Using a Capitalist System to Solve for Climate Change is Fundamentally Flawed

There are several glaring defects in Kahn’s capitalism inspired logic. Though some of these issues have already been introduced, they will be reiterated and expanded upon here in direct response to the arguments presented in support of capitalism as the solution to climate change. Firstly, Kahn assumes that consumers are rational, well-informed actors who possess a consummate understanding of, or at least a genuine desire to understand, the causes and consequences of climate change, and who will model their behavior accordingly. However, the empirical evidence suggests that an astonishingly significant segment of the American population is ignorant of, and reluctant to become informed on, the reality of climate change. A 2013 survey, titled Climate Change in the American Mind, revealed that 23% of Americans are certain that climate change is not happening, while 14% do not know whether it is happening or not. (Leiserowitz, et al., 2013, p. 5) If Kahn’s presumption that capitalism fosters greater understanding and appreciation of the environment were true, we would expect to see a decline in the percentage of the population who are unaware and unconcerned with climate change. Climate Change in the American Consilience Park: Climate Change and Capitalism Mind indicates a burgeoning trend in the opposite direction. The survey found that the percentage of Americans who do not believe in climate change, 23%, is swelling rapidly, even as the number of people who are uncertain about climate change shrinks. Among those who do believe in climate change and global warming, less than half believe that is caused by human activities, and that number is declining (Leiserowitz, et al., 2013, p. 5). If people do not believe in global warming, or do not believe that their actions are affecting the climate, they will have absolutely no reason to reduce their consumption of fossil fuels and other products that diminish the quality of our environment. This illuminating information is indicative of a growing degree of societywide ignorance towards the science of climate change, which is counterintuitive considering that the international scientific community reached a consensus on this subject nearly two decades ago. If American consumers were the rational actors that Kahn and other avid proponents of capitalism considered them to be, their beliefs and behaviors would reflect the scientific consensus on climate change. They would realize that understanding the facts is in their best economic interest, and would therefore seek out the truth, modeling their consumption habits accordingly. Kahn’s assessment relies almost entirely on the notion that consumers behave this way, but the evidence reveals, most assuredly, that they do not. The primary reason for this stems from the perverted nature of supply and demand, and the resultant dissemination of misinformation. As mentioned previously, many suppliers generate a synthetic demand for their products via marketing and advertising schemes. This fact is inherent to the very essence of advertising. Advertising is the process of convincing people to buy a product that they might not buy otherwise. Major ad campaigns almost universally attempt to connect their product to something that is much more desirable. For example, the new Coke cans and bottles have common names written on them, and Coke commercials explicitly suggest that buying and sharing their products will animate new platonic and romantic relationships. These campaigns attach their product to a fundamental human desire for love and social connection. This aggressive marketing tactic of associating low-quality, resource-intensive products with actual human needs and wants manipulates consumers to purchase a product based on unrealistic promises of satisfying a psychological longing, rather than on the product’s actual utility. Potent examples of this phenomenon can be found nearly everywhere in modern, capitalist societies. By compelling people to buy products through playing on their unrelated, often intangible desires, advertisers distort the actual demand for social goods. When people are buying products that are mere representations of the things that they actually need or want, suppliers are not really responding to the needs and wants of society, and thus economic growth is failing to facilitate improved social prosperity. Additionally, people’s consumption habits come to be based on illusory promises, unattainable expectations, and irrational associations rather than their substantive self-interests. The information- and expectation-distorting nature of advertising helps to explain why consumers are growing increasingly uneducated on the subject of climate change. Although it is in every individual’s best interest to consume fewer resources, specifically fossil fuels, so as not to contribute as much to the escalation of climate change, the vast majority of information that we are bombarded with on a daily basis is disseminated by companies and industries that have a compelling economic interest to convince us to constantly consume more. Consider the way in which the law of supply and demand determines the value of products, and, by extension, natural resources. The number of people who want to buy a product and its availability determine its price and value. When demand is growing and supply shrinking, the price goes up, making the product more valuable. In theory, this characteristic of capitalism is what inspires people to invent or discover an alternative to the scarce product or resource. However, there is no built-in market mechanism to prevent the complete depletion of any given resource. It is simply assumed that, if the absolute expenditure of a given resource would cause adverse social consequences, people would realize this through the process of conducting their cost-benefit analyses and through