By Roar Bjonnes
Introduction
This article looks at the development of green economics over the past decades and analyzes its various forms, including green economics, sustainable development, and green capitalism and concludes that none of these offers comprehensive system change and a viable solution to our current economic and environmental problems. Instead, the author argues, we need a new economic system beyond capitalism, one that can structurally replace it. The article introduces some of the main thinkers within the alternative economic movement over the past decades, from Karl Polanyi (1944) to Kate Raworth (2017), from E. F. Schumacher (1971) to P. R. Sarkar (1992) and presents a succinct review of their ideas. The article concludes that the main visions for an after-capitalism economy have already been articulated and may harbor in a new era of post-capitalist, sustainable economics.
The Birth of New Economic Thinking
The current resource and environmental crises—the dwindling of nonrenewable resources and human-made pollution causing global warming—are two of the most serious threats facing humanity today. Consequently, a renewed interest in solving these problems has resulted in the popularity of various green solutions.
While there are technical challenges in solving the environmental crisis, these challenges can be overcome with the right political will. The main problem is that the policies needed to implement changes are generally contradictory to short term profit motives, and thus classical or neo-classical capitalist economic thought largely ignore environmental problems all together.
Economic historian Karl Polanyi (1944) was perhaps the first to warn us of this issue. He asserted in his milestone book, The Great Transformation, that society needs to control the market economy, and not, as today, allow the capitalist market to control society. Polanyi further argued that the capitalist market is making labor, money, and nature into commodities and thus will create both negative ecological and social consequences through its unbridled market economy.
The first modern economist who specifically talked about this topic, and which now is at the heart of green political thinking, was the British economist E. F. Schumacher (1973). What Adam Smith (1776) did for classical economics and Karl Marx (1894) did for socialism, Schumacher did for green economics: he laid the foundation for further ideological thinking. In his path-breaking work, Small is Beautiful: A Study of Economics as if People Mattered, he presented a thorough critique of material capitalism’s main shortcomings and suggested a way to live on our planet of finite resources without going beyond the inherent boundaries of ecology.
Schumacher’s book introduced the term “natural capital,” (Hawken 2007) which brought Polanyi’s message into the arena of the environment. If we create an economy that abstracts itself from nature, they both argued, we will inevitably destroy this invaluable resource. All our current environmental problems have brought home the huge costs of the market economy’s faulty abstractions (Bjonnes and Hargreaves 2016). Without a sustainable environment, there can be no sustainable economy.
Green Capitalism
Schumacher did indeed understand this predicament. He pointed out that our ethical and philosophical worldviews have great political and economic consequences. He suggested two main reasons for our economic and environmental problems: 1) building an economy on the individual’s desire for wealth and 2) separating economics from ecology.
Directly or indirectly inspired and influenced by Schumacher’s Small is Beautiful worldview, American businessman turned environmental activist Paul Hawken wrote the book Natural Capitalism (2000); physicist and third-world farm activist Vandana Shiva developed a new vision for rural economies in India; architect William McDonough and chemist Michael Braungart (2002) have created revolutionary cradle-to-cradle industrial design innovations by copying the way nature works; the European green movement has inspired and founded political parties influencing governments all over the EU; third world bottom line economics have become a new standard by showing corporations that profit, people and planet need to be part of economic planning and accounting.
Capitalism’s Conflicting Value Systems
While there are many green parties and people with an interest in the environment, none of these parties have become a leading force in any major country. But even if that was to happen, it is unlikely there would be any radical change. Capitalism in its current corporate version cannot become truly “green.” The reason for this is that the driving force of the capitalist system is the profit incentive of individuals and companies. (Sarkar 1992)
The capitalist system is rigged so that people with the most money have the power. Those who fit the stereotype of “the rational profit maximizer;” those who put their financial interests above everything else; they are the ones who eventually achieve the most power in a market capitalist economy. It is in their favor to put short term financial interests above environmental interests. Consequently, within free market capitalism the political will toward ecologically sound industrial policies is rather weak. Trying to make capitalism greener and more sustainable is therefore not a practical strategy. Capitalism is by its very nature neither green, sustainable, nor cooperative. (Schumacher 1973, Polanyi 1944, Sarkar 1992)
The Profit Problem
Green politicians urge us to build upon the best of the market economy, but all capitalist reform strategies, from Keynes to neo-liberalism, from the welfare system to the greens, have one thing in common: they are attempts at circumventing, denying, or glossing over the systemic shortcomings of growth-capitalism’s basic principles. As history has shown, this only gives the multinational corporations more time to continue with their green-washed propaganda—pretending to be green and socially responsible (Rogers 2013). Similarly, taxing the corporations only makes them work even harder to find tax loopholes or tax havens to hide their profits. (Sarkar 1992)
Building on the ideas of Marx and Polanyi, Immanuel Wallerstein (1974) developed the “modern world-system” in which he argues that the world is dominated by a capitalist core, in systemic economic and political relation to peripheral and semi-peripheral world areas. Hence, as the capitalist core produces more goods wrapped in plastic, the peripheral and semi-peripheral areas of the economy—the developing world—supplies the labor and the raw materials. As the core produces more goods for an ever-growing populace hungry for more material things, resources are depleted, pollution increases, and global warming heats up. Profit is the engine that evolves the market but only as long as there is a periphery that can supply cheap labor and natural resources. Meanwhile, a growing environmental and economic crisis looms on the global horizon.
