for global warming.⁷ The warnings are clear: the Earth is heating up on an accelerating scale.⁸ The Intergovernmental Panel on Climate Change (IPCC) reported in 2007 that the years between 1995 and 2006 rank among the 12 warmest years since 1850. Meanwhile, greenhouse gas emissions have been building up faster than the worst scenarios projected by the IPCC in 1995.⁹

Sea levels have risen by an average of 1.8mm per year since 1961 as a result of melting glaciers and ice caps.¹⁰ In 2009, the Royal Society stated:

‘The accumulation of carbon dioxide in the atmosphere will lead to long-term changes in the climate system that will persist for millennia. Our growing understanding of the balance of carbon between the atmosphere, oceans and terrestrial systems tells us that the greater the accumulation of carbon dioxide in the atmosphere, the greater the risk of long-term damage to Earth’s life support systems. Known or probable damage includes ocean acidification, loss of rain forests, degradation of ecosystems, and desertification. These effects will lead to loss of biodiversity and reduced agricultural productivity. Reducing emissions of greenhouse gases can substantially limit the extent and severity of long-term climate change.’¹¹

In contrast to the startling clarity of the warning, the response has been woefully inadequate. The solutions range from ‘green taxes’ and ‘carbon trading’ to foreign aid and the abandonment of GDP as the measure of the health of the economy. All fall within the confines and