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Green the Capitalists
By Monowar Zaman
AuthorHouseCopyright © 2016 Md Monowaruz Zaman
All rights reserved.
In 1972, the Club of Rome, a global think tank, presented their report "Limits to Growth" that predicted that economic growth could not continue indefinitely because of the limited availability of natural resources, particularly oil. On the other hand, the huge amount of greenhouse gases released by burning fossil fuel, the planet's atmosphere traps more heat called "global warming", causing irreversibly shrinking of glaciers, that is, wiping out sources of fresh water on one hand and rise of sea levels on the other.
In last forty years, the global economic policies promoted consumerism under financial capitalism (Figure 1.5) instead of taking tough line on climate change that accelerated global warming. In 1992, to stabilize greenhouse gas emission, a UN Framework on Climate Change (UNFCCC) was adopted. Following 2008 financial crisis, New Economics Foundation (NEF) identifies that the growth driven global economy was facing a 'triple crunch', which was a combination of a "credit-fuelled financial crisis, accelerating climate change and encroaching peak in oil production".
In 2015 Paris Climate Conference, for the first time, a universal legally binding agreement is signed for holding the increase in the global average temperature 1.50C-2°C above pre-industrial levels. However, none of the countries is willing to compromise their growth, while the triple crunch crises are converging and gaining potential to explode. If a financial crisis hard hits global economy, the possibility of alternate energy to take over might disappear. Do we have a hope to protect us from the looming catastrophic disaster of triple crunch?
1.2 Growth versus Poverty
Ever since industrial revolution, economic growth and prosperity has been thought as synonymous and a panacea for all economic problems such as poverty and distribution. The strongest selling point of growth is alleviation of poverty since the industrial revolution led to high economic growth, eliminating mass poverty in what is now considered the developed world. However, much of this has been achieved not because of development of new technologies and machineries but also massive use of fossil fuel. In his recent article "Renewable Energy after COP21", Heinberg describes the impact of fossil fuel based growth on poverty as:
"Yet globally, wealthy industrial nations have disproportionately benefitted from the fossil fuel revolution while poorer nations have disproportionately borne the costs. And a similar disparity also exists within nations, both rich and poor ones. Further, the injustice of energy wealth vs. energy poverty is increasingly magnified by climate impacts, which fall disproportionately upon energy poor societies — both because of geographical happenstance and because they do not have the same level of resources to devote toward adaptation."
Now we have reached to a point where further use of fossil fuel will jeopardize the carrying capacity of our earth. On the other hand, without growth, financial industry will collapse and the existence of our industrial civilization will be jeopardized. The most severe impact is, if we continue growth and use up all economically available fossil fuel, the carrying capacity of our earth will fall quickly and suddenly by billions of population. In this case, as the poorer people will be first impacted and therefore, the transition will be extremely painful involving massacre or massive death by civil war between rich and poor either using religious banner or political banner and then famine and plague may follow. Perhaps this has already started in the Middle East and in Africa, where the resources have started to decline. According to Heinberg, although apparently, religion would provide the ostensible banner for contention in many instances but this is likely to be a secondary rather than a primary driver.
Economists often argue that if we sacrifice growth, poverty will increase and poor people will suffer. In reality economic growth may temporarily mask the economic problems but because of its unsustainable nature it provides no permanent route to escaping them. Tienhaara argues
"It goes without saying that further economic growth means something quite different in a society that has already achieved a high level of per capita income than it does in one in which the majority of the population lives on less than $2 a day."
Today one third of the world poor people who earn less than 2 dollars a day live in India. This means India is the biggest poverty ridden country in the world. At the same time, India is the world's third largest greenhouse gas emitting country. According to World Bank, in May 2014, the world had 872.3 million people below extreme poverty line, of which 179.6 million people lived in India. In other words, India with 17.5% of total world's population, had 20.6% share of world's poorest in 2011. According to United Nation's Millennium Development Goal (MGD) program in 2011-2012, there was 270 million or 21.9% people out of 1.2 billion of Indians lived below poverty line of $1.25 per day. It can be inferred that India reduced (or masked) a significant amount of poverty but that required to maintaining about 7% growth per year and burn a huge amount of fossil fuel. What will happen when fossil fuel will disappear? Growth will be negative; the people will be back to severe poverty.