Green Capitalism: An Inherent Contradiction
Since the publication of Schumacher’s green classic Small is Beautiful, the world has not become any more sustainable or greener, however. Despite the popularity of everything green, the corporations are ahead of the game and finding new loopholes to pollute and to pay less tax to maximize profit. The concept of green capitalism is thus a contradiction, and it is therefore unlikely its vision can develop a truly sustainable economy or save us from the environmental and economic crises we are in. (Bjonnes and Hargreaves 2016)
It does not seem that any current economic theory by itself holds the solution to the complex problems confronting us. A return to the economics before the 1980s when higher taxes, better distribution of resources, and less conspicuous consumption (Veblen 1953) were common, could certainly be helpful, but would it be enough?
At best green capitalism is an attempt to reduce the impact of environmental degradation within the constraints of the free market system. At worst, it sidesteps many inherent obstacles to real sustainability and thus, in the long run, will only increase the fundamental problems we are already facing. (Bjonnes and Hargreaves 2016) We cannot simply shop our way out of this predicament by producing more green products. (Mackinnon 2021)
As Polanyi (1944) and Schumacher (1973) pointed out long ago, the failure of the green movement today lies largely in its unwillingness to look beyond the current consumption- and profit-oriented economy and culture for political, economic, and environmental solutions. Therefore, it’s time to look for solutions beyond green capitalism. (Bjonnes and Hargreaves 2012)
After Capitalism: Toward a More Regenerative and Equitable Economy
Since Polanyi (1944) presented his prophetic vision about capitalist economics, there have been numerous alternative voices in his wake. A common thread among them is that the next economy will be more economically equitable and ecological, less focused on consumption, production, and GDP; more focused on progress as increased well-being, be rooted in a worldview where reality is an interconnected web rather than a machine to be manipulated, and where economic development and ecological balance are seen as intertwined goals. But how will this new, after-capitalism economy come about?
Scenario 1
The Green Capitalist Doughnut
Sustainable capitalism’s claim to fame is that green technology—electric cars, carbon sequestering, and solar panels—will save us from global warming. This is the argument favored by the UN’s stainable development goals, by the growing number of green parties as well as many leading green activist organizations. However, since the UN commission on sustainable development popularized that term in 1987, the world has not gotten any more sustainable, quite the opposite. In America, for example, resources are burned at a rate five times faster than they can regenerate. (Mackinnon 2021)
Prominent scientist Johan Rockstrom (2009) has presented nine planetary boundaries humanity must not cross for the planet to remain in ecological balance. These planetary boundaries are an integral part of Raworth’s doughnut economy and form the outer circle of the doughnut. (2017) By 2015, we had already crossed four of these boundaries: climate change, loss of biosphere integrity, land-system change, altered biogeochemical cycles (phosphorus and nitrogen). Today we are about to cross the remaining five.
Using Wallerstein’s model, which builds on the earlier thinking of Marx and Polanyi, it is evident that the capitalist market has only been marginally reformed by the green movement. Green capitalism may surely slow unsustainable growth of the core countries of the world, but given the slow speed so far, not nearly enough to alter global warming or economic inequality.
Seen from the perspective of countries in the semi-periphery and the periphery, they continue to supply the world’s raw material and cheap labor, including the rare metals and the cheap labor to fuel electric cars. Seen from Wallerstein’s world system approach (1974), we may witness a continued greening at the core of the world’s economies—in the US and Europe—while inequality, drought, sea level rise will keep plaguing the semi-periphery and periphery—the island nations, Africa, parts of India, China, South America, and the Middle East.
Green capitalism, as it has manifested itself in the core countries, has produced windmills and solar panels, but far from enough to fuel the world with alternative energy. Sustainable farming comprises only a small percentage of the food consumed today. As a result, most of the organic sugar sold at Amazon and Whole Foods is produced on rainforest land in Brazil, (Rogers 2013) and over 50 percent of the world’s electric cars are fueled by cobalt mined under terrible labor conditions in the Congo.
Such developments support Wallerstein’s argument that capitalism—whether green or not, is sustained by a profit-seeking core of corporations and nations. In the long run, the dichotomy between the core and the periphery is destructive to both the countries of the north and the south. The global predicament we are in today suggests that Wallerstein is right, both economically and environmentally.
The missing link is a viable macro-economic model to replace capitalism, which, as the father of modern economics, Adam Smith, (1776) claimed, is built on the premise that human self-interest and competition are the main drivers of economic growth. Green economists, such as Raworth (2017), acknowledge the inherent problems with Smith’s idea and favor cooperation, redistribution by design, universal basic income, and other means to soften the inequality caused by capitalism.
