Between 30 November and 12 December, at the end of a year that has experienced the hottest temperatures and witnessed the highest fossil fuel emissions on record, world leaders gathered in Dubai for Cop28, the UN climate conference. As a climate negotiation hosted by a leading petrostate and chaired by the CEO of one of the world’s largest oil companies, it was an event uniquely beset by controversy and contradiction. And yet, as observers simultaneously celebrate and denounce a final agreement that both mentions fossil fuels for the first time and fails to commit to their urgent and vital “phase-out”, it is clear that these negotiations are predicated on a contradiction: the task of agreeing a programme of radical global economic transformation is allocated to those – including, this year, a record 2,500 fossil fuel industry representatives – who stand to lose the most from disrupting the current economic model.
For the most influential in these negotiations – the titans of finance, energy giants, and the wealthy states who protect their interests – the solution to this dilemma is to find a way to transform the foundations of global capitalism, from energy to agriculture and from transport to industry, while preserving everything else about its social relations and overarching dynamics. Theirs is necessarily a future in which the transition to a decarbonised and ecologically sustainable economy implies no trade-off with continued growth, profit maximisation, private ownership or accumulation: in short, from fossil capitalism to a green capitalism.
For some, green capitalism is a contradiction in terms. That capitalism has unleashed ever-rising emissions and environmental exploitation is not a controversial point: the atmospheric concentration of CO2 has risen by 50 per cent since the Industrial Revolution, accelerating with exponential fervour in the postwar “golden age” of capitalism. This period of “great acceleration” from approximately 1950 has seen a quintupling of primary energy use and the razing of half of global forest cover. Some 70 per cent of all wildlife has been lost since 1970. An astonishing half of all fossil fuel consumption has occurred since 1990.
But key splits emerge between those who see this destruction as intrinsic to capitalism, which is therefore incompatible with a sustainable future, and those who argue that through reform of its market failures and worst tendencies – single-minded shareholder primacy, for example – capitalism can, or indeed is uniquely able, to tackle climate and ecological crisis. The urgent question then is not, “Have capitalist dynamics contributed to this environmental damage?” But rather: “Can these dynamics be reconciled with a sustainable future?” Is a genuinely “green capitalism” possible?
For Akshat Rathi, a senior Bloomberg reporter and author of Climate Capitalism (2023), the answer is a resounding yes. Through detailed success stories, from China’s electric vehicle (EV) and batteries sectors to Bill Gates’s climate investment fund, and from the green pledges of oil majors to shareholder activism, the book contends that capitalism is well on its way to becoming green and, however imperfect, is perhaps the only system capable of delivering the innovation, incentives and investment needed to meet climate targets. “The green economy,” Rathi’s book suggests, “is not only possible, but profitable.”
But while many of the cases presented are encouraging, it would be difficult to argue they prove that the forces of capitalism can be reliably wrangled to meet pressing climate targets, nor that it is the only system capable of doing so. For instance, while major oil companies were only recently falling over themselves to tout their green credentials, the pressures and irresistible profitability of oil and gas amid the energy crisis have rolled back this green messaging: Climate Capitalism celebrates BP winding down its oil and gas production, but the firm has since reversed its plans, investing 11 times as much on oil and gas this quarter than it invested in its “low carbon” business.
Similarly, despite the initial success of hedge fund Engine No 1’s campaign to elect climate-conscious directors to the board of ExxonMobil, experts and campaigners alike have described the impacts as “negligible” and even “the biggest disappointment in the fight against climate change”: in lieu of the green turn many hoped for, Exxon has dropped the “algae biofuel” programme that it previously applied as a green veneer, while loading up on new fossil fuel assets. Engine No 1, meanwhile, has not launched another activist campaign. Even if one accepts the success of the initial campaign, however, it’s hard to argue as Rathi does that it represents a sea-change in which “it’s clear that capitalism’s most powerful force – shareholders – are now ready to take matters into their own hands”, not least when a fifth of global assets under management are concentrated in the hands of just three asset management firms with no clear incentive to proactively steward their assets, and who overwhelmingly defer to corporate management when voting at the companies they invest in. And while Bill Gates’s green investment fund has channelled investment to key areas such as green cement, Rathi rightly admits it could be “hard to replicate” a model in which “billionaire friends” are happy to keep splashing billions on high-risk investments. Even if it were easy, to hand control of our futures to a coterie of billionaires is hardly a democratic or desirable proposition.