India is ranked world's third largest individual greenhouse gas producer or fourth largest putting European Union in the picture (Figure 1.1). However per capita emission (1.8 tons per capita) is nine (9) times lower than that of USA, about four (4) times lower than China and about 3 times lower than global average. In its report "Extreme Carbon Inequality", aid group Oxfam points out that those most exposed to climate risks such as extreme weather are contributing only a fraction of the emissions. According to this report, the richest 1 per cent of the world's population on average emits 175 times more carbon than the poorest 10 per cent. If we distribute Indian population in a scale considering some people maintain the same lifestyle as USA (16.5 tons per capita), some like China (7.6 tons per capita), the emission from the poorest people will certainly be close to zero. Since 1990 to 2014 CO2 emission in India increased by 260% and per capita emission increased by 1.25. Now pulling 179.6 million people out of poverty will not only mean add per capita emission by them but also add more proportionate emission by the riches. This means, poverty alleviation through growth is no more an efficient solution rather it is climatically suicidal.
The International Trade Union Confederation has called for the goal to be "zero carbon, zero poverty". In her article "Back to the Future: Our Journey to Zero Carbon, Zero Poverty World" Sharan Burrow, its general secretary argues that there are "no jobs on a dead planet". India could be world's role model, if India finds a way to alleviate its toughest poverty without increasing carbon emission. According to Indian negotiator Dr. Ajay Mathur in UN Climate Conference 2015 in Paris, Denmark is the most climate responsible country. He mentions
"Even if India adopted Danish levels of sustainability, India's billion-plus population would still override the gains made unless there were advances on current technology."
Looking back to history, as Figure 1.2 shows, according to economic historian Angus Maddison in his book "The World Economy: A Millennial Perspective", India was the richest country in the world and had the world's largest economy until pre-fossil fuel economy-the 17th century AD controlling between one third and one fourth of the world's wealth up to the time of the Marathas, from whence it rapidly declined during British rule.
Bangladesh, was part of Bengal, which was one of the richest provinces of eastern India when India was the richest country of the world. For thousands of years this region attracted foreigners, invaders, mercantilists and colonists. The names "British East India Company" and "Dutch East Indian Company" reflect this claim. However, its economy ended up in deep rooted poverty, impenetrable bureaucracies, complex politics and widespread corruption, that is, full of inefficiencies. It has the similar pattern of economy as India in terms of poverty and inequality. However, as Bangladesh economy is also growing by about 6% every year, per capita carbon emission has also grown by 400%, from 0.1 in 1990 to 0.4 in 2014. Now considering the political and bureaucratic complexities and linking poverty with growth, restraining CO2 emission in Bangladesh is close to impossible even though Bangladesh is one of the most vulnerable countries to climate change in the coming decades.
Let's meet Ayat Ali in Bangladesh–what he achieved in his 65 years of hard work but producing zero emission:
Ayat Ali is a 65-year-old rickshaw puller. ... Nowadays his back is bent, and his eyes are glazed with age. ... During his lifetime he has pedaled perhaps 170,000 miles, which is equivalent to seven times around the world or three quarters the way to the moon. Yet he has little to show for his effort. ... The few possessions he owns are tied up into a bundle of cloth.
- Robert Gallagher, "The Rickshaws of Bangladesh"
Ayat Ali is just an example of hundreds of millions of poor people in the world who absolutely (without any external energy such as fossil fuel) contribute toward growth of the economy creating zero emission but unfortunately, all they own are not enough to feed them for more than one day. He had no fault of his own, always being on right track in terms of carbon emission point of view. He had to work hard for his livelihood but fell into poverty over the generations. The rickshaws in Bangladesh provide majority of transport need serving more than one hundred million people every day. According to Gallagher, with the rent Ayat Ali has paid during his lifetime, he could have purchased a rickshaw 40 times over. If Ayat Ali were able to keep that money, most probably, he would use that for his low emission living. On the other hand, as the money went up it contributed to more and more emissions.
Figure 1.2 also shows before 18th century, China and India were the two largest economies by GDP output. Now China is the second largest economy in the world (GDP $10.356 trillion) followed by USA ($17.348 trillion) but largest economy in terms of CO2 emission (10.54 billion tons), double than USA (5.33 billion tons), next in the position.
What does it mean to be rich? Does it mean quantitative consumptions such as big houses in big cities, driving big cars, eating more processed food etc., then it will be accompanied with corresponding emissions. As an example, an average American consumes 250g of meat per day compared to less than 10g by an average Indian. And meat production is much more energy intensive than production of vegetables. Or becoming rich is more on qualitative, a safe and clean place for living and growing food, healthy lifestyle, proper heath care and education? Economists, policymakers and rich people promote the first but we should have a choice of our own when we know that they are wrong. Unfortunately, in reality, the poor people do not have the choice of their own.
