Climate change is inextricably linked to our economics. It is fuelled by our decisions, what we buy, what we value, how we price and how we construct meaning. But, do we need to move beyond capitalism in our solution to climate change? Or do we risk throwing out a highly innovative baby with the bathwater? At HowTheLightGetsIn Hay 2023, Rebecca Henderson, Troy Vettese and Helen Czerski debate where the true solution to climate change will be found.

Climate change is the greatest existential threat humanity has ever faced. Not solely for its scope and its complexity, but more fundamentally for its connection to the internal workings of our dominant economic paradigm. That of Capitalism. The world’s largest corporations emit 71% of greenhouse gas emissions, and all human activity is intimately connected to the value they provide. However, Capitalism has overcome its previous existential crises. From the original Dutch explorers inventing shareholder capitalism to fund the Dutch East India Company to expand their empire, to agricultural innovation overcoming Malthusian malaise, and consumerism defeating the Soviet challenge. Why would climate change prove intractable when compared to these capitalist victories? This question being the basis of HowTheLightGetsIn 2023’s debate Capitalism and the Climate.

The debate centred on a remark by Mark Carney, the former governor of the Bank of England and current UN climate envoy that net zero is the ‘greatest commercial opportunity of our time’. Is climate change a technical problem with technical solutions? That the right assemblage of regulations, checks, incentives and prohibitions could mitigate. Or is climate change both a necessary result, and an intractable crisis, for a decentralised system that fetishises growth, individualism, and competition to the abandonment of all other social strata?

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Net zero is the ‘greatest commercial opportunity of our time’.

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To answer this question, Harvard Business School professor and author of Sustainable Capitalism on a World on Fire’s Rebecca Henderson debated Helen Czerski, noted Earth systems scientist and physicist of the everyday and Troy Vetesse, economic historian and author of Half Earth Socialism. The debate was hosted by Linda Yueh, noted Oxford Economist and renowned author of several economics books.

The debate opened with the central question, ‘Is there a necessary connection between capitalism and climate change’. Rebecca Henderson opened the debate with an emphatic yes, but that capitalism alone has the dynamism to get us out of this crisis. The current form of capitalism, with its relentless exploitation of externalities and pursuit of profit as an end in itself, are what has gotten us into this mess. Instead, a reformed capitalism, one with strict regulations, a politics that is not captured by capital and a multivariate value system beyond pure profit can be the spur to the innovation needed to overcome this crisis.

Troy Vetesse disagreed and instead argued that while it is unlikely that capitalism will solve the carbon emissions problem, this is only one of nine planetary boundaries that must be operated within to prevent climate collapse. The competitive logic of capitalist thought is incompatible with any limit on growth, and as a result, economic planning is required.

Helen Czerski then described how economists ask the wrong question regarding climate change. She posits two basic rules about the planet. That most of our energy flows from the sun and out of our atmosphere, and that this planet of atoms is all we’ve got. Therefore, recycling has to form a major part of the answer to the climate crisis and infinite growth of anything is impossible, let alone the whole economy. Secondly, net zero is not the solution, zero should be the solution. Thinking in terms of ‘net’, be it through carbon capture and sequestration or just planting a load of trees, provides the theoretical justification for further fossil fuel expansion and growth, without considering if those ‘net’ solutions are at all feasible.

Helen finished off her opening pitch by criticising the fractal nature of capitalist competition and innovation. Electric cars are touted as a key technology in a net zero transition, but every brand has a different charger. This lack of standardisation is supposedly fuelled competitive advantages in efficiency, but it just results in everyone needing a bunch of superfluous adapters and chargers and all the energy and materials required to make them. Yes, innovation can reduce energy wastage in charging a car, but when left unchecked the corporate incentive is to make everything as onerous as possible to drive competitive advantage. The lack of electric car standardisation is emblematic of the deliberate differentiation that arises from capitalist competition and in turn the superfluous production that arises from it. After all, why do we have to fight to get Apple to change the port on the iPhone to USB-C?

