Averting climate catastrophe demands reorganising production, not ‘de-growth’, argues Dominic Alexander.
The problem of capitalism and growth predates the modern environmental movement, with the nineteenth-century liberal economist John Stuart Mill first raising the idea that there could be a ‘steady-state’ economy. This would be one where there would be no further economic growth, but simply a constant rate of production of the existing quantity of commodities.
The idea has appealed to many more recently as an answer to ecological crises, and especially climate change, as a way of envisaging a sustainable capitalist economy. Some have gone further, saying that what is needed is in fact ‘de-growth’, a massive reduction in economic demand, so that production puts far less strain on ecological limits, and non-renewable resources. George Monbiot has gone so far as to say that we need a movement of people to act against their own interests, and demand a lower standard of living for themselves.
It is certain that the existing economic system needs to be radically altered if we are to maintain an environment which supports life, and human civilisation. That is not in question. What is more problematic is whether capitalism can be ‘cured’, so to speak, of its ‘addiction’ to growth. Following from this is the issue of the different ways in which ‘growth’ can be conceived, and relate to standards of living.
Capitalism and growth
To take the former question first, is it possible to have capitalism without growth? The answer to this is a resounding no. Capitalism requires growth at its core. It is a system of competition for profit, in Marx’s formula, M-C-M’; capital (M) is invested to produce commodities (C), which are sold for a return of the original capital plus profit (M’).
Capitalists need to outcompete other capitalists, and capture larger markets, or they will be driven out of business by their rivals. The larger the amount of capital they can invest, the more power they have in the market, to sell goods at a lower price, at higher volumes, to undercut their competition. The larger capital, on average, wins, and that puts pressure on every capitalist to chase growth. Capital that sits still, withers, so growth is built into its very nature.
Moreover, credit has always been an essential part of the system. Indeed, the earliest forms of capitalism depended upon merchant capital, and the existing stock of money wealth that could be lent at interest. The cycle of investment, production, and re-investment demands returns, and as capital accumulates, it needs to expand constantly in order even to maintain the same rates of profit as before.
Accumulated wealth, existing in the form of money, government and corporate debt, or shares, is essentially a claim to a share of future profits. This is why Marx referred to much of the financial system as bound up with ‘fictitious capital’; it is based on expectations of production that hasn’t happened yet. Credit is lent in the hope that it will be repaid with interest, so on the level of the economic totality, this requires continuous growth in order to fulfil the promises already made. This circuit in itself generates a new round of credit and investment, in a cycle which can’t stop, or even slow down, without producing serious crisis. Capitalism has a persistent tendency to produce Ponzi schemes, precisely because its circulation system bears an uncanny resemblance to one.
If, somehow, governments were in a position to command growth to stop, the whole house of cards would collapse, and we would be plunged into a massive depression. The results of this would not at all be what any environmentalist would wish for, since production would still be seeking profit, if this were still to be a capitalist economy. The dirtiest, most exploitative and environmentally damaging methods of production would be adopted, because these would be the best bet for generating profit. Basic needs would fail to be met, because production would be in disarray, and providing essentials for most of the population would not seem likely to be profitable. The result would be social and political instability of a kind that would be highly unlikely to promote ecological solutions, so long as the system remained capitalist in nature, with profit-making at its heart.
The ultimate answer to our problems necessarily lies beyond capitalism, and demanding an end to growth is not going to get us there. To begin with, de-growth is just a moral exhortation directed at people to convince them to consume less, but consumption in capitalism is not in fact driven by demand, but by production for profit. If we want patterns of consumption to change, this has to be accomplished through the investment and production end, not from the demand side.
This brings us to the second issue raised at the start, which is the question of ‘growth’ itself. In the capitalist system this is defined purely by the quantity of production of commodities, whatever those are. Growth is not measured by use values, actual living conditions, nor indeed does it take into account the degradation of the environment. Capital is mobile and hasn’t had to worry about wrecking local ecologies, before now, when the scale of its ecological impact has reached global proportions. The problem is then profit-making as growth, not necessarily use-values needed for consumption. Moving towards a sustainable economic system does not have to be equated with driving down living standards, nor preventing the development of poorer countries.
Capitalism produces a tremendous amount of waste and redundancy, because its overriding concern is production for profit, not use values. Currently, GDP growth only measures rising incomes, and therefore bundles up social goods with actual harms, as long as they are some company’s profits. In order to address the climate emergency, however, we definitely do need carefully planned and directed growth to build an infrastructure of renewable energy, to provide for homes, public transport, industry and so on. Far from involving a reduction of living standards, this kind of planned growth would require large numbers of well-paid jobs to be created. Crucially, this could only be done by the state, not the private sector.
This is not a fanciful, or utopian scheme, but one that has been shown to be possible with existing technology. It is technically feasible, and, although complicated, an achievable proposition. A veteran of climate campaigning, the socialist activist, Jonathan Neale, makes a detailed and highly convincing case for all this in a book that is free to download, is accessibly written, and well worth reading.
The capitalist market cannot achieve the transformation that is required, but this is far from saying that it is not possible to do. In fact, Keynes once said: ‘Anything we can actually do we can afford.’ Capitalism creates enormous productive capacities, but they are misused because the system cannot plan for anything but the accumulation of profit, at whatever costs in terms of human misery and ecological harm. Those capacities could, through state planning, be directed towards renewable energy, sustainable farming, and the elimination of environmental harms.
Development and growth will actually be required in order to undo the damage that capitalist production for profit has done. Attempting to restrict development, and reduce living standards, is more likely to make the existing situation worse. With fewer resources, many more people across the world would be driven to adopt survival strategies that are more likely, rather than less, to result in environmental damage. A planned and co-ordinated creation of economies based on renewables could provide people with the security of livelihoods, homes, access to health care and education, and so on, that would open up the space for implementing sustainable ways of living. Saving the climate and improving lives for the vast majority are goals that run together, and are not opposed.
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Dominic Alexander is a member of Counterfire, for which he is the book review editor. He is a longstanding activist in north London. He is a historian whose work includes the book Saints and Animals in the Middle Ages (2008), a social history of medieval wonder tales, and articles on London’s first revolutionary, William Longbeard, and the revolt of 1196, in Viator 48:3 (2017), and Science and Society 84:3 (July 2020). He is also the author of the Counterfire books, The Limits of Keynesianism (2018) and Trotsky in the Bronze Age (2020).
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