A shorter version of this interview was published at Truthout.
Can we have economic growth while confronting climate change? In this interview, radical economist Robin Hahnel argues that ecological sustainability is perfectly compatible with increases in economic well-being. While we must drastically reduce the physical matter used and discharged within the global economy (“throughput”), we can simultaneously improve life for most people. Fighting for an ecologically sustainable form of growth must be central to the work of the climate justice movement.
Can we have economic growth while still drastically reducing net greenhouse gas (GHG) emissions? Many environmentalists answer with a definitive No, arguing that we must limit economic growth or even undergo de-growth. On the other hand, many economists argue that it’s possible to “decouple” growth and emissions, fomenting “green growth.” Who’s right?
With few exceptions economists were asleep at the throttle and completely oblivious to the fact that our economic train was barreling toward environmental disaster. So we owe a huge “thank you” to environmentalists for ringing the alarm bell and warning us that the kind of economic growth we have been pursuing will not only continue to damage the environment in myriad ways, it will trigger irreversible, cataclysmic climate change within a few decades if greenhouse gas emissions are not reduced by 90% over the next thirty years.
However, those who point out that it is perfectly possible for economic wellbeing per capita to grow indefinitely while protecting the environment and preventing climate change are correct. Yes. Green growth is possible. And when spokespeople for the steady-state and de-growth movements deny that green growth is possible, when they say we must reconcile ourselves to stagnant or even declining living standards to avoid environmental disaster, they are wrong, and do the environmental movement great harm.
What cannot continue to grow indefinitely is throughput. Ecological economists define throughput as physical inputs from the natural environment (usually thought of as raw materials) used as inputs in production processes such as iron ore and top soil; as well as physical outputs of production (usually thought of as waste or pollution) such as airborne particulate matter and greenhouse gases released back into the natural environment where they are absorbed in natural “sinks.” Throughput must be measured in some appropriate physical units such as tons of iron ore, cubic meters of top soil, pounds of particulate matter, and cubic tons of carbon dioxide.
On the other hand, what economists define as economic growth is not the same as growth of throughput. When economists refer to economic growth they mean growth of GDP, the value of the final goods and services produced during a year. As a “value” variable GDP is measured in constant dollars to account for inflation. While the growth of real GDP is commonly associated with growth of economic wellbeing, of course growth of real GDP fails to represent growth of economic wellbeing for a host of reasons that are well known (1). Nonetheless, what economists mean by economic growth is the growth of economic wellbeing per capita, assuming it could be measured properly, not the growth of economic throughput. And there is no reason that economic wellbeing cannot grow even as throughput remains constant, or decreases. In the literature this is called decoupling, which means separating the growth of the value of what we produce from the quantity of throughput we use to produce it.
Where critics are correct is to point out that business as usual economic growth has failed to decouple. In fact, business as usual growth has us on a suicidal trajectory! But that does not mean that a different kind of growth—growth that increased throughput efficiency at the same rate that it increased labor productivity, and therefore put no more strain on the environment—is impossible. And that is what decoupling means: Increasing throughput efficiency as much as we increase labor productivity. Because if we do we will have completely “decoupled” growth in the value of what we produce from any increase in throughput used (2). Moreover, there is plenty of evidence that decoupling is possible. We are doing it right now for greenhouse gas throughput. Of course we have to reduce GHG throughput much faster still to avoid cataclysmic climate change. But anyone who argues that decoupling is impossible is wrong on both theoretical and empirical grounds.
The name of the game is to increase the rate at which we decouple growth of economic wellbeing from growth of throughput. Yes, we must also change how we achieve economic wellbeing. We must substitute more leisure for less material consumption. And we must change the composition of our material consumption, substituting less throughput-intensive goods and services for more throughput-intensive goods and services. But make no mistake about it. We need to decouple increases in economic wellbeing from throughput BIG TIME. The more we decouple the more economic wellbeing can increase without further degrading the environment. Those who deny the possibility of decoupling are both wrong and detract us from the task at hand.
