Naomi Klein’s This Changes Everything: Capitalism vs. the Climate
This is the first of at least two book reviews that I am planning to write about Naomi Klein’s important and occasionally frustrating, quite-large book (466 page) This Changes Everything: Capitalism vs. the Climate (which I will abbreviate as TCE). The reasons for more than one book review are several. TCE contains a number of important ideas and insights that are not tightly tied together in one argument. Naomi Klein happens to be one of the more politically-savvy and widely-read public intellectuals currently writing about social, political, and economic issues and TCE dives into a central complex of issues surrounding the gravest and most massive challenge we face as a species, the fight against human-caused climate change. Her previous work in Shock Doctrine and related articles, is “must-read” if you want to understand the predatory nature of neoliberal elites, a feature of our current age which she at least popularized, if not discovered. Naomi Klein is also a leading activist on this and other issues, including her work with 350.org and help in co-planning the People’s Climate March in September of this year. The book is varied in content and focus, therefore the plan to write more than one review of the book, rather than write one very long one.
As implied in the last sentence above, TCE is not tightly structured around her central argument, which shifts in its focus as well as in whom she is attempting to address. However what follows here is one, perhaps biased, overview of TCE’s main arguments.
Klein’s central thesis, pretty much stated in her title, is that the capitalist economic system, in particular minimally regulated neoliberal capitalism, and decisive climate action, as has not yet really been attempted, are incompatible. Furthermore, Klein sees a deeper cultural shift as the ultimate terrain for action; Klein views the fundamental evil to be overcome as the social and psychological system of “extractivism” , inclusive of both capitalism and state socialism, where humans have taken as a given a non-reciprocal relationship with nature, which we then view as a boundless source of need-satisfying objects. Klein traces the philosophical justifications for extractivism back to philosopher of science and scientist Francis Bacon in the 17th Century . She then sees the use of fossil fuels as the critical enabler of both the industrial revolution and the institution of capitalist and state socialist extractivism . Klein understands that, on a biological level, humans must extract from nature their livelihood but calls for a regenerative relationship with nature, regenerating non-human nature rather than simply taking from it or dumping toxins or chemicals into it without regard for their effects.
Despite the pervasive, long-term nature of the extractivist mindset and system, Klein recognizes that the climate crisis is an emergency, requiring emergency measures. In a rebuke to mainstream Big Green and the existing climate bureaucracy generated by the Kyoto Protocol cap and trade systems , Klein says that due to constraints of time as well as the nature of the climate challenge, a gradualistic approach to climate action is no longer feasible. Klein points out that emissions are still rising after 20 years of climate policy attempts. The policy of putting a gradually ascending price or gradually descending cap on carbon, where market forces would then create the new society under these constraints, are in Klein’s take too slow and not equitable enough. She calls the dominant carbon trading mechanism, aptly, a “jargon generator”, which obfuscates its own workings for the benefit of insiders and shields it from political pressure from outside.
Klein acknowledges that right-wing and denialist fears about the required climate actions leading to “left-wing” government intervention are generally correct, though entirely wrongheaded in their valuation of these actions . She believes, that climate policies and climate policy advocates that attempt to the reassure the Right and right-leaning orthodox economists about the central role of the market in climate action are fundamentally misguided. Klein makes arguments both directed at the more traditional Left that they should take on the climate challenge and also towards climate “centrists” that they need to embrace the issues and concerns of the Left. While in some parts of the book, Klein attempts to emphasize the continuity between the traditional Left and her vision of climate action, she underlines that the Left cannot continue to focus only on the distribution of goods and bads within societies, as has been its general focus. Klein criticizes “progressive extractivism”  as witnessed by the Chavez and Correa governments in Latin America, which have emphasized social equity while engaging in similar or higher levels of natural resource/fossil fuel extraction than their more right-wing predecessor governments.
Klein is somewhat vague in terms of both her vision of the new post-extractivist society as well as the path to it. Klein recognizes that aspects of the current society must expand, which she terms the “caring economy” while the “careless economy” must shrink . She also seems to support the green-left idealization of decentralization of control of the economy and polity for its own sake, while at the same time calling for more planning and the role of, what sounds like, a strong central government. Klein recognizes that climate action involves a large expansion of the public sector against the trend of fiscal austerity of the last several years throughout the developed world . Klein has some kind words for not particularly decentralized Scandinavian social democracies, though pauses to point out that Norway is simultaneously a major oil and gas extractor/exporter . Klein mentions worker-owned cooperatives as one model of a future, direct democratically controlled economy. She also sees a role for a strong government to ban certain activities of the fossil fuel industries, like fracking.
