We’re students, not economists, but if you had to choose, do you think our global economy should serve as an instrument for short-term profit or one for long-term prosperity?
Hopefully most of us would answer in the latter, recognizing a society’s long-term well-being has higher value than a short-lived spurt in gross domestic product. Unfortunately, though, this is not how our current global economy functions, where profit is the end-all, and government regulations often face staunch ideological opposition.
The perils of our current economic system are evident enough. After all, if we have learned anything from the 2008 financial crisis that started our current recession, it’s that while the boom of an unregulated economy might benefit consumers in the short run, it is a luxury often short-lived.
In the long run, profits that come from a unregulated market boom are ultimately condensed into the pockets of corporate plutocrats when those markets bust, swindling misfortunate consumers who are then forced to pay the price.
Indeed, this pattern has become a truism of our times. In the words of Nobel Prize-winning economist Joseph E. Stiglitz, we now live in an economic system wherein “profits are privatized and losses are socialized,” citing the $700 billion taxpayer-funded bailout of various rapacious financial institutions in 2008 as the most glaring example of this.
The foregoing notion raises serious points about our nation’s economic policy that will have to be addressed in time, but by now most readers are probably just wondering: What the heck does any of this have to do with the environment? Well, as it turns out, our current form of corporate capitalism doesn’t only breed systemic problems in terms of economic inequality, social mobility and consumer protection. As long as gluttonous lobbying practices remain essentially unchecked in Washington, the worst-case scenarios of climate change will be beckoned in as well.
To anyone familiar with the role of private interests in our current political system, it’s not hard to see how this is true. Last year alone, the fossil fuel industry spent nearly $150 million lobbying Congress, stuffing the coffers of any crooked legislator willing to put corporate profit over environmental progress.
As long as our political economy continues to function in this manner, no efforts to combat global climate change will ever be successful. And what’s more, I’m not the only one who thinks this — legitimate climate professionals have shared the sentiment.
In August, climate scientists at the University of Manchester’s Tyndall Centre for Climate Change Research published a commentary on the feasibility of keeping average global temperature increases under the threshold of danger (2 degrees Celsius).
Alarmingly, these scientists concluded dangerous global climate change simply cannot be avoided “within orthodox political economic constraints” and called for a necessary “paradigm shift” if we are to overcome this challenge and maintain a prosperous society.
Exactly what kind of “paradigm shift” these climate scientists have in mind is a mystery, but it doesn’t escape the realm of imagination. In particular, a kind of steady state economy comes to mind, in which economic growth is capped and maintained at a predetermined carrying capacity. From there, a steady state economy would function more as a means of promoting the well-being of society as a whole as opposed to our current model, in which profit is the purpose.
A lot has been written on the topic of steady state economics, but perhaps most striking is that father of modern economics Adam Smith recognized limits to economic growth, ultimately stating economic growth is ultimately transient and will eventually have to give way to economic stability.
In many ways, a steady state economy could be exactly what we need at this critical point in society, in which our very livelihood is being threatened by our avarice. At the very least, such economic transcendence would replace, as John Maynard Keynes had hoped, our current economy, where he said “the love of money is detestable” with a model that “value(s) ends above means and prefer(s) the good to the useful.”
Of course, the most important question we ultimately face is if we'll be able to make such an unprecedented societal transformation. And to that, the answer is simple: We have to. If we think our collective humanity is of any real value at all, we simply have no other option.