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Capitalism dominates the globe. It has become so enmeshed into the cultural narrative that it seems almost axiomatic. Private owners (of capital) control the means of production. The goal: build profits. The best part about it is that if everyone pursues self-interest, the market will grow and society will benefit. The invisible hand helps the market to self-regulate, creating socially desirable results.

Simple?

No. When it comes to dealing with issues such as poverty, the income gap, unemployment, economic crises, human rights, war, imperialism, and the externalization of costs on society and the environment, the invisible hand that Adam Smith once imagined is not invisible, it is nonexistent.

We are currently experiencing, without a doubt, the greatest crisis to face human kind. Indications of climate change are being seen around the globe: accelerated melting of the Arctic sea ice, rapidly receding glaciers, rising sea levels, warming oceans and ocean acidification, more frequent and longer-lasting droughts, stronger and more frequent storms, higher temperatures than ever recorded, and a rapid extinction of species are direct result of a warming climate.

There is a scientific consensus that the climate is rapidly changing and that these rapid changes are due to anthropogenic causes. The science is clear: the human-caused emissions of great amounts of greenhouse gases – primarily carbon dioxide, methane, and nitrous oxide – are causing global environmental damage.

Many argue that market and techo-based approaches are the way to combat climate change. They push for carbon taxing and trading, geo-engineering, and renewable energy without considering the fact that the system itself is incompatible with sustainability. By its very nature, capitalism seeks only to grow and accumulate – an idea that is diametrically opposed to a sustainable existence.

In this series, I will examine how the capitalist system has brought us to climate disaster, and why it cannot get us out of it.   

The Externality Problem

A discussion of the capitalist economic system would not be complete without an examination of the issue of externalities incurred within it. An externality is a cost or benefit that is thrust upon a group that did not choose or cause it. Externalities are a natural byproduct of a capitalist, free market system and are a major factor when considering the causes of global climate change. These externalities would include such things as industrial manufacturing causing extreme air pollution, which effects human and non-human life, water pollution caused by the runoff of chemicals in industrial farming practices, massive over-fishing that depletes the fish stock for small communities and individual families, a high unemployment rate and extreme income disparities, and so on.

In capitalism’s incessant need for growth (an issue I examined in Part I: The Growth Problem), new technologies are constantly developed to expand production and reduce costs, and so long as costs can be externalized on nature and society, capitalism reaps the benefits.

Within the free market system of capitalism, regulations and controls are minimal, allowing the true costs of industrialization or large-scale farming, fishing, and production to be written off as externalities. The producer thus incurs the benefits, while the costs are incurred in other areas, including the environment. With capitalism’s pure focus on accumulation of capital, there is an incentive to externalize at all costs possible, be that through using outdated but “cheaper” technologies that emit high levels of pollution, or through the exploitation of cheap labor.