Worse still, they make it impossible to build a political coalition sufficiently numerous and powerful to prevent climate change. Why would lower classes in advanced economies support a movement that says their children cannot aspire to a higher standard of living? Why would any of the four billion people living in less developed economies who have yet to enjoy the benefits of economic development sign onto a movement that tells them they must give up any hope of enjoying those benefits? The answer is they won’t! The tragedy is our environmental movement does not have to preach this self-defeating sermon. Preventing climate change, and better protecting the environment in general, is perfectly compatible with increases in economic wellbeing.
And while I’m at it, let me point out what should also be obvious: Even if we had a global eco-socialist revolution tomorrow, even if we consigned capitalism to the dust bin of history, once and for all as it richly deserves; our eco-socialist economies would still have to decouple just as aggressively to prevent climate change and better protect the environment in other ways as well. The difference between an eco-socialist economy and a capitalist economy is that the former would provide institutional and ideological support for decoupling, while the latter erects institutional and ideological barriers to decoupling. But the amount of decoupling needed is the same in both cases.
Some argue that while ecologically sustainable growth is hypothetically possible, it is impossible within a capitalist system. Richard Harris, for instance, claims that green-growth advocates “assume that capitalism is sufficiently malleable that capitalist fundamentals can be ‘inverted’ such that corporations can, in one way or another, be induced to subordinate profit-making to ‘saving the Earth.’” He implies that the green-growth crowd is ultimately more concerned with preserving capitalism than with ecological sustainability.
Capitalism can become a lot more green than it has been to date—which is damn lucky since replacing capitalism with eco-socialism isn’t going to happen fast enough to prevent climate change. Capitalists pursue profits via the easiest route. Of course they are not going to save the Earth out of the goodness of their hearts. But there is no reason we cannot make the route to profits from extracting and burning fossil fuels more difficult. And there is no reason we cannot make the route to profits by producing renewable energy and retrofitting buildings to conserve energy much more lucrative. There are many ways to intervene in markets to change results, and we will have to use all of them over the next decades because the kind of green new deal we need is going to have to be launched while economies are still very much capitalist.
Yes, there are many green capitalists who are more concerned with preserving capitalism than preventing climate change. Actually, most of them don’t give a hoot about capitalism per se, they are simply interested in making a profit by producing renewable energy, making a profit by increasing energy conservation, etc. There are also socialists who are more concerned with replacing capitalism with socialism than preventing climate change. In other words, there are opportunists with “hidden agendas” on both sides! As in all successful political coalitions, the coalition needed to launch a green new deal will include opportunists of many stripes. Since we have a mammoth political task ahead of us, we will need a massive coalition. This means we should welcome them all!
What would a “green new deal” look like under capitalism? And are there any precedents for that kind of massive shift in economic priorities?
Replacing fossil fuels with renewables, transforming not only transportation but industry and agriculture as well to be much more energy efficient, and rebuilding our entire built infrastructure to conserve energy will be an immense, historic undertaking. What is needed if we are to avoid unacceptable climate change is the greatest technological “reboot” in economic history, transforming what we should think of as Fossil-fuel-estan into Renew-conserve-estan. This is the only way to avoid literally broiling ourselves to death at some point in the century ahead, and I might add, the only way to re-employ the tens of millions who lost their jobs in the Great Recession and the hundred million young people who will need jobs over the next two decades.
What does a Green New Deal consist of? A massive green fiscal stimulus, a huge government intervention in the credit system to redirect investment away from asset bubbles and environmentally destructive luxury goods for the wealthy into renewables and energy conservation, renewable energy standards for utilities, auto performance standards, energy efficiency building codes, carbon taxes, emission caps, tradable emission permits, good old fashioned regulation, and much more. The precedent is the massive shift of economic priorities the US economy went through between 1939 and 1942. Just as we responded to the menace of global fascism by shifting over 50% of production from consumption goods to war materials, we need a similar response to the equally dangerous menace of cataclysmic climate change.
Robert Pollin and collaborators at the Political Economy Research Institute have fleshed out the details of what a Green New Deal would look like not only for the United States, but also for many other parts of the world economy. See Green Growth: A US Program and Global Green Growth: Clean Energy, Investment and Jobs. A major finding is how little it would cost over the next several decades for the world to become free of fossil fuels. In short, Pollin and his collaborators demonstrate that the barriers to preventing climate change are political, not technological.