price signals, and they would cease to consume and demand said resource. However, it has already been established that consumers do not behave as quintessential rational actors, and that the cost-benefit analysis is incapable of assessing the true value of natural resources. What all of this means with regard to climate change is that our economic system is designed to use up more fossil fuels than our environment is designed to handle. The known total of the Earth’s extractable supply of fossil fuels is around 2,750 gigatons, of which 745 gigatons are owned by fossil fuel companies (Quick, 2014). The proliferation of neoliberal capitalism and industrialization, coupled with population growth, is cultivating an ever-growing demand for fossil fuels that shows no signs of abating. Recent data from the U.S. Energy Information Administration, displayed in Figure 1, shows the current and projected trends in global fossil fuel consumption. Figure 1: (Source: The Global Education Project, 2014) As we can see in Figure 1, there is no indication that the market is responding to the undeniably dire social need to consume fewer fossil fuels. What we see is quite the opposite. The market is signaling a need for the increased extraction, production, and consumption of fossil fuels. The global demand for fossil fuels is a function of the global population, and both categories are experiencing consistent annual growth. Thus, as population grows, the subsequent demand for fossil fuels grows, diminishing the total supply and jacking up the market value. Inevitably, the fewer fossil fuels that are available, the more valuable they become. The irony is that, the more economically valuable fossil fuels become as a consequence of increased demand and reduced supply, the more imperative it will become for us not to consume them. Unfortunately, that fact is unbeknownst to the free-market, and to the majority of its participants. This paper is not intended to vilify the fossil fuel industry or any other industry; it is merely a critique of the capitalist system that has cultivated the unproductive incentives for these industries to behave as they do. The systematic incentivization to indefinitely exhaust scarce resources, which are assumed to be replaceable upon depletion, inevitably ensures that unfettered capitalism will push us to the brink of climate chaos and beyond. The final major logical pitfall of the free-market, capitalist approach to resolving and adapting to climate change is the assertion that environmental regulation is unnecessary, and even counterproductive. Proponents of a free-market resolution to climate change insist that the government’s role should be limited to providing the public with informative warnings regarding imminent natural disasters (Kahn, 2012). They maintain that the government should not meddle with the freemarket by imposing limitations on the production or consumption of fossil fuels and all other resources. Proponents also purport that government policies intended to buffer the effects of climate change, such as the provision of recovery funds for the victims of natural disasters, encourage people to subject themselves to inevitable environmental hazards, as they come to expect that the government will protect them from future natural disasters. Government is critically important for providing the public with accurate information on present and future environmental hazards. On this point, there is no disagreement. However, the role of government should be not confined to this singular aim. National governments and international governance entities such as the United Nations are in a unique position to enlighten people on the science of climate change. In fact, it was the United Nations that spurred the establishment of the international scientific consensus on climate change via the IPCC. Government and corporate entities are among the few organizations that possess the resources necessary to effectively compile and disseminate information on a national and global scale. Additionally, these entities enjoy a high level of social influence, necessary for convincing people of the veracity of their claims. As previously mentioned, most corporations who are in a position to enlighten the public on climate change, specifically those in the fossil fuel and energy industries, have a powerful economic incentive to persuade consumers that climate change is not occurring, or that it is not a product of human action. These corporations frequently employ their influence to stir specious uncertainty into the mix of public perception of climate change, and thus protect their assets. While corporate influence no doubt permeates the political sphere, government is relatively less biased in climatic matters, and has an entrenched This content downloaded from interest, and a social responsibility, to provide people with the real facts of climate change, and to set a course for remediation. The greatest strides that have been made towards environmental protection and the abatement of global warming have been initiated by government entities. One of the best examples of this can be found in the national Clean Air Act, passed in 1970. Since 1980, this act has reduced sulfur dioxide and nitrogen dioxide, both of which are harmful airborne pollutants, by 71% and 46%, respectively (Union of Concerned Scientists, 2013). The CAA has also forced commercial chlorofluorocarbons, which deteriorate the ozone layer, to be phased out, thus facilitating a recovery of ozone molecules in the upper atmosphere. If we were to allow the free-market to provide us with information that is relevant to environmental protection and climate change without government interference, we would be highly susceptible to adopting viewpoints that are skewed by economic interests. Government involvement and regulation is necessary for preserving the environment, as well as mitigating and adapting to climate change.