Klein spends a good portion of the latter part of her book, in a way that seemed to me to meander somewhat, in describing the various exploits of what she calls “Blockadia”, the various anti-fossil fuel movements that have arisen over the past decade or so. Some of these movements are rooted in or inspired by indigenous communities who resist the expansion of fossil fuel extraction projects. Klein chronicles the activities of some of these groups in a celebratory manner, without much in the way of political analysis. Klein understands that the transition to a post-fossil fuel society is not just going to emerge from heroic acts of blockading various fossil fuel infrastructure sites but she also holds out this existing movement as maybe one of the primary constituencies from which such a transition will emerge. In my opinion, she might have made clearer some of the limitations of the strategies of local groups that often are focused not on global warming per se but on the local effects of fossil fuel extraction, an extension of traditional environmentalism or the environmental justice movement. From my observation, these groups often lose the climate thread in their focus on the local damages of fossil fuel extraction that are specific to a particular method or place.
Klein’s cultural politics though are complex and perhaps a little bit contradictory. Klein realizes that she enjoys most of the benefits of the most privileged inhabitants of the metropolitan centers, including her treatments for infertility before the conception of her son, a mostly personal chapter in the book . There are parts of her book that praise a “small is beautiful” what might be called a mild “neo-primitivist” lifestyle or are certainly signaling that she is sympathetic to those who cherish or identify with the ideal of tribal or indigenous life. There is no single “take-away” that Klein offers in this area and she may be politicking by appealing to a range of constituencies rather than offering a cultural-political “program”.
While Blockadia currently seems to be very far from realizing such a vision, Klein believes that a broad-based mobilization should emerge that will lead to governments “planning and banning” to achieve carbon emissions reductions and eventually to achieve some form of post-extractivist society. Also not clear on the details of local vs. national control, Klein seems to think that additionally local movements would create decentralized solutions but ultimately her book is not explicit and programmatic in this area. While Klein’s recommendations are diverse and multifaceted as would befit “changing everything’, she does in the book mention that a World War II style mobilization of resources and spending is the major political-economic first step for the climate movement  . In this latter area, I share this advocacy position and have sketched out some of the economic and technological implications of such a mobilization over the past year or so. Additionally, in this Klein is in agreement with just-launched groups like The Climate Mobilization.
Klein’s Hard-Money Ideas, Typical of the Left
Climate action needs to happen very soon and as we live in a largely monetary economy, it will be via some form of payment that many types of projects to reduce emissions will take place. There will be non-monetary behaviors and transactions based on ethical commitments and other motivations but these will still take place in the midst of a society that runs on the balanced reciprocity of exchanges of goods and services for money. Therefore how climate action integrates economics and money is a critical element to its actual realization.
One of the more policy-oriented parts of TCE but highly problematic is Klein’s theory of money and how the climate and energy transition will be financed. A section of TCE  and in a supporting article in the Guardian titled “Climate change: How to make the big polluters really pay”, Klein outlines what I would term a “hard-money” view of financing climate action that is pretty explicitly also an imagined retribution against the fossil fuel industries for their multiple wrongdoings. Klein states that governments have exhausted their supply of money in bailing out banks, while the fossil fuel industries have accumulated money from their profitable businesses. Via fines or taxes on fossil-fuel company profits, as major polluters, Klein sketches out via her “polluter pays” program that governments can then finance the climate mobilization and large-scale investments that she recommends. In a seemingly self-contradictory manner, Klein recognizes that governments have the capacity to create money and acknowledges that it would theoretically be possible for governments to institute “quantitative easing for the people” but she explicitly states her preference for extracting money from fossil fuel companies as if to finance government expenditure.