From the perspective of the climate justice movement (CJM), what are the concrete implications of the debate about growth?
The Climate Justice Movement has already made two great strategic mistakes. It can ill-afford a third by allying itself with de-growth forces.
At COP 21 in Paris every country announced its emission reduction pledge [Intended Nationally Determined Contribution, INDC]. The CJM had the opportunity to launch a major international campaign explaining which pledges were consistent with a country’s responsibilities (for creating the problem) and capabilities (for making contributions toward solving the problem.) Before the Paris meetings equity researchers had reached a broad consensus for how to judge proposals, and evaluations were readily available. See for example the Climate Equity Calculator at www.ecoequity.org. What these evaluations showed was that the pledges of more developed countries in most cases fell far short of their fair share, while the pledges from less developed countries were consistent with their fair shares in most cases. The CJM should have made support for countries making fair pledges, and criticism of countries whose pledges fell short, its major priority in Paris. By not doing so the CJM failed to provide palpable support for country governments offering to do their fair share and mobilize public pressure against country governments falling short.
Earlier the CJM made the mistake of categorically rejecting any kind of international carbon trading as a scam and a “false solution.” This is most unfortunate and short-sighted because the only way to get more advanced countries to pay for their fair share of global reductions is to force them to buy reduction credits from less developed countries. No matter how “just” the idea of climate reparations may be, there is no way wealthy countries are going to pay reparations. Wealthy countries have already reneged on much smaller pledges to provide financial and technological assistance to poorer countries. Only by making it in the self-interest of emitters in wealthy countries to purchase needed emission credits from poorer countries will climate change be averted fairly. Instead of embracing this opportunity the CJM denounced carbon trading in any form, refused to support simple ways to fix trading systems to make them effective and fair, and beat its chest demanding reparations to no avail (3).
If the CJM now embraces the de-growth movement they will further consign themselves to the dustbin of history. Because economic growth is necessary to improve the lives of most of the world’s population, a “de-growth” platform is suicidal when trying to build a mass movement to prevent climate change.
Some argue that given the vast wealth controlled by the richest 1% a massive redistribution of wealth could provide for everyone’s basic needs without more economic growth.
Soak the rich to eliminate poverty. Would it were so easy! Not only isn’t it easy to soak the rich, it is not true that we could eliminate poverty by redistributing income from the rich to the poor with no further economic growth. There are too many poor and too few rich.
It is true that this situation has changed somewhat over the past three decades. The major change is that the top 1% now have much more than they used to. So soaking the rich would put a bigger dent in world poverty than it would have back in the middle of the twentieth century when income distribution was less unequal than it is today. But it is not even true that everyone in the US today could be raised up into the lower middle class by soaking the rich in the US. And it is certainly not true that everyone’s basic needs could be met worldwide merely by redistributing income globally. In short, growth in average economic wellbeing is still necessary to meet everyone’s basic needs. Fortunately this is perfectly possible even as we quickly eliminate use of fossil fuels worldwide.
This is not an argument against soaking the rich. We should soak them for every penny we can to raise the living standards of the poor. But soaking the rich is not sufficient to eliminate poverty globally, so more economic growth is required as well. I might also point out that it is usually easier to distribute new wealth more equally than to transfer existing wealth from those with more to those with less. This is not a moral argument against wealth transfer, just a practical observation. Over the next 30 years more new wealth will be created in the form of new shares of stock, increases in property values in metropolitan areas, and most importantly, rights to emit GHGs into the upper atmosphere than the amount of wealth that exist today. A more productive approach to equalizing wealth distribution may well be to concentrate on who gets the new wealth, rather than trying to redistribute existing wealth.
To what extent does confronting the climate crisis require fundamental changes in the lifestyle and consumption of the average working person in the Global North?
