Our market economy: the solution or the problem?

No doubt in an attempt to bolster its green credentials in advance of the UN climate conference starting in Glasgow at the weekend, last week the Government published its ‘Net Zero Strategy’. Whilst this strategy aims to achieve many worthwhile outcomes, it is fundamentally flawed. Why? Because it is embedded within and built upon an economic model that measures its success in terms of economic growth. In his forward, the PM asserts that “over the last three decades we have already reduced our emissions by 44 per cent – while growing our economy by over 75 per cent – and this strategy sets out our plan for going the rest of the way.” This no doubt sounds good, as it is intended to, but when analysed the shine quickly fades.

For one thing, the 44% reduction in carbon emissions does not include emissions associated with international aviation nor those associated with the UK consumption of goods and services imported from overseas. This means that the emissions associated with approximately one third of the goods and services we consume are not taken into account. But worse is the relentless pursuit of growth, growth that is fuelled by the constant imperative to consume: to consume stuff we didn’t know we needed; stuff to replace other stuff that is made to appear out-of-fashion; stuff we then need to spend more resources and energy disposing of.

If we are serious about reducing our carbon emissions we need to consume less stuff. End of. It is as simple as that. The manufacture of any product results in some amount of carbon being emitted. We need to start asking ourselves which of these products we actually need, and which we simply buy to appear fashionable or to impress others. The problem is that our current economic model is grounded in consumption. If we stopped consuming our economies would stop growing, and the presiding government would be blamed for mismanaging the economy. An alternative economic model could be based on population wellbeing – perhaps based on some measure of the degree to which the population is healthy, have warm and secure homes, sufficient food, are free from crime, abuse or hate, and, most importantly, are not exploiting their natural environment.

One way to adjust the current economic model would be through the introduction of a carbon tax. Currently many of the ‘costs’ of producing a consumer item are not included in the price – the carbon emitted during its production and by its shipping half way round the world for example. If these costs were included the consumer market would better reflect the realities of production. To be fair, the ‘Net Zero Strategy’ does hint at this. In the Executive Summary (p16) the 2nd of 4 Key Principles says “we will ensure the biggest polluters pay the most for the transition through fair carbon pricing.” But, and this is a very big but indeed, I can find no reference to a carbon tax in any part of the 368 page document.

One of the other consequences of having this strategy imbedded within the model of a market economy is the belief that, given the right incentive, the market will find the necessary solutions and that direct government action would simply get in the way. Hence a large part of the strategy is given over to investing sums of public money in various policy areas (net zero bus and rail travel or clean maritime vessels and zero emission flights) in the belief that private companies will use this money to create the desired solutions (together with their necessary profits of course).

An alternative would be for the government to take a lead and directly deliver what’s needed. So rather than simply proposing a date for when all new cars will need to be fully emission free (2030) and investing in public transport to enable half of journeys in towns and cities to be walked or cycled by 2030, why not bring all public transport back into public ownership with the aim of making it both a cheaper and more convenient option than using a private vehicle. Even a zero emission car has a carbon footprint, not least of which as a result of the steel used in its manufacture. And when you consider that most cars spend most of their time not being used, wouldn’t it make sense to try and find ways of living without them?

Another area that needs far more radical action is the building sector. Rather than simply saying that no new gas boilers will be sold after 2035 and offering a small number (compared to what will actually be needed) of grants for boiler upgrades and fuel pumps, the government, through revised planning guidelines, needs to be legislating for all new buildings to be built to the highest energy efficiency standards, and offering encouragement and help for all (not just a few) existing homes to be retrofitted to the highest standards possible.

The bottom line here is that the market economy is part of the problem, not part of the solution – and the government just doesn’t see it. As Michael E. Mann points out in his new book The New Climate War, “Seventy-one per cent of global emissions come from the same hundred companies.” I just can’t believe that with a few nudges in the form of relatively small sums of government investment these large global companies are going to stop prioritising profit and the wealth of their directors and CEOs over the wellbeing of the Earth and its citizens.

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