So, what does the future hold for the capitalist free market and its many green versions? Wallerstein argued that capitalism would collapse by itself because of its inner contradictions and be replaced by a socialist economy. But the communist economies have utterly failed in positively replacing capitalism, of course, and the softer versions of socialism, the social democracies of Denmark, Sweden, and Norway, while relatively equitable, have high carbon footprints and are far from sustainable. Can a different kind of socialist economy emerge to form the material foundation for the positive visions the green thinkers and activists espouse?
Scenario 2
The Prout Doughnut
If capitalism is based on Adam Smith’s notion of self-interest as the measurement of growth and progress, P. R. Sarkar’s economic philosophy is founded on combining self-interest with collective interest. To Sarkar, the metaphor for society is a group of individuals moving together. Hence, in his PROUT economy (Sarkar 1992), capitalism has a role but only on the local level of the economy—as small local industries, bakeries, shops, farms, and so on. That structural change, he claims, is key to curbing the excesses of capitalism.
This, then, is the economic consideration green economists have yet to clearly articulate: how to economically balance the dynamic relationship between self-interest and collective interest? Sarkar’s answer to that question is further developed in his three-tier economy—a dynamic balance between small private enterprises, cooperatives, and government-owned key industries. This restructuring of the economy is, to Sarkar, a better solution to limiting inequality and environmental destruction than a progressive tax as bestselling economist Thomas Piketty (2014) suggests.
Seen from Wallerstein’s perspective, what is emerging then is an economic system that can replace capitalism with a more socialist, yet green economy, creating economic and ecological balance from the core to the periphery. No longer does the core need to exploit the periphery for resources and cheap labor, because now all people, regions and nations are, in the light of doughnut economics, part of the inner doughnut where society and the economy thrives without overreaching Rockstrom’s natural boundaries.
We have all become part of a sustainable core. Hence, Sarkar’s concept of prama—dynamic equilibrium—where the limits of nonrenewable resources are acknowledged and balanced by the notion that progress is measured in wellbeing, not material growth. PROUT’s Doughnut is thus neither purely focused on no-growth (Hickel 2020), nor is it purely growth-oriented as in market capitalism. True progress for Sarkar is non-material, cultural, artistic, and spiritual. These elements of society have a low carbon footprint as they are high on the wellbeing-curve and low on the resource-curve.
Sarkar’s underlying philosophy is neo-humanism, where all beings, and even inanimate nature, have existential rights. Hence, his neo-magna carta: to give constitutional rights to nature and thus prevent by law the unbridled exploitation of natural resources.
Sarkar’s economic philosophy includes the notion of “cosmic ownership.” This concept, that everything belongs to everybody, is diametrically opposed to capitalism’s dictum of private property. Nature, or the commons, is therefore the collective property of all and will be stewarded with everyone’s best interest in mind, including, of course, nature’s own best interest. To be effective, this vision will require local, regional, and global enforcement and oversight.
With this new restructuring of economics, PROUT is neither purely capitalist nor socialist but creating a new integration of economics beyond both. In practical terms, international, national, and regional governmental bodies would enforce environmental laws to ensure the regenerative use of resources. The internet would be owned and run by governmental non-profits, not Google and Meta. Roads, collective transport, large airlines, key aspects of the energy industry, health care, and the educational system would be owned and run by governmental entities. Corporations would be owned by the workers and run as cooperatives, much like the Mondragon enterprises in Spain. Finally, small industries, shops, farms, and restaurants would operate as private, capitalist enterprises, thus by law unable to grow into exploitative, capitalist behemoths. (Bjonnes and Hargreaves 2012)
This three-tiered system of economics, Sarkar argued, would need to be enhanced by a decentralized economy, where local self-sufficiency and local ownership of the economy would be paramount. Over time, as core and periphery economies, nations and regions would become more balanced, Sarkar envisioned a planetary governing body—a UN without a security council of self-interested power brokers like today—to ensure that environmental, economic, and political laws are implemented and adhered to from the planetary to the local level.
Summary
With all the regenerative designs and plans available to us by green economists, the after-capitalism economy can emerge slowly, as it does today, but with rapidly increasing environmental and economic problems due to lukewarm support from corporate capitalism and its continued greenwashing practices. The second, and more hopeful scenario, can emerge combining elements of the above two scenarios, as well as through sudden economic structural changes, as Sarkar suggests. Either way, a new world is possible and could emerge combining high- and low-tech green solutions with a decentralized, cooperative economy preventing the economic collapse pointed out by Wallerstein and without overreaching the environmental limits exposed by Rockstrom. This could all be inspired by the tenacity of people’s movements led by activist intellectuals and ordinary citizens awakened by the looming crises and inspired by the economic vision of thinkers like Polanyi, Schumacher, Raworth, and Sarkar. As the saying goes: change happens slowly, then it comes all at once.
References
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Roar Bjonnes is a freelance writer and researcher and the author of two books on alternative economics, Growing a New Economy and The Principles of a Balanced Economy. Bjonnes is the cofounder of Systems Change Alliance, an organization using systems science to inspire and advocate economic and environmental change.
