Getting a handle on the relationship between capitalism and ecological degradation

If we pay even the most casual attention to what is happening around us, we observe enormous ecological destruction. Recent events in the ‘100% pure’ ‘clean and green’ tourist paradise of Aotearoa New Zealand reveal industrial pollution dumped on marginalised urban communities, wetlands drained and forests logged to make way for dairy farming, rare species killed by introduced predators, rural river courses reduced to stinking drains by dairy farming run-off, and well-advanced plans for remote valleys to be mined for coal or dammed for hydropower … I could go on.

Should we consider each one of these incidents in isolation? They are very often treated this way, both in their reporting and in the responses to them – isolated and independent events that vividly demonstrate the ignorance, greed and stupidity of certain individuals or corporations. However, much of the writing on wellsharp has aimed to move beyond this sort of interpretation, to show that individual acts of ecological destruction are far from disconnected. They are intimately connected through an underlying systemic cause – capitalism and its pathological growth obsession.

But how is one to prove this? Getting a handle on the relationship between environmental performance and capitalism as a system is far from easy, but doing so in a way that moves beyond theorising is essential if the argument is to convince a wider audience. Ilgu Ozler and Brian Obach of the State University of New York at have taken up this challenge.

Per capita ecological footprint was chosen as the measure of environmental performance in this study; it’s a reasonably familiar concept and footprint data is available on a nation-by-nation basis here. However, the more difficult challenge is to select a variable that somehow measures the ‘degree of capitalism.’ Ozler and Obach have been able to do this by drawing on the work of the Heritage Foundation and the Wall Street Journal. These organisations, arch-exponents of free market theories, have devised a so-called ‘economic freedom index (EFI),’ a nine-component aggregate measure which is intended to quantify the extent to which states adhere to the capitalist ideal on a scale of 0-100. While I might very well argue with the Heritage Foundation’s conception of economic freedom, using this EFI data as a proxy for ‘degree of capitalism’ is a neat manoeuvre on the part of Ozler and Obach – it can hardly be regarded as invalid by neoliberals given that it is a measure devised by the neoliberals themselves.

The two indices provided comparable data for 110 states across the years 1996 to 2003. In the analysis, the data was controlled for other economic and environmental variables, namely urban population as % of the total, exports as % of GDP, per capita GDP itself, and climate type. Results of the statistical analysis indicated “a positive and significant relationship between the Economic Freedom Index and per capita ecological footprint” (p.94) and showed that a 1% increase in EFI is associated with a 1.2% increase in footprint score.

Overall, Ozler and Obach conclude that

Capitalist state economic polices have a negative influence on environmental performance. In almost every respect, the free market, left unchecked by state action, yields greater ecological degradation. (p.98)

The more states embrace the free market ideal, the more difficult it will be to achieve sustainability” (p.103).

The nine individual components of EFI were also examined by Ozler and Obach to identify which make the greatest contributions to ecological footprint. They found that what the Heritage Foundation terms ‘business freedom,’ ie reduced state regulation, has the most significant impact. If all other factors remained the same,

a change in the regulation measure from the lowest to the highest score (corresponding to a decrease in regulation on the ‘economic freedom scale’) would result in an 80 percent increase in per capita ecological footprint. (p.98)

This discovery is a fascinating little gem. It challenges today’s conventional wisdom that state environmental regulation does not work and that what we need are more market instruments that employ the profit motive to encourage ‘best practice’. Because of the demands of this ‘conventional wisdom’ in the context of climate change policy, we get emissions credit trading schemes and carbon markets … And the outcome of that is an ever-increasing level of greenhouse gas emissions. The work summarised here would suggest that an old-school approach is needed: nationally regulated and monitored emissions caps for individual firms and premises.

Ozler and Obach take some comfort from their research findings, because not all states are striving to please the Heritage Foundation and others in the free market cheer squad. They write:

Our evidence suggests that state policies can restrict free market functioning in ways that truly reduce ecological impacts. This appears to be the case when states restrict trade, impose regulations, and implement policies that do not prioritize private property rights above other considerations. Our evidence also suggests monetary and investment policies can be devised to reduce ecological impacts. (p.99)

One further interesting finding emerges from analysis of the EFI components. Increases in government spending (reduced ‘freedom from government’ in EFI terms) and taxation (reduced ‘fiscal freedom’) go hand in hand with increased per capita ecological footprint. In other words, “when the state does directly control resources, it does not perform well environmentally” but further analysis is needed to “clarify what specific government expenditures and state owned enterprises enlarge per capita ecological footprint” (p.102).

Some answers on this are clear in the New Zealand context at least:

— Solid Energy, the corporation wishing to vandalise and defile Happy Valley by mining it for coal, is wholly owned by the state;

— Genesis Energy, the corporation wishing to build a gas fired power station at Kaukapakapa, is wholly owned by the state; and

— Meridian Energy, the corporation wishing to destroy the Mokihinui Gorge by damming the valley for a hydro scheme, is … well, yes, you’ve guessed already.


S. Ilgu Ozler and Brian K. Obach (2009) Capitalism, state economic policy and ecological footprint: An international comparative analysis. Global Environmental Politics 9(1), 79-108.


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