Economic growth and attention to the environment are not opposites: here’s how to reconcile them |  Alessio Terzi

Economic growth and attention to the environment are not opposites: here’s how to reconcile them | Alessio Terzi

A few weeks ago I was in Lucca to present my new book at the Pianeta Terra Festival organized by Laterza. At the end of my talk, an audience member stands up and remarks that capitalism is obviously a system against people and against the planet: a belief widely shared in the hall. The idea that capitalism is the cause of the main problems afflicting our societies, and in particular of climate change, has been taken up by various international media (here an article on the subject by The Guardian), now almost becoming vox populi. Even the World Economic Forum, not your classic anti-capitalist organization, launched a podcast series entitled “Planet vs Profit” a few months ago. More recently, Colombian President Gustavo Petro used his speech at COP27 in Sharm El-Sheikh to describe how the market and the accumulation of capital they are what led to the climate crisisand therefore will hardly be able to contribute to solving it.

As well illustrated by Naomi Klein in her bestseller A revolution will save usthe j’accuse environment versus capitalism typically structured as follows: driven by the blind selfish pursuit of profits, corporations continue to pollute, to the detriment of all. Definitely, it is argued, only 100 companies worldwide are responsible for more than 70% of CO2 emissions, but they cannot be stop because the big lobbies have bought the silence of politics.

Correctives yes, but not all wrong

While some of these criticisms are certainly appropriate, e in fact, current capitalism requires important corrections (ed. as Martin Wolf also wrote in the Financial Times), the argument according to which everything must be attributed to the system is not very convincing. Just think of the socialist experience ofSoviet Union, which had abolished prices as an organizing principle of the economy in favor of centralized planning, and where firms were neither profit-maximizing nor engaged in commercial lobbying. Consumer goods, in turn, were standardized, as the variety of products was considered a perversion of Western capitalism. The Soviet bloc had not even adopted GDP as a guiding parameter for orienting economic policy. Yet the environmental impact of the USSR has been disastrous. (continue reading after the links)

The cotton disaster around the Aral Sea

For example, due to wasted irrigation for growing cotton in an arid region, the fourth largest lake in the world – the Aral Sea – has been dried up. In parallel large quantities of pesticides and fertilizers flowed into its basin, leading then United Nations Secretary General Ban Ki-moon to call it in 2010 one of the worst environmental disasters on the planet. The USSR’s record on CO2 emissions or air pollution in general has not been rosier. As science writer Leigh Phillips rightly said, even if the whole world had been socialist in the twentieth century, the atmosphere would have warmed anyway.

The slow reaction of socialist authoritarian systems

What unites capitalism and socialism – also underlined Eugene Linden on Time – the fact that, for a long time, global warming was not considered a particularly pressing problem. This was true for citizens who in many cases either were unaware of it or saw it as an abstract threat in the distant future. And for politicians who knew their re-election depended on short-term concerns, such as promoting industrialization and job creation. However, when environmental threats were considered imminent and closer to us, such as air or water quality, liberal democracies addressed citizens’ concerns by introducing stringent environmental standards. And companies responded by putting in place new technologies to replace the banned pollutants. Socialist authoritarian regimes were slower to do both.

The push of citizens: what are the real priorities

Which brings us to today’s capitalist societies. The decisive factor that will define the speed of the green transition is the degree to which it will be considered by citizens as the highest priority. After all, as the French writer Victor Hugo put it, nothing is more powerful than an idea whose time has come. Climate awareness and concern are growing, in part because the distant future has become the present And the abstract threat materialized in the form of floods, droughts, fires, megastorms and heat waves. In the face of this collective awareness, the subsequent phases can be quickly unlocked. Governments are able to implement increasingly stringent environmental standards to kick-start the green transformation, such as the recent ban on fossil-fuel car registrations in Europe, such as in California (emphasizes the BBC, ed.), without risk losing the election. The innovative companies can in turn develop and distribute new products with zero climate impact, even if initially more expensiveknowing that we can draw on a large pool of environmentally aware consumers who see added value in the protection of nature.

Be careful not to get stuck in the fossil economy

The companies that will be able to develop first these green technologies will enjoy huge profits (ed. read the McKinsey Sustainability Report here) which will allow them to invest, improve production processes to reduce costs and further expand their activities. The companies that remain stranded in the fossil fuel economy will be perceived as antiquated and will progressively face bankruptcy. The battle of the proverbial ‘Schumpeterian destruction’ will be fought on the grounds of climate neutrality and, as capitalism will go greenit will be evident again that prosperity, people and the planet are actually perfectly compatible.

*Alessio Terzi an economist and the author of Growth for Good: Reshaping Capitalism to Save Humanity from Climate Catastrophe

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