Looking back to pre-fossil fuel history again, when China was the largest economy in the world, most of the hardworking Chinese peasants were living in poverty. Carroll Quigley divides the hierarchy of Chinese society on that time into three classes, the ruling class, the gentry, and the peasants. He describes:
"[T]he upper most group deriving its incomes as tribute and taxes from its possession of military and political power, while the middle group derived its incomes from economic sources, as interest on loans, rents from lands, and the profits of commercial enterprise, as well as from the salaries, graft, and other emoluments arising from his middle group's control of the bureaucracy. At the bottom the peasantry, which was the only really productive group in the society, derived its incomes from the sweat of its collective brows, and had to survive on what was left to it after a substantial fraction of its product had gone to the two higher groups in the form of rents, taxes, interest, customary bribes (called "squeeze"), and excessive profits on such purchased "necessities" of life as salt, iron, or opium."
According to the new economic model described in this book, the relationship between the Chinese peasant class and the middle class bureaucracy can be considered as an inefficient "Biased Equilibrium" since the peasants were the only productive class supplying incomes for the upper two classes with long term stability, while they remained under poverty. According to Quigley again:
"The inefficiency of the system was both customary and deliberate, since it allowed a large portion of the wealth which was being drained from the peasantry to be diverted and diffused among the middle class of gentry before the remnants of it reached the imperial group at the top."
Quigley also defines three ages forming the central portion of the life cycle of a civilization, Age of Conflict, Age of Expansion and Age of Universal Empire. In his view a shift from an Age of Conflict to an Age of Expansion is marked by a resumption of the investment of capital and the accumulation of capital on a large scale. However, it can be argued that accumulation of capital is not an outcome of the transition between the ages, it is the reason. As an example, when more efficient, progressive Europeans went to direct conflict with inefficient and un-progressive Chinese society, it was conflict between the vested interests and sole objective was extension of European dominations on the middle group to grab the share of money produced originally by the Chinese peasants. Chapter 2 provides snapshots of the capitalists' synthesis through a series of events that our civilization has come through.
The concept of capitalism is originated from Adam Smith's concept of 'invisible hand, which became popular and mainstream when the British East India Company began to bring huge wealth from India and other colonies followed by fossil fuel based industrial revolution.
New theories were developed around the degree that government does not have control over markets (laissez faire), and on property rights. The concept of capitalism tells about integrating self-interest nature of economic agents for free flow of goods and services, where government should act as a facilitator. Chapter 3 focuses on the historical context on which the capitalist concept has become dominant in our economic and political world. The historical path of our capitalist economy has been marked by many rise and fall but it has always ignored the earth's natural limit.
The politicians, policymakers of every country rely on economic growth for the "development" of world economies including the world's poorest economies, which eventually help them hold powerful positions. They think without growth, people would never achieve the consumer lifestyle enjoyed by people in the world's industrialized nations. According to data published by World Bank, it shows the proportion of world population in extreme poverty 1981–2008 reduced from 40% to below 20% as the gross world product increased. It supports the widespread belief among economists and policy makers that sustainable economic growth can alleviate poverty. The effect of economic growth on poverty reduction, the Growth elasticity of poverty, can also depend on the existing level of inequality. This book introduces positional properties of inequalities in Chapter 4 that can be used to measure level of difficulty of poverty alleviation. As an example, income inequality in USA (Gini ratio 45%) is more than that of in India (Gini ratio 33.4%) but the positional property of Biased Equilibrium tells that, poverty in India is harder to alleviate.
The economic theories supportive to existing quantitative economic structures are based on a set of unrealistic assumptions which in reality never exist. In real picture, the world has reached to its peak in terms of resources and technologies but there are hundreds of millions of poor people are in a 'poverty trap' who may never be able to make a sustainable escape from there. This situation is explained in Chapter 4 by introducing a new concept "Biased Equilibrium".
Although our growth compulsive capitalist economy cannot solve the problems such as poverty and inequality but it has already used up the major part of our scare reserve of fossil fuel and surface water and caused ecological crisis like global warming or greenhouse effect. In its report "The Limits to Growth" Club of Rome argue that a narrow view of economic growth, combined with globalization, is creating a scenario where we could see a systemic collapse of our planet's natural resources.
Excerpted from Green the Capitalists by Monowar Zaman. Copyright © 2016 Md Monowaruz Zaman. Excerpted by permission of AuthorHouse.
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Table of Contents
ContentsCHAPTER 1: THE CRISES, 1,
CHAPTER 2: A BRIEF HISTORY OF CAPITALIST SYNTHESIS, 39,
CHAPTER 3: ECONOMIC THEORIES AND PRACTICES, 159,
CHAPTER 4: NEW CONCEPT "BIASED EQUILIBRIUM", 229,
CHAPTER 5: THE TAKE OFF, 315,
CHAPTER 6: TOWARD FOSSIL CIVILIZATION, 413,
CHAPTER 7: GREENING CAPITALISM, 477,
CHAPTER 8: CAPITALISTS BIASING, 549,
CHAPTER 9: A SWITCH OVER STRATEGY (SOS), 597,
CHAPTER 10: GREENHOUSE CARE ECONOMICS, 649,