Sorry, Kyoto Signatories, Emissions Traders, Carbon Taxers, Homo Oeconomicus Won’t Save the Climate – Part 4

By Michael Hoexter

[Part I] [Part II] [Part III] [Part IV]

8.  Effective Climate Policy:  A Massive Commitment of Public and Private Resources

The long list above of features of an effective climate policy may fail the requirement that some would place on documents such as these that they be short and easily absorbed from a momentary scan of the page.  Perhaps at a future date, I or someone else will produce a shorter summary of what would go into effectively transforming the energy basis of society and maintaining and developing civilization beyond its current state.  However when the scale of the challenge is taken into account as well as the stakes involved, I believe the length of the mere sketch I have produced here is warranted.

Ultimately the argument that I would like to put to rest with this document is that climate policy should be “farmed out” to a largely amoral market, within which the motive force of socioeconomic change is simply the desire of market actors to maximize profits and minimize losses.  The construction of climate policy, contrary to the market-based view, requires engagement of the full range of human capabilities, including our ethical sense and our sense of belonging to a greater community.  Furthermore, an understanding of the role of government in monetary economies, still poorly understood and torn apart by enormous ideological shearing forces, is central to the success of any climate policy, a critical lapse in both the headlong rush in the 1990’s and thereafter into emissions trading or the slightly different carbon-tax/fee-only view of climate policy.  The yawning gap in the understanding of government in conventional neoclassical economics, the basis upon which climate change economics has been built to date, makes the transformation of the energy basis of society almost impossible, as, in reality, governments will need to take a leading role in shutting down the fossil fuel industries while organizing the building of a net-zero carbon alternative within a span of a one to three decades.

A large portion of the substance of an effective climate policy are the spending and budgeting decisions of governments with regard to numerous areas related to climate and energy as well as direct regulations in the same areas, budgeting decisions and regulations about which the various carbon pricing frameworks have almost nothing to say.  The substantial expansion of the public sector, of social supports organized or funded by government and partial leveling of vast disparities in income and wealth required by effective climate action seem to reinforce the contention of the Right that climate action is simply a coup attempt by the traditional Left to assert its vision of society in a new and unexpected guise.  It might be contended that climate policy to date has taken the tortured and ineffective shape that it has to reassure/contradict this fear of the Right regarding climate action.  Actually effective climate policy includes a large-scale reconfiguration of the fiscal policy of government and the macroeconomic accounting process that prioritizes and quantifies the mobilization of real resources by government spending.

However this largely unspoken political argument about the politically-acceptable shape of climate policy is at the moment conducted entirely within the erroneous premises and assumptions of neoliberalism: a “good” government is a small government that funds a small public sector and what results from this smaller government, it is assumed, is a prosperous economy.   Within this ideology, that small government can only affect climate by manipulating via the quasi-monetary policy of carbon pricing the behavior of  businesses and households. Even if we did not seek to operate within the appropriate carbon budget and transform the energy basis of our civilization, the neoliberal and right-wing conceptions of what would constitute a good government have under almost all circumstances not led to prosperity and freedom for the majority of a nation’s citizenry.  This conception of society and the economy has failed according to its own standards, let alone those of the monumental task of transforming societies to face the climate challenge.

As it turns out, we have learned from bitter experience, the neoliberal political and economic ideas of the political Right, now adopted by many “centrists” and in part shrouded in academic respectability by neoclassical economics, function primarily as an elaborate political and economic fraud promoted by knowing and unknowing agents.   The neoliberal ideology that is still dominant in many capitals of the world, has been a largely successful attempt to convince the plurality of the electorate to participate in their own immiseration and promotion of their own unfreedom for the apparent (short- and medium-term) benefit of the financial elite, the very wealthy and their political and ideological representatives.  Austerity, the current intensification of neoliberalism after the 2007-2008 crisis, is an effort to consolidate the political-economic position of these privileged groups after their embarrassing, monumental failure to lead society and the economy.  Austerity attempts to achieve the goal of distracting and further extracting economic rent from the public with talk of belt-tightening, undeserving workers, overcompensated pensioners, and overleveraged homeowners.  Meanwhile, in actuality both neoliberalism and its new austerian version, sequester the power and benefits of the apparatus of government and government finance for the benefit of the well-to-do and the incumbent political-economic elite at the expense of the vast majority and of the potential for effective climate action.

Saddest perhaps are those true believers in the market fundamentalist/neoliberal ideology who actually are convinced that the removal of government’s role is somehow beneficial for the economy and for individual freedom.  The ideals of a small government, “free trade”, and a “free” market, which are never in reality achieved nor should they be in many economic sectors, are held up by ideologues and some economists as a means to strip away those aspects of government that are beneficial to the broad majority of the public and beneficial to the medium- and long-term prospects of private businesses that deliver real goods and services.  A knee-jerk ideological rebellion against the insights of John Maynard Keynes regarding macroeconomics, neoliberalism is without substantive advice in managing the macroeconomy as well as in helping nations develop real industrial assets to produce real goods and services, the province of “industrial policy”, heretical to neoliberalism.

Unfortunately, these true believers in the fairy tales of free markets and minimal government live in enough of an echo chamber and have been given enough support by those millionaires and billionaires who cynically manipulate these true believers via this ideology, to insist on their free market ideology as the description of a palpable reality.  So convinced are these foot-soldiers of the plutocrats by the repetitions of free market mantras that they are willing to believe that climate scientists have created along with an imagined or actual political Left an elaborate hoax to convince the world to revert to something like Communism.  So blinded are they by ideology that they believe everything can be reduced to a political struggle that is part-imaginary and part-historical (the capitalism vs. Communism conflict of the 20th Century), that natural and physical systems cannot have a dynamic that inconveniently makes their ideology doubly irrelevant to the physical and social world as they actually exist.  The dynamics of the ecosphere in the Anthropocene create challenges for all political-economic schools of thought but none more than laissez faire, “free” market beliefs so coddled by most academic economists and by the vanity of wealthy patrons.

Effective climate policy cannot be formulated showing respect or consideration for the anti-science of “free market” or laissez faire economics within which Homo oeconomicus is assumed to rule.  The sensitivities of our emerging oligarchy and their propagandists, who have created an echo chamber in which the most sensible solutions are taboo or ridiculed, cannot be factored into the discussions of actually-effective climate action and policy.  There are decisions to be made and many choices, almost none of which are informed by the fantasy of unencumbered markets.

There are real political and economic dangers associated with the massive increase in the size of the public sector and the role of government in leading the transformation of the energy basis of our societies.  That the chance exists for government to become over-powerful or corrupt is not reason to trash the ecosphere for future generations or to tailor climate policy that almost completely “misses the boat” in terms of effectiveness.  The opponents of climate action or the naïve advocates of ineffective climate action would hold us back from actually-effective climate action because of the fixed idea that they subscribe to that government action is and will always be inefficient and tyrannical, so should be shunned and not discussed with as much scientific rigor as possible within the public sphere.

Ultimately vigilance, ongoing demands for transparency, and strengthening democratic institutions are critically important within the transition to a net zero carbon society.  But working within a model of the economy that does not realistically recognize and analyze the role of government will not yield effective oversight of government functions in either the current economy or one in which we are making our best effort to preserve the viability of the world for generations to come. The denial of the usefulness and centrality of the instrument of government has and will never enhance liberty for the majority of people.


(You can access a complete PDF of this multipart series here.)

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