Transition to sustainability is impossible—[insert three reasons]

13.3 Three Aspects of the Impossibility of a Sustainable Capitalism

The logic of the impossibility of a sustainable capitalism is concretely proven in numerous aspects of its modus operandi. Let us isolate three aspects of this impossibility. But before that, it is best to start by giving voice not to pure and staunch liberals like Milton Friedman, but to those who believe that capitalism has nothing to fear from environmental regulation. Many of them reject a defensive stance and put themselves on the offensive, claiming that environmental sustainability and increased profits are not only compatible but reciprocally strengthen each other in a virtuous circle. If I am not mistaken, the advocates of this thesis prefer the following argument: adopting innovative solutions to increase the efficiency of the input/product or product/waste ratio and improve environmental safety in the production process increases the company’s competitiveness (as opposed to reducing it) because it is a valuegenerating process, be it in terms of risk management, brand image, and, finally, effective financial results. If this is true, then taking the lead and being at the forefront of economic processes with lower environmental impact and risk will ensure a better profitability than the average profit rate. I hope to not underestimate the literature on the business and sustainability binomial by saying that it limits itself to elaborating variations on this theme while offering several case studies on the direct relationship between sustainability and profitability. There are a growing number of economists and NGOs committed to encouraging companies to embrace this belief. They naturally render a tremendous service to society and to the companies themselves through their work. However, their success is limited by the three aspects that render an environmentally sustainable capitalism impossible, as stated in the title of this section. (1) Decoupling and Circular Economy Decoupling is the hope that eco-efficient technologies and production processes in industrialized countries with mature economies will enable the miracle of increased production and consumption with less pressure (or at least no corresponding increase in pressure) on ecosystems (Jöstrom and Östblom 2010). It is true that a greater efficiency in the production process may allow for relative decoupling, meaning that it enables a reduction in pressure per product or per unit of GDP. But it does not decrease this pressure in absolute terms, since the number of products does not cease to increase on a global scale. The mechanism known as the “Jevons paradox” or rebound effect describes how increasing demand for energy or natural resources always tends to offset the eco-efficiency gain of technological innovation. Thus, although energy efficiency per product has doubled or even tripled since 1950, this gain is offset by the expansion of production at a greater rate than the eco-efficiency gain. The actions of institutions and business foundations that advocate for an ecoefficient and circular economy based on reverse engineering, recycling, reuse, and remanufacturing are certainly positive. We know, however, that there is no circular economy. No economy, let alone a global economy trapped in the paradigm of expansion, can evade the second law of thermodynamics, whose relationship with economics has been analyzed by Nicholas Georgescu-Roegen since the 1970s (1971, 1975 and 1995). Here we must state the obvious: even though the surplus energy supplied by oil and other fossil fuels in relation to the energy invested to obtain them is declining (for this declining EROI, see Chap. 5, Sect. 5.5), low-carbon renewable energies are not yet, and may never be, as efficient as oil. This means that the energy transition, while urgent and imperative, will further distance us from a circular economy. According to calculations by Dominique Guyonnet, “to provide one Kw/h of electricity through land-based wind energy requires about 10 times more reinforced concrete and steel and 20 times more copper and aluminum than a coal-fired thermal power plant” (Madeline 2016). The only way, therefore, to lessen the environmental impact of capitalism is to reduce, in absolute terms, the consumption of energy and goods by the richest 10% or 20% of the planet. This is incompatible with capitalism’s basic mechanism of expansive functioning and with the worldview that it sells to society. (2) The Law of Resources Pyramid The increasing scarcity of certain inputs and the need to secure their large-scale and low-cost supply nullify the potential benefits of various green initiatives taken on by companies. These cannot, in fact, evade the law of the resources pyramid, described by Richard Heinberg (2007): The capstone [of the pyramid] represents the easily and cheaply extracted portion of the resource; the next layer is the portion of the resource base that can be extracted with more difficulty and expense, and with worse environmental impacts; while the remaining bulk of the pyramid represents resources unlikely to be extracted under any realistic pricing scenario This law of the resources pyramid can be stated in an even simpler form: in capitalism, the logic of capital accumulation and surplus, together with the growing scarcity of finite natural resources, necessarily exacerbates the negative environmental impact of economic activity. (3) The Impossibility of Internalizing the Environmental Cost What makes it specifically impossible for corporations to submit themselves to the environmental imperative is the impossibility of “internalizing” the costs of increasing environmental damage that they bring about. Methodologies to “price” nature are now multiplying. But whatever the methodology (always based on the assumption that the value of nature is reducible to a market price), the result is the same: it is impossible for corporations to internalize their environmental cost because the total value generated by their activity is often less than the monetary expression of the value of the natural heritage that was destroyed by that activity.4 A report was prepared for The Economics of Ecosystems and Biodiversity (TEEB), titled Natural Capital at Risk. The top 100 externalities of business (2013) show that: The estimated cost of land use, water consumption, GHG emissions, air pollution, land and water pollution and waste for the world’s primary sectors amounts to almost US$7.3 trillion. The analysis takes account of impacts under standard operating practices, but excludes the cost of, and risk from, low-probability, high-impact catastrophic events. (…) This equates to 13% of global economic output in 2009. Risk to business overall would be higher if all upstream sector impacts were included.