Of course, this is well-meaning economic freestyling on a number of different levels made to serve Klein’s, all-too-typical Left and liberal, preference to reduce economics to a simple morality play of victimizers and victims. For one, even within the terms of Klein’s stated policy preferences, Klein skims over that what she is proposing is akin to a complicated carbon tax, though Klein seems to think that this will be simply a matter of “taking” the fossil fuel industries’ ill-gotten gains as punishment. Klein seems to believe that fossil fuel companies will still continue to exist and function to a degree, generating profit and revenues, to in turn supply the money for climate action. In reality, not only would there be legal complexities in terms of corporate accounting and governance associated with such government actions but also the economic behavior of these companies and the fossil fuel sector overall after such fining or taxing is not explained in TCE.
More importantly, Klein’s scenario for financing climate action ignores that currency-issuing governments (unfortunately not the Euro-Zone countries) continually create money by spending (and destroy it by taxing), so Klein’s dismissal of fiat currency as second-best to “polluter pays” is a spurious distinction, at least on the national level. If it were possible to follow Klein’s format for climate finance, a tax would be imposed on fossil fuel company profits and then government spending for climate action would occur via fiat as a separate action. Local or regional governments that must use taxes to finance themselves could in part use some version of Klein’s mechanism but this might also expose these more vulnerable jurisdictions to the flight of the industry to more favorable tax regimes in other jurisdictions or a “race to the bottom” by local governments or “tax arbitrage”.
The amount of government spending for currency-issuers like the US and Canadian federal governments is, in reality, not dependent in amount upon the amount of taxation. Finally, the profits of fossil fuel companies, though very large in terms of corporate profits ($271 billion in the US and Canada in 2013) constitute not a particularly large slice of total energy industry revenues (somewhere between 5-10% for established oil giants and it appears many fracking operations operate entirely in the red) and are by no means enough to fund large-scale spending in the manner of a war mobilization to fight climate change. Such a mobilization in the US might easily require in the range of a trillion dollars or more of additional government spending in some peak years. The price-tag in the trillions is no problem for currency-issuing governments given the risks and incalculable real and subsequently monetary costs of insufficient or no action. Klein is well-aware of many of the government actions required, and I agree with many of the ideas for spending she puts forward but has chosen an unfortunate and problematic way to “finance” them.
I agree with Klein that one aspect of government climate policy should make the fossil fuel business become a less profitable and therefore a less financially attractive business on the way to its downsizing and orderly liquidation. There are many ways to achieve this, including the removal of subsidies, divestment and thereby raising the cost of capital, as well as reducing demand for oil, via a variety of government and other programs and measures including taxation, all of which Klein does or, I imagine, would support. However, utilizing the idea that governments, especially national governments “need” or should prefer to “use” the money in fossil fuel company bank accounts does not ultimately serve these goals.
Klein’s aesthetic preference for the “Robin Hood” style tax/fine-then-spend scenario for public spending is familiar to readers of New Economic Perspectives as well as observers of the contemporary neoliberal-era “Left”. Almost the entire, supposedly progressive, public sphere, inclusive of the Democratic Party, labors under the illusion that taxation must precede spending and the amount of the latter is dependent upon the amount of the former. The debate on the sustainability of government spending on Social Security as well as other social programs is almost entirely contained within the paradigm that the federal government can run out of money, and is dependent on the amount of taxation collected. Left-leaning Democrats are particularly focused, at least in rhetoric, on the taxation of the wealthy and corporations as the gateway to subsequent social spending, and display ignorance of or dismiss the relevance of the actual fiat monetary operations. Modern Money Theory shows that for currency-issuers this imaginary “conservation of currency” via tax-then-spend violates stock-flow consistent macroeconomic accounting in a growing economy with private sector savings/profits. For some reason, the neoliberal-era Left concedes to the political Right the entitlement to relatively unrestricted use of fiat spending for their favored purposes. Spending without regard for tax revenue is “allowed” to bailout the private financial elite and military spending, while “good” liberals blindly play the game of overzealous adherence to “covering” spending by taxation for the more socially- and economically-useful government spending they tend to advocate. They are, alone, trying to win a virtue competition that their right-wing colleagues ignore, in this case with good reason. Bill Clinton is praised for running budget surpluses, one of the more economically damaging aspects of his Presidency, while George W. Bush is pilloried for one of the few bright spots of his awful Presidency, i.e. that he once again ran deficits.
