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Economic System

Ecological concerns have prompted some reconsideration of economic and political principles.

Capitalism and Socialism

Many researchers have argued that a socialist economic system, rather than the prevailing capitalist system, would yield better environmental outcomes (for examples, see 1, 2, 3, 4, 5, 6, 7, 8). The common usage of the terms "capitalism" and "socialism" can be broad and imprecise. Following, we investigate one aspect of the relationship between economic system and environmental performance, namely economic freedom.

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The top 50 environmental performers, as indicated by the EPI 9, are arranged into five equally-sized quintile groups of countries by economic freedom 10. Results show correlation between economic freedom and environmental performance, but not causation.

The EPI is based on air quality, water and sanitation, climate change, biodiversity and habitat, and several other environmental metrics. Economic freedom is as defined on our Social Well-Being analysis; it refers to the ability of private actors to make free economic decisions. The 10 year gap is based on that policy changes now will have environmental impacts in the future.

Most studies confirm (e.g. 11, 12, 13, 14, 15) that environmental performance is associated with economic freedom, though some (e.g. 16) come to an opposite conclusion. Historically, communist countries have tended to have poor environmental records 17, 18, 19, 20, 21, though the presence of environmental parties within a democratic framework was found to help the environment 22.

See also our discussion of "extractivism", an element of the environmentalist critique of capitalism, in the context of mineral trade.

Economic Growth

Economic growth, as it manifests itself as the demand for more goods and services, is the main factor driving rising environmental impacts. Population growth and international trade are lesser factors driving impacts.

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The main objective of an SDA is to determine the factors that drive increase or decrease in environmental impacts. This study breaks down the total growth in material usage from 1990-2010 (+33 billion tons total, from 37 to 70 billion tons). The 78 billion tons for final demand, for example, mean that total material usage would have grown 78 billion tons if final demand grew as in reality and all other factors stayed the same. The -66 for material efficiency means that if material efficiency happened as in real life, and everything else stayed the same, total material usage would have gone down 66 billion tons. These figures are mathematical formalisms, as negative resource usage is clearly impossible. "Production recipe" refers to the structure, but not the size, of inputs into final goods. "Import structures" refers to material moving, via imports, from generally more to less efficient countries. Source: Plank et al. 23.

Similar results hold for global CO2 emissions 24.

Due to the importance of consumption growth in driving environmental impacts, several authors have called for an end or reversal to economic growth, known as degrowth (for example, see 25, 26, 27, 28, 29). See our analysis of well-being for the impact of growth of human well-being in particular.

Far Right Ecologism

Far right ecologism, known pejoratively as ecofascism, sits at the intersection of evironmental or ecological thinking and right wing political movements. Some (alleged) representatives of far right ecological thought include Garrett Hardin's Lifeboat Ethics 30, the Unabomber Manifesto 31, environmental opposition to immigration 32, some anxiety about "overpopulation" 33, and that disasters such as the COVID-19 pandemic are good for the Earth 34, among other views.

Impact Investing

Impact investing is a form of financial investing with social goals, such as environmental protection or labor standards. Today and in the foreseeable future, ESG (environmental, social and corporate governance) divestitures are too small to have a meaningful impact on investment decisions 35.

References

  1. Engel, J. "An Addiction to Capitalism: A Rhetorical Criticism of Mainstream Environmentalism". IdeaFest: Interdisciplinary Journal of Creative Works and Research from Humboldt State University 3(1):12. 2019. ↩

  2. Kallis, G., Bliss, S. "Post-environmentalism: origins and evolution of a strange idea". Journal of Political Ecology 26(1), pp. 466-485. August 2019. ↩

  3. Markiewicz M,. "Green Activism in the Trap of the Capitalocene. Neoliberal Environmentalism as a Privilege". Anthropos? (28 Elitarne), pp. 102-17. 2019. ↩

  4. Skeikh, S. "Decolonising Environmentalism". In: Re-framing Environmentalism. Birkbeck, University of London, United Kingdom. 2017. ↩

  5. Splash, C. "Environmentalism and Democracy in the Age of Nationalism and Corporate Capitalism". Environmental Values 26(4), pp. 403-412. August 2017. ↩

  6. Stoner, A. "Things are Getting Worse on Our Way to Catastrophe: Neoliberal Environmentalism, Repressive Desublimation, and the Autonomous Ecoconsumer". Critical Sociology. September 2020. ↩

  7. Vasan, S. "Ecological Crisis and the Logic of Capital". Sociological Bulletin 67(3). 2018. ↩

  8. Vergara-Camus, L. "Capitalism, Democracy, and the Degrowth Horizon". Capitalism Nature Socialism 30(2), pp. 217-233. April 2019. ↩