What we consume will have to change. Where and how we live and work and transport ourselves will have to change. A middle-class standard of living will no longer consist of an energy-leaking home on a quarter-acre lot with a two-car garage in the suburbs and tens of thousands of commuting miles per year. We will live more compactly. We will share larger, superior open spaces than we have today. We will consume more public and fewer private goods. The environmental throughput intensity of our private consumption basket will be far less. And as people reach a new kind of middle-class standard of living they will take further increases in their labor productivity more as leisure and less as consumption. But there is no reason that economic wellbeing cannot increase for future generations in the Global North while adequately protecting the environment—even as citizens of the Global North accept their fair share of the responsibility for bearing the costs of a mammoth, global, technological makeover during the next half century. De-carbonization will require that we live differently, but we can all live far better—and that is the message the environmental movement needs to emphasize.
I’m thinking about the biggest greenhouse gas emitters by industry in the United States (and globally): power plants, industrial production, the transport system, and agriculture. It seems that the first two (power plants and industry) could be totally transformed to run on clean energy without negatively affecting the amount of electricity of value produced. For the third, shifting toward mass transit would mean a change of lifestyle for many working and middle-class people who are used to driving, though not necessarily a negative change. But cutting emissions from the last source—commercial agriculture—would seem to require a pretty drastic reorientation of most people’s meat-heavy diets. Even in much of the Global South, many working-class people eat meat daily.
According to the EPA GHG emissions by sector in the US in 2011 were: electric power 33%, transportation 28%, industry 20%, construction 11%, and agriculture 8%. The revolution in electricity is already underway as king coal is dead and the cost of wind and solar are plummeting. The big technological challenge in the electricity sector is to rebuild a more flexible and smarter grid. Most of us assumed that to reduce emissions in transportation cars would have to be largely replaced by public transportation and changes in urban planning so people did not have to move around as much because they could live, work, go to school, and shop mostly in their own neighborhoods. It now appears that electric cars will rule the roads in another decade—for better or worse. In essence, we are on pace to move much of the energy supply for transportation over to an electricity sector powered by renewables. Finally, it is probably the case that transforming much of industry to reduce emissions will be easier than reducing emissions in agriculture, as you suggest. But even if not a single one of us who eats meat now became a vegetarian we can get 92% of the way home. In short, vegetarianism may be a good thing. But if so it is primarily for health reasons and animal rights reasons, not because we can prevent climate change by not eating meat.
This is not an argument against major changes in our agricultural system to make it more sustainable and healthy. As part of a multiyear study of “Future Economy Initiatives,” Economics for Equity and the Environment commissioned two case studies about alternative agriculture in the US—one in Hardwick, VT, the other in the Pioneer Valley in Western MA. Those interested in a data-based evaluation of the benefits of alternative agriculture, the keys to success, as well as the obstacles alternative ag must overcome in the US can find the studies at www.futureecon.com.
What might sustainable economic growth under a socialist system look like?
Before addressing what eco-socialism will look like concretely, let me emphasize one point that seems to have escaped those on the left who argue that climate change can only be averted by replacing global capitalism with global eco-socialism, and therefore that all intermediate measures short of “system change” are “false solutions.” If all the countries in the world had eco-socialist economies they would still have to negotiate an international climate treaty. And it would still look like the treaty I have outlined that we need in today’s world (4). The governments of eco-socialist countries would still have to:
- Set a global cap on emissions consistent with what scientists tell us is necessary to keep average temperatures from rising more than 1.5 degrees Celsius.
- Distribute remaining emission rights fairly among countries, i.e. according to differential responsibility and capability.
- Allow countries to trade carbon credits with one another.
The only difference internationally would be that governments of eco-socialist countries would presumably be more willing to negotiate, sign, and live up to such a treaty.
Internally, national eco-socialist economies would have to engage in long-run development planning, 5-year investment planning, and annual participatory planning along the lines some of us have proposed in our model of a participatory economy (5). This is the only way to make sure that nature’s constraints are observed, damages from emissions are accounted for in decision making, and increases in throughput efficiency keep pace with increases in labor productivity.
Most self-identified socialists in the Global North seem to reject carbon markets unequivocally, as a scam devised by polluters to thwart real change. Social movements in the Global South—in Latin America for instance—seem to be divided on the issue. Opponents often cite the European Union’s Emissions Trading System as proof that carbon markets don’t cut net greenhouse gas emissions. What does the EU program’s failure mean, and are there contrary examples of more successful cap-and-trade programs?