I have encountered from other intellectuals of the Left similarly convoluted and homegrown hard-money beliefs that seem to be premised on the wealthy or corporations controlling and virtually owning the money system. In response to a blog post by a prominent left-wing academic and long-time political commentator in which he/she claimed that the US government was suffering from a dollar shortage and therefore diminished foreign influence, I sent him/her an explanatory email, including links demonstrating the fiat nature of US government spending, indicating that waning US international influence may have had other causes. The response I received did not engage with the content I had sent him but was simply a blithe reiteration of his own personal theory of money, tailored to the historical moment of his interest, that at the same time is a similar type of moralized monetary theory to that of Klein.
One of the problematic areas in terms of recognizing monetary realities for the Marxist, post-Marxist or liberal Left’s ideas about money is that economic and monetary theory is subordinated entirely to a moral vision, based on condemnation of existing inequalities. The wealthy are to feel guilty in the liberal version or in the Marxist are to be outright condemned, punished, and forcibly or legally transformed into the non-wealthy. An unfortunate side-effect of this vision that has some roots in Judeo-Christian ethics and the age of money based on coinage and precious metals, is that money is reified and its fiat dimension ignored or misunderstood. Money continues to be misunderstood as a finite collection of “money-things”, like gold coins, of which the wealthy, of course, possess more. Moral redemption in the liberal vision is then either the giving of charity or the payment of fines and higher taxes and in the Marxist or radical vision, the full-scale levelling of wealth differences and therefore the punishment of those who have become wealthy by exploiting or oppressing others. Klein and the aforementioned academic are holding fast to their view of money (and in case of the latter against proffered evidence) because they apparently have an attachment to a drama where the evil-doers will be punished monetarily with simultaneous rewards for the poor and working people, very much like the Robin Hood story.
Of course, this theory is in part rooted in ideas from Marx, that politics and the State are part of a “superstructure” that rests upon the more fundamental economic class relations between the working classes and the ruling/ownership classes, the “base”. Some non-Marxist Left, Marxist and neo-Marxist writers often tailor their theories of money to fit the notion that the capitalist class is pulling all the strings within government so they then elide that into a homespun “hard money” theory in which virtually “all the money” is owned by various corporations/members of the capitalist elite. This rather a-historical view, despite pretensions to historicism, ignores the roles of states in co-creating capitalism or at least many of it institutions, including fiat money. Furthermore, one can better describe the operations of even a highly unequal plutocracy-corporatocracy like our current one, i.e. during the financial meltdown of 2008, if one also accepts that politics and government institutions are also economic institutions but formally independent of and different from capitalist enterprises and financial institutions.
[Of course, Marxists will point out that Marx was sensitive to the problem of reification and commodity fetishism and in fact “wrote the book” about it 150 years ago. That Marx invented this terminology however does not mean that its role has been fully integrated into either off-the-cuff or more doctrinaire economic and political analyses of the Left. Furthermore, it might be argued that Marx’s inadequate theory of money and his even more inadequate theory of politics and the State have prevented those who follow in his footsteps from fully understanding the abstractions involved in monetary systems. Reification and commodity fetishism remain the basis of much Marxist and non-Marxist left cultural criticism but are not understood as dangers or phenomena in Marxist or Marxian political-economic analysis.]
The Ethical Problem of “The Polluters”
Before proceeding to the political problems of hard-money thinking in facing global warming, Klein’s and the broader anti-fossil fuel movements’ contention that the fossil fuel companies are “the polluters” and, by implication, the end-users of fossil fuels are “non-polluters” sets up an untenable ethical basis from which to build the movement’s political position, a position that in this case must be grounded on some of the soundest ethical foundations imaginable. In other words, the naming of the producers and sellers of fossil fuels as “the polluters” without further modification, exonerates the buyers of those fuels and those who benefit from their use from any responsibility. This is not just Klein’s idea in her “polluter pays” format but is a direct expression of the attitudes of many in the anti-fossil fuel movements, including the tendency to date of 350.org, even though this might upon confrontation be “denied” or turned back on the questioners as their exoneration of the fossil fuel companies’ primary roles.