Elsewhere, successes seem to have happened despite market forces rather than because of them. Instead of a defence of the free market, Rathi expertly details how the Chinese EV industry owes much to strategic government planning and intervention, including $60bn in subsidies between 2009 and 2017. When it comes to lithium battery-recycling programmes, he writes: “The question yet to be answered is whether it can be [rolled out] at a price that the industry can afford,” before adding that “governments aren’t waiting to see whether the economics pan out”. In short, the urgency of these programmes makes relying on market forces too risky. Still others seem more incidental to capitalism: it’s not clear that strong leadership at the International Energy Agency or bold environmental lawyers suing governments and corporations for failing to align with the Paris Agreement is thanks to capitalism, rather than simply coincident with it.
The resulting confusion – namely, what can or cannot be attributed to forces unique to capitalism in these cases – stems from the absence of any clear description from Rathi of what “capitalism” is. Aside from being an “extractive economic system… set up to maximise profits” – perhaps surprising in a book championing capitalism – the titular “climate capitalism” is not explicitly defined. The upshot is the book’s important questions remain unanswered: can we, as Rathi argues, “harness the forces of capitalism to tackle the climate problem”? Is capitalism the only viable option for doing so?
[See also: Extreme weather could bankrupt the UK in 100 years]
To answer either question requires us to define capitalism. While the debate over the definition of capitalism and its constant evolution occupies an entire world of scholarship, certain of its core animating forces are particularly relevant to the question of confronting climate and ecological crisis. For the purposes of a working definition, these might include market coordination of investment and production, mediated by the profit motive and price signal, and undergirded by sustained growth. It is in defining these key forces and dynamics that it becomes difficult to see how capitalism can deliver the radical transformations needed to limit global heating or reverse ecological devastation.
Market coordination, premised as it is on private, unsynchronised investment decisions, leaves us vulnerable to the whims of private capital, and there are compelling reasons to believe it cannot alone deliver the complexity, scale and pace of energy transformation required – particularly not without creating considerable disorder or injustice in the process. To take just one recent example, subjective expectations for high returns are already a stumbling block for offshore wind: recent auctions in the US and UK have failed as rising input costs eat into prospective profits, even with public subsidy, and industry representatives consistently cite suitably high returns as “a main barrier to decarbonisation of the energy system”, according to a report from consultants Bain & Company. Similarly, Big Oil’s explosive profitability and catastrophic doubling down on fossil fuel investments over the past year directly contravenes the International Energy Agency’s affirmation that there can be no new fossil fuels if we are to meet climate targets. Faith in the ability of fossil fuel firms to transition, even among stalwart hold-outs, is rapidly evaporating.
It is a third defining feature – sustained economic growth – that undermines the prospects for a “climate capitalism”. The “degrowth” movement, as its name implies, argues that unending aggregate economic growth is incompatible with a sustainable future. And its influence is expanding. Among degrowth’s high-profile champions is Saito Kohei, an academic at the University of Tokyo who wrote a shock best-seller in his native Japan, which will be translated into English next year as Slow Down: The Degrowth Manifesto. Slow Down begins in well-trodden territory, examining whether economic growth can be “decoupled” not only from carbon emissions, but also from material footprint and environmental impact.
On all points, the prognosis is poor. There is some evidence of “absolute” emissions decoupling – where GDP rises while emissions flatline or fall – in certain countries such as the UK, even when accounting for the offshoring of emissions by, for instance, importing more goods. However, not only does this trend disappear at the global level, but the rate of decoupling in individual cases is not yet anywhere near fast enough to meet climate targets that are already moving swiftly beyond reach.