The amount of ill-informed criticism of carbon markets, carbon trading, carbon offsets, etc. that the left has spewed out over the past two decades would fill an ocean. Two things drive this fury: First, nobody likes the idea of placing a price on nature and putting nature up for sale. In other words, rejection of carbon markets in any form is part of a justifiable disgust with the commercialization of life. Second, many—although by no means all on the left—understand that markets are part of the problem. The problem is not just private ownership of the means of production. Coordinating our interrelated economic activities through markets is also an integral part of the economics of competition and greed we find ourselves entangled in, and need to extract ourselves from (6). So people reason, if markets are part of the problem, how can a carbon market be part of the solution?
But beside massive ignorance regarding how carbon markets do and can work, here is what many leftists fail to understand: We live in a market system. And until we do not, the only way to change what happens is to intervene or regulate markets in one way or another. Do socialists denounce campaigns to raise the minimum wage on grounds that anything short of eliminating wage slavery altogether is a “false solution”? No. We recognize that until we can eliminate wage slavery a higher price for wage-slaves is better than a lower one. The same holds for affecting carbon emissions. Until we can replace the market system we need to intervene in the market system to reduce GHG emissions. Right now those who find it in their interests to abuse nature by releasing GHGs into the atmosphere do so without paying a cent—which is why too many megatons have been, and are being, emitted. In a market system one way to reduce emissions is to force emitters to pay for the damage they cause by charging them a tax per unit of emissions. Another way is to cap total emissions and require emitters to purchase permits for whatever they emit. In both cases we are selling off rights to abuse nature. Sorry about that, but until we replace the market system there is no alternative except to allow businesses to abuse nature free of charge. In any case, the effects are essentially the same for both the tax and cap-and-trade policy, although a tax does not create a new market while a cap-and-trade program does. My first choice for a tool to reduce emissions domestically is generally a carbon tax, in part because it does not create a new market. However, political viability and local conditions often make some other policy tool or combination of tools more effective, and CJM activists are often counterproductive when they denounce use of anything, other than some policy they favor without even really understanding it, on a priori grounds.
However, the situation is different when we consider international policy. And this is the second thing CJM activists fail to understand. Many of them are willing to support a carbon tax but denounce an international carbon market. They reason taxing polluters is good, but markets are bad. But here is the irony. There is no way an international carbon tax would be fair to countries with lesser responsibility and capability. An international carbon tax would require less responsible and capable countries to pay the same price to prevent climate change as countries that are more responsible and capable (7). On the other hand, if caps on national emissions are set fairly, and if emission credits can be bought and sold in an international carbon market, more responsible and capable countries would be forced to pay for their fair share of preventing climate change and less responsible and capable countries would pay only what is fair for them to pay. In short, CJM activists should oppose proposals for an international carbon tax because it would not be fair, and should support proposals for a global cap-and-trade policy where national emission rights are set according to differential responsibility and capability. Instead, they have more often than not done just the opposite.
The EU Emission Trading System has been disappointing. The reason is simple. Far too many permits were issued, which is the equivalent of setting a pollution tax so low it has very little effect. The Clean Development Mechanism that was part of the Kyoto Protocol was badly designed, although it was not nearly the failure CJM critics made it out to be, and did not fail for the reasons they argued (8). AB [Assembly Bill] 32 in California has been quite successful, and now Quebec and Ontario have joined California’s trading system. RGGI [the Regional Greenhouse Gas Initiative] in the Northeast has also been effective. In short, when well designed, these programs work. When poorly designed they don’t. But what will definitely not work is refusing to support well-designed interventions, denouncing them as “false solutions,” and waiting for global capitalism to be replaced by global eco-socialism.
You’ve written about the importance of reducing working hours and increasing leisure as part of tackling the ecological crisis. Why is that so important?
I do think fighting to change people’s habits concerning leisure vs. consumption is far more important than trying to convince people to become vegetarians, at least from the perspective of climate change. But the person who has written most knowledgably about consumerism is Juliet Schor, not me. I think she makes an excellent argument, and many are now listening to her. The argument is essentially this: Once people reach a certain level of material consumption, more consumption quickly reaches diminishing returns as regards generating more happiness, or wellbeing. There is more and more evidence that this is the case. This is not an argument against continuing to strive to increase labor productivity. Instead it is an argument for taking increases in labor productivity as greater leisure instead of more material consumption. Of course if an increase in labor productivity leads to fewer hours worked instead of more goods produced, the environment is also better off because environmental throughput will not rise. In short, increasing leisure can be a win-win for people and the environment.