Klein, in a way that will be now familiar to readers of this book review, acknowledges a reality but then minimizes that reality. She points out in passing and implies that consumers and an “extractivist” attitude is widespread, especially in her accounts of how the island-nation of Nauru is undermining its own guano foundation and that “extractivist progressivism” is a problem. But Klein, in her central financing mechanism for climate action turns to a view that divides the world into polluters and, implicitly, innocent non-polluters. Earlier this year, I proposed an ethical framework that might have been useful to those grappling with these issues: I posit that there are approximately three levels of responsibility for catastrophic global warming, of which the group that Klein calls “the polluters” are in the group that I call “primarily responsible”. That said, the consumers of fossil fuels have a secondary degree of responsibility upon which they should feel ethically compelled to act at this point in history. Finally there is a very large group of people in the developing world who have a responsibility to choose or not choose a development path that does not depend on fossil fuels, though their responsibilities are less than the first two groups.
These ethical distinctions are not just a matter of abstract philosophical interest or the product of a commitment to an unrealistic moral perfectionism but feed directly into how one construes economic causality and therefore politics. Those with secondary responsibility for the fossil fuel economy are many of them consumers in the developed and rapidly developing world, who together with manufacturers of fossil-fuel-requiring machinery (like internal combustion vehicles), continue to generate or increase demand for fossil fuels. Economic history has shown that demand is in most cases one of the most powerful drivers of the business cycle and also provides the fossil fuel industries the business and the ethical justification for their very existence. The recognition that the business cycle is demand-driven is most often attributed to John Maynard Keynes and the revolution he inspired within economics but remains disputed by neoclassical economists out of a combination of ignorance or some degree of acceptance of the antiquated Say’s Law.
In the area of fossil fuels, it is not so much that people want the fuels per se but they want the services enabled by fossil fuel use. Demand for them is also a function of a massive mechanical and physical infrastructure that requires both large amounts of supplemental energy and at the moment requires fossil energy or a combustible equivalent (for which biofuels are no likely or “green” substitute for fossil fuels). Each individual consumer in the developed and rapidly developing worlds is not substantially responsible for the continuing trajectory of global warming but neither are they without responsibility and, when organized together in political groups, not without influence.
Klein’s Hard-Money Fetishism is a Political Dead-End
Given that the financial operations of currency issuing governments are a focus among those who analyze economies with the help of Modern Money Theory like myself, some might interpret the above as nit-picking or smart-alec Besserwisserei (“knowing better” as a noun in German) based on seemingly arcane economic theoretical differences. However the political and therefore real-world consequences of Klein’s erroneous beliefs about money, transmitted to tens of thousands via her influence, are potentially catastrophic in their effect upon climate action as well as exceedingly dire in the fight against economic and social inequality. To hold only hard-money beliefs as climate activists is to almost certainly organize the defeat of rapid climate action, and, for that matter, the goals of other social movements for realizing the general public good that one might champion.
Besides being technically incorrect in terms of government financial operations and their capacity to adequately fund climate action, Klein’s hard-money views set up the anti-fossil fuel and anti-global warming movements to fail because her financing prescription perversely and in a financially imaginary manner, “deals in” the fossil fuel companies, their financial assets, and the legal status thereof, into the central mechanisms by which governments and peoples will start to free themselves from their fossil fuel addiction. Klein and I are in agreement that government financed public works will play a pivotal, though not an exclusive, role in the transition to a net-zero carbon society. It is not primarily via exacting retribution upon fossil fuel companies either financially or politically that such a non-fossil fuel dependent infrastructure for society will be built!
In this, Klein is reproducing or creating an economic model to justify the tendency of the leftward parts of the climate movement to conceive of climate action as largely various forms of opposition or non-violent resistance to the fossil fuel industries and, in actuality, the local dangers they present either via spills, non-GHG pollutant emissions, or explosions. There is a focus on “NO” to the fossil fuel industry and alarmingly many activists become, what I view as, distracted by, the details of local fossil fuel-related pollution and the global effects as well as the “obsoleting” of fossil fuels are shifted to the background. Activists and their political leaders become transfixed, hypnotized by that which they are opposing, which in addition means choosing a reactive rather than proactive political strategy.
