Many people in the environmental movement believe that the economy can be successfully ‘greened’. Assuming this ‘greening’ expresses a real desire for substantive change (ie, it’s not just a marketing exercise), some important questions must be asked. For example, just how are greens’ key objectives of sustainability and participatory democracy to be achieved in the context of a market economy? What would a market economy that can achieve these objectives actually look like?
In an article published in the journal Environmental Politics in 2007, Dan Greenwood has provided a very useful examination of the problem, by comparing the analysis of free market advocates (eg, Friedrich Hayek) with the tradition of ecological economics (which began with Herman Daly) that allows a role for markets but demands a “thick layer of democratic, non-market institutions” (p.74) to overcome the failures of the market.
The free market case is simply stated: intervention in markets must be minimised, and preferably eliminated, because any attempt to replace or interfere in markets always fails, whatever the aims of the interference may be. The argument is that intervention fails because of the enormous complexity of the calculations and decisions that need to be made – only markets can make the complex technical and economic decisions needed to deliver efficiency and co-ordination in production. Furthermore, only markets can make the necessary value-based decisions in ways which maintain the freedom of choice of the individual (‘consumer sovereignty’). As Greenwood highlights, this second point underpins the suggestion that markets are “an essential feature of the liberal order” (p.77).
In the opposite corner we have the greens, carrying the banner of ecological economics. Ecological economics embraces a ‘strong’ conception of sustainability in the desire to preserve the natural world because it is irreplaceable and critical to our well-being. In addition, the closed system of the planetary ecosphere means that environmental limits are predetermined and cannot be decided solely by the market. For this reason, it is argued, economics must be placed within the bigger context of ecology, a principle which puts ecological economics well outside the mainstream of economic theorising. Therefore, for advocates of ecological economics, while markets are deemed to be necessary for the allocation of resources, they must operate “within limits that are established by non-market institutions to ensure (strong) sustainability” (p.78). In addition, the nature of these limits “must be established collectively through a democratic procedure” (p.79).
The approach to sustainability currently taken by many governments treats sustainability as a problem of management to be solved by expert and/or bureaucratic intervention. Free market purists and greens are in agreement in rejecting this technocratic approach, as both recognise that environmental values cannot be reduced to objectively measurable monetary terms. This is because any value-based decisions undeniably have an ethical dimension. Therefore any interventions in the market intended to improve the prospects of ‘sustainable development’ (or, indeed, intended to do anything else) are unavoidably political.
The free market purists consider any such politically based interference in the market to be the ‘road to serfdom’, in Hayek’s famous words. Ecological economists, on the other hand, see the opportunity for a democratic, participatory economics that can truly deliver sustainability. Clearly, this demands either a degree of political consensus on the need for sustainability or political institutions that can democratically embody the diverse values of the citizenry and apply them to complex economic problems.
This highlights the first challenge for advocates of green capitalism. In order to live up to its ‘green’ billing, green capitalism must be about a lot more than eco-efficiency and enviro-technology – it must incorporate the principle of participatory democracy that is one of the central tenets of green thinking. Therefore, green capitalists must start to think about the political institutions that can deliver a participatory economy.
Dan Greenwood finishes his article with another neat point about complexity. As we have seen, free market advocates claim that only the market can resolve complex technical, economic and value problems. Yet the market itself is a source of considerable complexity. This stems from the ceaseless demand for firms to increase profits, to enhance capital accumulation, to ‘grow or die’, a demand which often cuts right across the urgent need to address ecological crises. Greenwood takes the painful Kyoto Protocol negotiation process as an example of how the “vested interests of certain industries have prevented anything other than very slow progress.” That is to say, the “process of lobbying politicians, corruption, or even migration of capital” demonstrates a “built-in tendency” for green capitalism to revert to free market capitalism when it comes into conflict with the profit motive (p.89).
This, then, is the second challenge for green capitalists. Given that capitalism as it is generally understood runs on the energy of the profit motive and the growth obsession, green capitalism must find some way of reining in this drive for profits and making sustainability the primary motivator.
I would suggest that makes green capitalism a logical impossibility.
Dan Greenwood (2007) The halfway house: Democracy, complexity, and the limits to markets in green political economy. Environmental Politics, 16(1), 73-91.