  9. Wendling, Z. A., Emerson, J. W., de Sherbinin, A., Esty, D. C., et al. "Environmental Performance Index". New Haven, CT: Yale Center for Environmental Law & Policy. 2020. ↩

  10. Miller, T., Holmes, K., Kim, A., Markheim, D., Roberts, C., Walsh, C. "2010 Index of Economic Freedom". The Heritage Foundation, Wall Street Journal. 2010. ↩

  11. Hartmann, J., Uhlenbruck, K. "National institutional antecedents to corporate environmental performance". Journal of World Business 50(4), pp. 729-741. October 2015. ↩

  12. Kerret, D., Shvartzvald, R. "Explaining Differences in the Environmental Performance of Countries: A Comparative Study". Environmental Science & Technology 46(22), pp. 12329-12336. October 2012. ↩

  13. Roberts, J., Olson, R. "How Economic Freedom Promotes Better Health Care, Education, and Environmental Quality". The Heritage Foundation, The Center for International Trade and Economics. September 2013. ↩

  14. Scruggs, L. "Institutions and Environmental Performance in Seventeen Western Democracies". British Journal of Political Science 29(1), pp. 1-31. 1999. ↩

  15. Wood, J., Herzog, I. "Economic Freedom and Air Quality". Fraser Institute, Vancouver, Canada. April 2014. ↩

  16. Özler, Ş., Obach, K. "Capitalism, State Economic Policy and Ecological Footprint: An International Comparative Analysis". Global Environmental Politics 9(1), pp. 79-108. February 2009. ↩

  17. DiLorenzo, T. "Why Socialism Causes Pollution". Foundation for Economic Education. March 1992. ↩

  18. Hill, P. "Environmental Problems under Socialism". Cato Institute. Fall 1992. ↩

  19. Stroup, R. "Economic Freedom and Environmental Quality". Proceedings, federal reserve bank of dallas, pp. 73-90. 2003. ↩

  20. Tupy, M. "There's nothing green about socialism". CapX. December 2017. ↩

  21. Zitelmann, R. "'System Change Not Climate Change': Capitalism And Environmental Destruction". Forbes Magazine. July 2020. ↩

  22. Jahn, D. "Environmental performance and policy regimes: Explaining variations in 18 OECD-countries". Policy Sciences 31, pp. 107-131. June 1998. ↩

  23. Plank, B., Eisenmenger, N., Schaffartzik, A., Wiedenhofer, D. "International Trade Drives Global Resource Use: A Structural Decomposition Analysis of Raw Material Consumption from 1990−2010". Environmental Science & Technology 52(7), pp. 4190-4198. March 2018. ↩

  24. Wang, H., Su, B. "A Multi-region Structural Decomposition Analysis of Global CO 2 Emission Intensity". Ecological Economics 142, pp. 163-176. December 2017. ↩

  25. Escobar, A. "Degrowth, postdevelopment, and transitions: a preliminary conversation". Sustainability Science 10, pp. 451-462. April 2015. ↩

  26. Fournier, V. "Escaping from the economy: the politics of degrowth". International Journal of Sociology and Social Policy. October 2008. ↩

  27. Kallis, G. "In defence of degrowth". Ecological Economics 70(5), pp. 873-880. March 2011. ↩

  28. Raworth, K. Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist. ISBN-13 : 978-1603586740. March 2017. ↩

  29. Schneider, F., Kallis, G., Martinez-Alier, J. "Crisis or opportunity? Economic degrowth for social equity and ecological sustainability. Introduction to this special issue". Journal of Cleaner Production 18(6), pp. 511-518. April 2010. ↩

  30. Hardin, G. "Lifeboat Ethics: the Case Against Helping the Poor". Psychology Today 10, pp. 38-43. September 1974. ↩

  31. Kaczynski, T. The Unabomber Manifesto: Industrial Society and Its Future. WingSpan Classics, ISBN-13: 978-1595948151. 1995 (book published November 2008). ↩

  32. Neumayer, E. "The environment: One more reason to keep immigrants out?". Ecological Economics 59(2), pp. 204-207. September 2006. ↩

  33. Dyett, J., Thomas, C. "Overpopulation Discourse: Patriarchy, Racism, and the Specter of Ecofascism". Global Development and Technology 18>(1-2). January 2019. ↩

  34. Newton, D. "The Dark Side of Environmentalism: Ecofascism and COVID-19". Office Of Sustainability – Student Blog, University of San Francisco. April 2020. ↩

  35. Berk, J. "The Impact of Impact Investing". Stanford University Graduate School of Business Research Paper. September 2021. ↩