The local anti-fossil fuel movement here in Northern California, in which I am active, has generally focused its politics on these local dangers and only in passing mentions the climate dangers associated with fossil fuel use. The movement, as in many other places, discusses how the fossil fuel industries extract, transport and process increasingly unconventional and “messier” fossil fuels but loses sight of the general fact that dependence on fossil fuels overall is the main problem of our societies. Much mental bandwidth is consumed in studying and casting scorn upon the various tactics and techniques of the fossil fuel industries, the industries of the past, while little attention is paid to the policies and technologies that might usher in the future. In the latter category, solar panels and renewable energy more generally are the main “placeholders” for what a climate solution might be, which is just scratching the surface of climate solutions. Some of the focus on local effects of the fossil fuel industry is justified by local movement activists as an effort to try to protect the most vulnerable or victimized people preferentially, while in other regards this is traditional environmental activism transposed to fossil fuel extraction techniques and their local, “dirty” pollution effects. Some have expressed to me the idea that their job is to convert the fossil fuel industry to clean technology, ignoring the role of public works by government and of “sunrise” clean-energy industries that already exist independent of the fossil fuel industry.
A combination of Klein’s idea that climate action will be financed by “polluter pays” and the predominant politics of the anti-fossil fuel movement to date would be, tragically, the climate movement, the shaper of humanity’s future, defining themselves by the fossil fuel industry’s finances and practices, not by either real macroeconomics or by the real technological and design features of a near-future, net-zero carbon society. Out of misguided notions about movement heroism and perhaps “dragon-slaying”, Klein’s finance mechanism limits government spending that should be limited only by the availability of real resources to meet the climate emergency and the most efficient and rapid way to defuse that emergency.
The notion of politically and economically “going through” the fossil fuel industries is entirely unrealistic and diverts the political energies of activists into a narrow channel that is of marginal importance to building the future. The whaling industry in the United States was not curtailed by anti-whaling activists throwing themselves in front of whaling ships but by the discovery of oil and the use of fossil fuels instead of whale oil for light. Though we are on a more rigid timeline than the decline of whaling in the US, the fossil fuel industry may be slowed by anti-fossil fuel activism but ultimately public and private investment in non-fossil fuel dependent technologies and infrastructure systems will be the resolution and also terminally weaken the economic and, eventually, political power of the fossil fuel industries. Anti-fossil fuel infrastructure activism, like against the Keystone XL pipeline is a good rallying point but it must be paired with an achievable exit strategy from fossil fuel dependence. Demand and supply must be addressed simultaneously in movement politics.
The cast of political characters who will determine the future does not include the fossil fuel industries or bear substantially the imprint of their influence upon technology, economics or social organization. The central motives for climate action, if one thinks it through, are ethical commitment to this and future generations, to the human community, and the desire for self-preservation. Those who feel and express these impulses can agitate most forcefully and effectively in the polities of the world and via their political representatives, the domain where ethical commitments and human continuity can be realized into some form of effective action and the building of public sector institutions to realize them, of which Klein seems to be fully in support. Non-human corporations, let alone fossil fuel corporations are not representatives of ethical commitment to the human community beyond what would support their current and near-future business practices and fiduciary duty to their shareholders. Neither do non-human fossil fuel companies share the impulse towards human self preservation for the same reasons. We already know, and it seems that Klein sort-of knows, that governments create money for the public purpose and are the ultimate arbiters of the distribution of liquidity in society beyond boom-and-bust surges and drains upon economic liquidity due to private bank lending. The national polities of the world and their currency issuing governments or government institutions have no need to base the amount and type of absolutely vital public climate investment upon fossil fuel industry finances.
Of course, the fossil fuel industries, their paid political representatives, and the “free-market” ideologues that oppose climate action for a combination of economic, personality and ideological reasons, will attempt to one degree or another to stand in the way and will probably need to be battled continually. Many governments can be considered petro-states, including the United States federal government and the degree to which those governments are petro-states, they must be thoroughly transformed into non-petro-states. But the fundamental vision and policy instruments to create a net-zero emissions society will not come from a political conflict that invites these political groups in on the ground floor, either as advisors or as compulsory opponents, against which we are always reacting. They can be best defeated if we start with realistic policy proposals to save ourselves and then they attempt to interfere with those proposals to keep us bound to the fuels that are wrecking a livable planet for humanity. Their role as representatives of “energy” or an “energy industry” must be removed in all future-oriented energy and climate policy and politics.