Two economists were stuck down a well. One says, “We’re doomed! This is it!” The other says, “I think I have a plan.” “Okay, what is it?” “First, assume we have a ladder…”
An old one but a, if not good, at least apt one. For many of us the idea that an ideology built on the idea that “greed is good” could be our solution is so absurd it is not even worth considering. To make it even vaguely plausible we have to invent a whole raft of assumptions that bear no relation to how capitalism has actually worked through history. Yet at a Dhamma talk I gave recently on this topic, one fellow was quite adamant that capitalism would save us. People will stop using fossil fuels and the change in demand will drive the company away from coal towards renewables. I didn’t argue with him, it’s not seemly at a Dhamma talk!
There’s a couple of points I’d like to make here. First, check this out: the list of greatest annual corporate profits of all time. Inspiring, right? Number one: ExxonMobil. Number two, ExxonMobil. Number three, ExxonMobil. Number four… I think you’re getting the point. In fact 37 out of the 64 greatest annual profits were by fossil fuel companies. Many of the rest were by companies closely related, like automotive or banking, while all of these companies absolutely depend on the power, transport, and other goods provided by fossil fuels.
So there’s lots of money in fossil fuels. Lots and lots and lots of money. Yummy, yummy money. And this is not theoretical money, which could be made by potential renewables industries at some hypothetical point in the future. This is real money that you can use right now to buy watches, yachts, and governments.
And kittens, I guess.
So where do these profits come from? Supply and demand, right? We all need energy. But hang on: we all need lots of things, more than we need fossil fuels. Food, houses, medicine, clothes: these things are much more basic human needs. How come they’re not so profitable?
Okay, so here’s the basic equation: revenue – cost = profit. Something like that, anyway. We’ll keep it simple here: I’m reaching back into my high school economics! So the company makes a product, sells it for a certain amount, deducts costs like wages and capital, and there you have it.
Except for one little thing, which is mentioned in passing in basic economics, but you hardly hear mentioned elsewhere: externalities. Remember them? The costs of economic activity that are borne involuntarily. So, as typical example goes, if a company pollutes a stream, the cost of that is not borne by the company. Unless, of course, the Government taxes them to clean it up. So usually this is seen as a fairly minor, easily managed, consequence of a few bad companies.
But in the case of the fossil fuel industry, it’s much more than that. Their entire industry is based on the idea of using up the energy accumulated by the earth, by nature herself, over millions of years and concentrated in the form of oil and coal. They don’t make anything, they extract: taking what is not given. Then the true costs of their economic activity are effectively shunted anywhere outside of the company: the air, the sea, the land, our lungs, our future.
And when someone, like the Australian Government last year, introduces a tax to recover a tiny percentage of that cost, cost which is created by that industry and which is the very basis of their obscene profits, all hell breaks loose.
And that is why the fossil fuel industry is the most profitable rort ever devised. Of all industries, it has most successfully externalized its costs, so that in the end, the very future of civilization becomes an externality. And this is why they have fought, and will continue to fight, against any realistic response to climate change, using any means fair or foul, as long as they draw breath.
But the problem is deeper than that. Fossil fuels are not just another industry that capitalism happens to do. They are the very foundation of industrial production. They power the capital that gives capitalism its name. Modern capitalism, and the environmental disasters that follow it, was made possible by the industrial application of fossil fuels.
So no, capitalism isn’t going to save us.
But what about all the wonderful environmental startups and initiatives. Aren’t they great? So many fresh ideas and wonderful promises!
Sure. But look around you, what do you see? What is the overwhelming, undeniable force that drives virtually all capitalist activity?
Consume. Consume more. Consume until you are sick. Consume until it kills you. Then consume some more.
Even so-called green products are just about getting you to consume, only it’s something that is, hopefully, a little less damaging to the environment.
Greed isn’t good. Greed is bad. It will kill us all.
You know what’s good? No greed. That’s good. And that is also the end of capitalism.