However, I hasten to add that we do need to increase consumption for those who are still poor in advanced economies, and the vast majority in less developed economies who have yet to benefit from economic development. When basic needs go unmet more leisure is no substitute.
At a time when climate scientists deliver terrifying warnings almost daily, do you see any promising examples of popular organizing around climate?
Yes, the warnings are indeed more dire every day. And we need to bear this in mind. However, I am more optimistic than I was a few years ago about our response. First and foremost, I believe we are winning the ideological battle, and denialists are becoming more isolated. Second, the costs of wind and solar are dropping far more quickly than I anticipated. And third, how much good policies implemented by national governments can accomplish is being demonstrated in places like Germany and China.
Even here in the US there has been a great deal of progress in some regions—California, and the Northeast in particular. My heroes are the organizers and NGOs who have learned how to patch together broad progressive coalitions to make real progress in the give-and-take world of local and state politics. Some local CJM activists and groups have played productive roles in those efforts. However, I regret to say I think the self-declared international climate justice movement has been pretty much a disaster to date. This is truly unfortunate because the CJM could play a very useful role internationally. Hopefully the CJM will learn from its mistakes, and study how others have been able to accomplish much more.
1. For a discussion of the many ways in which GDP fails to measure economic wellbeing, and an evaluation of various attempts to improve our ability to measure how much economic wellbeing is growing, see Robin Hahnel, Green Economics: Confronting the Ecological Crisis (Armonk, NY: M.E. Sharpe, 2011), Chapter 3, and “The Growth Imperative: Beyond Assuming Conclusions,” Review of Radical Political Economics 45, no. 1 (2013): 24-41.
2. See Robin Hahnel. “Environmental Sustainability in a Sraffa Framework,” Review of Radical Political Economics (forthcoming), for a rigorous demonstration that as long as the rate of growth of productivity rises no faster than the rate of growth of throughput efficiency, throughput will not increase even if hours worked remain the same and there is no shift in the composition of output substituting less throughput-intensive goods for more throughput-intensive goods.
3. See Robin Hahnel, “Left Clouds Over Climate Change Policy,” Review of Radical Political Economics 44, no. 2 (2012): 141-159, and http://newpol.org/content/
4. See Robin Hahnel, “Desperately Seeking Left Unity on Climate Change Policy,” Capitalism, Nature, Socialism 23, no. 4 (2012): 83-99.
5. For a description of how such a post-capitalist economy can work see Robin Hahnel, Of the People, By the People: The Case for a Participatory Economy (Oakland, CA: AK Press, 2012). For a rigorous analysis of how pollution would be treated in such an economy see Robin Hahnel, “Wanted: A Pollution Damage Revealing Mechanism,” Review of Radical Political Economics (forthcoming).
6. See Robin Hahnel, “Against the Market Economy: Advice to Venezuelan Friends,” Monthly Review 59, no. 8 (2008).
7. Only if an international agency collected the international carbon tax and redistributed it back to countries based on differential responsibility and capability could an international carbon tax be fair. But no country is going to let an international agency collect a tax from its residents and businesses. Moreover, ask yourself if you can imagine the US government sending a big chunk of a carbon tax it collected from Americans to China, for example. Because this is what would have to happen for an international carbon tax to be fair.
8. See Hahnel, “Left Clouds Over Climate Change Policy.”
Robin Hahnel is Professor Emeritus at American University in Washington DC, Research Affiliate at Portland State University, Visiting Professor at Lewis and Clark College, and Co-Director of Economics for Equity and the Environment. He is also the author of, amongst other books, Green Economics: Confronting the Ecological Crisis (2011), Of the People, By the People: The Case for a Participatory Economy (2012), The ABCs of Political Economy (2014), and Alternatives to Capitalism: Proposals for a Democratic Economy (with Erik Olin Wright, 2016).
Kevin Young is an Assistant Professor of History at the University of Massachusetts Amherst.