Lectures for SOCA3060 and SOCA6590 2005
Weeks Two and Three
The Reformist Approach - Week Two
In week two I said that the reformist approach was called that because it aimed to make small reforms to the economic and political structures of current society to deal with environmental problems. A typical writer is Lovins (the reading for Week 2).
Within this approach markets are the main means to distribute products – they are bought and sold for money. It is assumed that the other aspects of the capitalist economy such as money, private ownership of the means of production (factories and farms etc.) and wage labour are also retained.
The rich countries stay affluent and the developing countries continue to become more affluent – to develop.
In this model economic growth continues, but it is argued that this can take place at the same time as environmental damage is curtailed. In fact, new environmental technology is a growth industry in this account and stimulates growth in the economy as a whole.
4. Parliamentary democracy
The way in which environmental reforms come about is by lobbying of politicians - with the threat of voters turning away from parties that do not enact environmental reforms. This is in the rich countries. Proponents do not say much about the way poor countries today rarely experience democracy!
5. Government controls
Environmental reforms come about partly through lifestyle changes by ordinary citizens who make different market decisions. But a central aspect of change is various kinds of government intervention in the economy:
- Regulations – rules, laws
- Environmental taxes
- Incentives and subsidies
- International agreements
6. Economic benefits
All these environmental reforms benefit the economy.
- Because energy efficiency is cheaper – you are not wasting money on energy you don’t need.
- Because environmental reforms create new industries and new jobs – for example new energy infrastructure such as wind energy plants or energy efficient double glazed windows.
The Radical Restructuring Perspective - Week Three
In week three I talked about the kinds of criticisms that people make of the reformist model. These criticisms link up to imply that what is necessary is a radical restructuring of politics and the economy. There are three basic models of how this could be done. The reading for this week is Ted Trainer, a representative writer in this perspective.
Critics of the reformist approach think there are a number of problems with the economic structure of capitalist societies. The following is a short list of some aspects of capitalist economies that they think lead on to environmental problems and why.
- Paid work and consumerism
In a capitalist economy people have to work for a wage and do not have much control over what they do at work. Most people are bored at work. They see an increasing ownership of consumer goods as hard earned compensation for the stress of the working day. They do not take kindly to reforms that may regulate or curtail their use of consumer goods for environmental reasons – for example to force them out of their cars and into buses.
- Private ownership and growth
The very structure of the capitalist economy makes growth inevitable. This is because firms compete to make profits. Less profitable firms are dumped by shareholders. This competition means that it makes sense to invest in technology which allows the firm to produce more with a lower cost in labour. So productivity increases. The same number of workers is producing more goods and services. The only way for firms to sell all this extra stuff is to increase their markets. This is growth.
In a market a firm can always make the most money by selling more to people with more money to buy things. This means that resources end up being allocated to the rich. This can be a problem if allocation to the poor is necessary to prevent environmental damage or if what we need is more public spending.
In a market economy, investment always goes to the places where the highest profit can be made. If a country sets up a tough regime of environmental regulation which restricts economic choices and may impede profits, investors will take their money to other countries.
If growth was cut back to prevent environmental damage, the effect in a capitalist economy would be increasing unemployment. Because productivity always increases as a result of competition between firms, markets have to grow for the same number of people to be employed. In fact, 3% p.a. is the minimum growth rate if the same number of people is to be employed year after year.
If growth continues it is very hard to prevent increasing environmental damage. Growth in the economy means more use of resources, more pollution. The critics of reformism do not believe that there can be growth without environmental consequences – growth in “service” industries like entertainment, education and tourism is also connected to new buildings, more transport use and so on.
For example you could make an environmental improvement to cut energy use by 1/3 through energy efficiency. If there is 3% p.a. growth, after 14 years you are back to using the same amount of energy you started with before the efficiency measures; after 23 years you have doubled that, and after 46 years you are using four times as much energy. It is the difficulty of coping with such a magnitude of growth over time which makes it impossible to prevent increasing environmental damage.
4. Parliamentary democracy
The combination of parliamentary democracy and capitalism is a problem for the environment.