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The competitive logic of capitalist thought is incompatible with any limit on growth

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While our panellists uniformly place the blame for climate change at the foot of capitalism, will capitalism form part of the solution? To this, Rebecca answered with a heavily qualified yes. While we need radical changes, and even utters the surprising word ‘socialism’ in her answer, there are aspects of capitalism that are vital for tackling this crisis. If there was radical equality, a job guarantee and uniform access to the necessities of life, alongside a strict regulatory framework and economic democracy, there would be sufficient breathing room for small, dynamic companies to compete within incentives that mitigate climate change. However, Rebecca rejected calls for a Marxist revolution, citing the monopolisation of power under a Leninist vanguard state as antithetical to the social justice necessary for a climate transition. Instead ‘let’s do Denmark at scale’ where individuals own the means of production within regulations is her answer.

Troy retorts that the Capitalism’s need to grow make it incompatible with climate mitigation. And that the necessary regulations to reduce emissions would fundamentally break the profitability of most companies. Instead Troy proposes a more planned economy, albeit not a Soviet planned economy but one led by citizen’s committees in a decentralised fashion. Current global capitalism facilitates the unimpeded movement of capital away from threats of regulation and therefore enables a race to the bottom of worker’s standards, environmental exploitation, and economic equity. Private enterprises with free movement will therefore pollute up to whatever the global price floor is. Planning, with socially owned means of production, is necessary to prevent capital flight and to consider more than pure profit in the allocation of capital.

Helen disagreed with both of them, the problem isn’t necessarily ownership, but the culture that drives it. Our response to capitalism is intersectional, but within a decentralised network of capitalists without a central authority this complexity allows for blame shifting across and within supply chains. ‘It’s not my fault I polluted, if I didn’t my competitors would have and I’d be less competitive’ is an easy response to individual poor practice. Instead, we need to change the rules of the road and the questions we are asking. Capitalists need to listen to what people and the planet needs and work from the ground up to find a solution, rather than imposing technical fixes from the top down.

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We would see that the wealth of the global north is not a function of the exuberance of capitalists, but a measure of the exploitation of the natural world.

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 But while Helen may have problematized the notion of ‘net zero’, is it a goal corporations can achieve? Troy disagrees and points to the litany of empty promises from climate conferences of Kyoto to Paris as proof. This is not a function of corporate malfeasance, but inability. To this Helen agrees and points to the widespread externalising of environmental costs as corporations exploiting nature as a tap of resources flowing into the factory and a sink of costs at the end of production. Rebecca in turn argued that consumers need to pressure corporations to clean up their act. Just as people need to vote for sustainability, they need to buy it too. With the right regulations creating a minimum standard and transparency, people’s choices can do the rest. However, this is met with great scepticism from the panellists, both from the perspective that the economic power of large corporations has the power to manufacture consent for the current paradigm, but also that individual action is based on unrealistic epistemic claims around information asymmetry and long-term thinking that may inform economic models but that are divorced from reality.

We then retured to our central claim, is net zero ‘the greatest commercial opportunity’ or is this a misnomer? For Helen, framing climate change as a commercial opportunity implies a capitalist logic that misses the point. We need to ask how to operate within the biophysical boundaries of the planet and ultimately reinject humility into our economics. Looking to the natural sciences should be a key source of economic inspiration. The natural cycles of our environment should be mirrored in the centrality of recycling and circularity of the macroeconomy. Troy, similarly criticises the framing of this question. While there may well be commercial opportunities in green bonds and sustainable finance currently, this is still a function of the underreporting of the costs of environmental harm. Were the costs of production that are borne by nature be costed then many commercially viable sectors would go bankrupt overnight. And thus we would see that the wealth of the global north is not a function of the exuberance of capitalists, but a measure of the exploitation of the natural world.

The final word goes to Rebecca, who broadly agrees that net zero should not be solely viewed as a financial opportunity, but nonetheless argues that a brighter future is possible. Some companies understand the scope of the problem, and they must be the standard bearer for a new capitalism. But this will require radical change. Not solely economic, but also cultural. A net zero target is meaningless in a world dominated by a growth fetish where your worth is determined by the goods you buy and we are led by capitalists who focus on profit above all else. Instead, we have the solutions to solve these problems. The technologies exist and the will is there. While our panellists may disagree that net zero is the ‘greatest commercial opportunity’, climate change could be the impetus to design the greatest social reprioritisation of our time.