As access to cheap, plentiful energy dries up and the effects of climate change take hold, we are entering a new era of profound challenge ― and free market capitalism cannot dig us out. This is the conclusion of a report produced for the United Nations by Bios, an independent research institute based in Finland.
Signs of a world in turmoil are not hard to find. People are increasingly feeling the effects of rapid climate change. Cities boil in more than 120-degree heat, California burns and the Arctic thaws. Meanwhile, biodiversity loss is reaching terrifying levels, with animals going extinct at about 1,000 times the natural rate. In addition, as societies, we’re facing increased inequality, unemployment and soaring personal debt levels.
Faced with these interconnected crises, says the report, our economies are woefully underprepared: “It can be safely said that no widely applicable economic models have been developed specifically for the upcoming era.”
The paper, commissioned to feed into the U.N’s 2019 Global Sustainable Development Report, looks specifically at the next 20 to 30 years as a key transition period during which the world must radically cut emissions and consumption to have a hope of stopping climate change.
Traditional ways of economic thinking have been based on the assumption we will continue to have access to cheap and plentiful sources of energy and materials, says the report, but the “era of cheap energy is coming to an end.”
The thrust of the authors’ argument is that, for the first time, economies are moving to sources of energy that are much less efficient ― meaning more and more effort is needed to get smaller amounts of energy. There are plenty of fossil fuels that can still be pulled from the ground but doing so would shoot through climate commitments and accelerate global warming. In addition, we have used up the planet’s capacity to handle the waste generated through all our material and energy use.
In other words, we are at an ecological crunch point and we don’t have the economic tools to deal with it.
“Trusting that the free market capitalist dynamics will get us there, that of course is not going to happen,” report co-author Paavo Järvensivu, an academic who specializes in economics and culture at Bios, says in a phone call with HuffPost. Economies that rely on the power of markets, notes the report, don’t even recognize the problem as they’re too focused on short-term profits to take account of longer-term issues like climate change and environmental destruction.
But Järvensivu is also keen not to fuel an argument about whether capitalism is dead.
“I think it’s harmful to think of capitalism as this one big lump, or capitalism as this kind of ‘either, or’ question: that we either have capitalism or something totally different,” Järvensivu says.
“The social and material need for this transformation [away from cheap energy and mass consumption] is so acute and societies have to go through a very dramatic shift over 20 to 30 years to get their emissions dramatically lower,” he adds, “so we are past this discussion of should we have capitalism or should we have something else.”
Instead, he says, we need to find new ways of thinking about the economy to meet these challenges. It’s asking the question, he says, “Do we aim for more consumption or do we aim for liveable environments in the future?”
Around 80 percent of global energy comes from fossil fuels ― oil, coal and gas, which powered industrialization but have a heavy toll through their climate change impact. While we need to wean ourselves off these, renewables are not efficient enough yet compared to conventional energy and the infrastructure is not in place for it, the report says. “Meeting current or growing levels of energy need in the next few decades with low-carbon solutions will be extremely difficult, if not impossible,” it notes.
What’s needed, says the report, is to combine developing clean energy sources with lowering energy use. And it has some suggestions about how to achieve this without compromising people’s opportunity for a decent life.
The report calls for an overhaul of transportation away from a focus on car ownership. In cities, this would mean changes in city planning to focus on biking and walking, combined with an electric public transit system. This “could be beneficial for people in a larger sense,” says Järvensivu, as it “means less transport, less owning private cars, but not necessarily a less good quality life.”
International freight transportation and aviation would need to be slashed, says the report, as they “cannot continue to grow at current rates” because of the need to cut emissions as well as the lack of low carbon alternatives.
Food systems also need to be rethought. Both rich and poor countries should focus on self-sufficiency, advises the report, to produce a diverse selection of food for their own populations. As for diets, it advocates that dairy and meat, which have a big climate impact, be replaced by largely plant-based diets.
Housing is the third area slated for transformation. Construction using steel and concrete is hugely carbon intensive. The report authors suggest moving to wooden structures, which could provide carbon storage.
All these changes require concerted political action. “There must be a comprehensive vision and closely coordinated plans. Otherwise a rapid system level transformation towards global sustainability goals is inconceivable,” says the report.
Which is all well and good, but doesn’t exactly jibe with what’s been happening on the political scene. President Donald Trump is hellbent on cutting environmental regulation and has withdrawn from the Paris climate agreement. Even the countries that remain in the agreement are failing on their commitments to curb climate change.
There has been interest in introducing a carbon price, which means charging polluters for the carbon they emit ― a key pledge Canada Prime Minister Justin Trudeau made in his campaign. But the report argues this measure is nowhere near good enough: “As a policy tool, carbon pricing lacks the crucial element of coordinating a diverse set of economic actors toward a common goal.”
Järvensivu believes the push for action will come from the fact that people are starting to genuinely worry about their future security and looking for collective action. “These kind of things might actually start to matter quite a bit more than caring about a new iPhone or a yearly trip to Thailand,” he says. “We are actually looking for a sense of security and not in a way that we would just aim for more consuming power in terms of money and so on.”
He cites Sen. Bernie Sanders (I-Vt.) as an example of someone seeking transformational economic change, along with professor Stephanie Kelton, whose work argues sovereign governments cannot run out of money, thus debunking the argument that economies cannot afford to make the transformations needed to address climate change.
Järvensivu insists the report isn’t advocating for an economy that would be unrecognizable from what we have now, at least not in the short term. Rather, he says, it seeks to identify the material and energy crises approaching us and the kinds of economic tools and policies we need to meet them.
“After 20 to 30 years, we don’t know what this [economy] would look like, if we actually managed to achieve radically lower emissions and still secure possibilities for a good life ... are we then even concerned whether this was capitalism or not, or are we looking for other things,” he says. “Probably we are.”
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