- Voters have to put their jobs first ahead of any environmental considerations.
- Capitalist owners have to resist environmental regulation to compete locally and globally with firms that may be able to avoid it.
- Wealthy people have lots of money to spend on media campaigns and to buy media ownership to promote their perspective and influence voters.
5. Government controls
Every type of government control advocated by reformists is politically difficult to implement in the framework of capitalism and democracy.
- Regulation of ordinary consumers is considered an invasion of the private time in which people can do what they like – unlike the time they have to spend at work doing what they are told.
- Regulation of economic activity is resisted by managers who have to compete locally and globally to retain shareholder confidence.
- Environmental taxes are regressive because they tax use of resources which affects the poor more than the rich – e.g. a petrol tax driving ordinary people off the roads while the rich can still afford petrol.
- Critics of reformism also believe that a large increase in taxes is needed to pay for changes to an environmental economy. This is resisted by capitalists and consumers alike.
- Incentives to improve the economic chances of sustainable technology have to come out of taxes.
- Environmental policing costs money but has to go with every policy to monitor and control the actions of companies.
6. Benefits to the economy
Critics of reformism believe that it is not true that environmental reforms will benefit the economy.
- It is true that energy efficiency is cheaper than spending money on energy but that is only the start of changes that we have to make.
- New environmental industries and jobs are part of a package that reduces economic activity and jobs as a whole. This is because environmental reforms make all kinds of economic activity more expensive. For example the cost of energy has to go up if we replace coal fired power plants with wind energy and solar panels. So, for example, the energy costs of making a house go up, so people can afford less square metres of housing, so there are fewer jobs in construction. These dampening effects on the economy outweigh the economic benefits of new jobs in environmental infrastructure.
- The bottom line is that putting in new environmental infrastructure diverts resources from the production of consumer goods. Yet the new environmental infrastructure just puts the same economic services in place that we already had. In so far as the ordinary person and the economy are concerned it does not increase “the standard of living” as people usually define it. For example, a wind farm can replace a coal fired power plant but there is no more electricity generated.
- Critics believe that reformists greatly underestimate the costs of environmental technologies. For example Trainer says that solar panels to supply a house with an average Australian electricity supply would cost $408,000!
Radical Restructuring Alternatives
Critics of reformism have a number of alternative models of how to run society that they think would be more compatible with environmental goals. I will mention three versions. All depend on a decisive overthrow of the political and economic power of the capitalist class and a very different economic structure coming out of that. They also share a commitment to negative economic growth in rich countries, very low energy use, international equity in wealth distribution, and a restructuring of human settlements. Again, Trainer is a good example of this approach.
1. The Mixed Economy Model
The idea behind this is that the virtues of three different kinds of economic structure can be mixed to create the ideal economic and political climate for a sustainable society. Trainer's book The Conserver Society supports this model.
Private firms are allowed to operate with government support and in the context of a government direction of the economy as a whole.
There is a large government sector in which people are employed in public services and environmental reconstruction.
A much larger part of people's lives than at present is spent in voluntary leisure and community activities. People who do not have paid employment in the other sectors are guaranteed an adequate income and may choose to do community work if they desire.
2. The Socialism with Democracy Model
This is like the soviet system in that all major property in the means of production (factories, farms, mines etc.) is owned by the state, but it is different in that this is organised democratically. This is the model promoted by organisations such as the Socialist Alliance, or Green Left Weekly. There are three elements.
§ State ownership of the means of production
§ Democratic control of the state's economic planning through electoral processes
§ Local participatory control of the implementation of state decisions by the people working in particular industrial sites.
3. The Anarchist or Gift Economy Model
All production of goods and services is voluntary. Clubs and associations organise their production so as to give their products to the community or they organise their production to service their own needs. In either case, the tools and instruments of production are also gifts from other clubs of producers. People's access to goods and services does not come through monetary payment but as a result of gifts. This is the model promoted by anarchists. In contradiction to the other two models there is:
§ No money
§ No paid work
§ No state. In other words there is no one institution with the legitimate right to tell people what they have to do or the power to force them to do so.