The evidence for decoupling from “material impact” – resource use and its attendant environmental impact – is considerably less. In a particularly damning review letter published in 2020 in Nature, the authors found “overwhelming evidence” that rising global consumption “has diminished or cancelled out any gains brought about by technological change aimed at reducing environmental impact”. In his exhaustive work Growth (2019), Vaclav Smil, a favourite thinker of the anti-degrowth Bill Gates, concludes that “continuous material growth, based on ever greater extraction” of resources and “increased degradation of the biosphere’s finite stocks and services, is impossible”. For Smil, there is an “irreconcilable conflict” between the growth imperative and planetary stability, and economists’ claims to the contrary are “total nonsense”.
But where the scientific evidence on growth is relatively unambiguous, less firmly settled is whether capitalism requires growth. Even degrowth scholarship remains agnostic on this point. Saito is unequivocal, leveraging Marxist analysis to assert that capitalism cannot function without it. Not only is decoupling “an illusion”, he argues, but capitalism is constrained by dynamics such as the “productivity trap”, whereby capitalist competition creates the drive to indefinitely increase workforce productivity, leading to unemployment that in turn requires expanding the economy to generate new employment opportunities, such that capitalism – in which individuals must sell their labour to survive – can function. The solution, therefore, is the toppling of capitalism.
For Saito, degrowth is not austerity or “voluntary poverty”, nor will it cause the pain of economic stagnation under capitalism. In the past, this pain has been the result of a system that demands growth to function and to mask spectacular levels of inequality in which millions struggle to meet basic needs, even in periods of comparative stability. Instead, Saito’s proposal for “degrowth communism” is defined by “radical abundance” based on maximising use-value – that is, value derived from meeting needs – rather than the monetary value associated with capitalist “abundance”, itself a mirage based on creating artificial scarcity through private ownership.
Importantly, while a “radical abundance” in which everyone’s needs are met may generate growth in some areas, it will require a scaling down in many others, producing an overall movement towards degrowth. Key to ensuring this abundance is reclaiming the commons as a sphere of collective ownership and governance, a project Saito sees as a strategy for gradually displacing capitalism entirely. He argues projects that prefigure a degrowth communist future are already under way, from localised electricity projects in Japan to worker cooperatives and an urban farming revolution in Detroit.
Saito is well aware that his proposals seem radical or outrageous, even to many on the left. Yet the essential components of his vision – rejecting GDP to organise an economy around meeting needs, moving from extraction and private accumulation to shared and democratically governed abundance – as well as the evidence he uses to advance it, will resonate with many. And, despite the frequent ridicule of degrowth by voices across the political spectrum, stalwart advocates of capitalist green growth can hardly claim to be offering any more “serious” or “realist” propositions when weighed against available evidence. Less plausible still is the notion that capitalism will confront climate and ecological crisis while attending to questions of staggering global inequality or injustice.
Saito does leave several key questions unanswered: for instance, how can interconnected energy and transport systems be effectively and reliably decarbonised without higher-level planning and coordination than the local? How does Saito reconcile his antipathy to the state with the need to coordinate and deliver investment and production at the scale and pace required?
Ultimately, the spectre haunting degrowth – or any radical proposal for confronting climate crisis – is politics. A glance at the messaging of both major UK political parties indicates how far degrowth is from a near-term political likelihood, while the outsized influence of pro-growth corporate and financial interests in both domestic and international politics would make Goliath blush. Indeed, the profound constraint of politics is the argument Rathi makes when says that only capitalism is up to the challenge, citing Noam Chomsky’s comment that there is “no conceivable possibility” of replacing capitalism within the time available. While acknowledging that “unfettered capitalism has contributed to warming the planet”, it is this political constraint that makes “reforming capitalism” our only option.
We therefore arrive at something of a paradox. If a genuinely green capitalism is impossible, it also may be, in some form, inevitable. We are wedged between the unyielding rock of the planet’s finite resilience to infinite growth, and the hard place of the politics produced by contemporary capitalism. At present, a political coalition capable of transforming and rebuilding our economic model feels a distant dream. Similarly, it seems far too optimistic to assume that capitalism will simply collapse and be replaced with something better. And yet, something’s got to give; in the end, only one – the system that we have made – can.
[See also: Pierre Friedlingstein: There are no “magical climate solutions”]
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