There seems to be a problem with growth as it has been defined since 1979.
Not only has it raised capital’s advantages to income by labor, it has put more CO2 and more plastic waste in the planet’s ecosystem than in all previous human history combined. We are painfully realizing that we’re a threat to the subtle natural balances that make our existence possible.
Might it be that, in the midst of a global health crisis, we are starting to collectively understand that both man’s superiority to nature and the Chicago school of economics are both dangerous untruths?
In 2011, the Occupy Wall Street protests signaled the need for change. No doubt there are still many people out there who still think the movement was naïve or that their demands were something unrealistic. Yet, Occupy Wall Street now seems a prophecy whose time had not come.
The market hegemony did not break down. Humankind lacked the imagination to change a system where hundreds of millions of people labor every day and a few thousand people make capital decisions that drive or starve companies or entire continents. If it wouldn’t be like that – how would capital move? And so on. We didn’t figure it out.
It is true that companies and financial institutions are making serious effort to divert their activities towards more sustainability. No serious company is without a sustainability manager. But does it create market advantages? I don’t think so. The whole system needs to be flipped in order to make sustainability the core of business – the ecological bottom line.
By now, the accumulating emissions and waste are becoming such a problem that neither nature nor we can handle it. It is intimately connected with the notion of growth: capital markets demand growth and growth comes, until this day, emitting more of CO2 and generating more waste. It is the imperative of more – more stuff, more turnover, more profits – that’s, among other things, becoming too heavy a burden. The more has been devilishly cheap, externalities have not been included in the cost.
The moment a large company does not grow anymore, it starts slowly disintegrating. If the growth numbers were not so good, the capital market figures: ok, let’s pull the money out. This drives boards to making more or less radical decisions. No ecological, human or social cost is too high when the bottom line is on the line.
Money is responsible only to money, nothing else. If money can buy itself out of problems – and it can, with a bit of money – then why bother? The motivations are so sweetly in place.
Thus, we have swelling super-companies, fit for only money’s purpose and no more. The real success of the neoliberal model has not been in proclaiming the superiority of the markets. Its most fundamental success has been killing any seed of imagination as to what could also count in this world besides money.
There are 20 companies who account for a third of the global emissions. Sure, they account for our consumption and energy needs. Yet, they have also been the lobbyists for more fossil fuels, normalizing a highly wasteful economical model. They have not tolerated dissent; they have hindered ecological innovation in energy by obstructing information and buying up innovative competitors. For money’s sake.
The big polluters have now had their Black Wednesday . About 40 years too late. But better late than never, I guess.
Any effective change towards a more ecologically balanced economy will tackle the problem through the motivation. Through the flow of money.
This is what Occupy Wall Street said – then, it seemed too good to be true even to supporters. What has changed? What has changed is that we are now in an explosive situation – a moment where possible futures are too many to count or play out and we’re in a moment, like it or not, in which the future narrative of the world takes shape.
It is these kinds of explosive moments when we see the contradictions of the old system falling under their own weight that new ideas are forged. The problem is that, historically, this level on inequality combined with a technological revolution has had a boldly negative outcome. The persecution of minorities. A bloody revolution. A big war.
It is also true that war has been an economic equalizer. It has brought incredible devastation and death but its aftermath has also brought progressive policies that offer improved education, healthcare and social care for the many.
To avoid a cataclysm, if follows, is a question of imagination. Can we imagine a system that not only takes into account the market but also all ecological and social costs? A fair and competitive marketplace for all?
Just maybe, this time we might become progressive before the big war – although the effects of the climate crisis might amount to the devastation of one. The world needs a new organizational principle, a new balance. Whereas the market hegemony plays on the balance of supply and demand, this new post-capitalist system needs to take into account other balances: in the digital economy on the verge of environmental catastrophe, traditional supply and demand balance becomes distorted through the possession of data and a growing understanding that maybe we shouldn’t take all the resources nature has got… It will have to be more rule based – to balance out the algorithmic and exponential superpowers with the social and ecological costs.
The first pieces of this are being put in place. The European Green Deal is one example of a chance at it. Biden’s green investment and corporate taxing are another. They should work in unison to solve these two global problems at once: the devastation of the planet and the devastation of the people.
Central to this cooperation should be the concept of the true cost – the social and ecological cost of doing business. Some things have become incredibly cheap lately. A producer of waste has not had to think about what happens to it, just as the international corporation has evaded taxes to its incomes in a way that a small national firm cannot. It creates motivations in which the most shameless win.
These things should have signaled long ago that the marketplace is not fair. That it does not bring about prosperity for all but an unnatural advantage to the big players. But I get it: the heaviest stone in the universe is the human heart. If it doesn’t want it, nobody cannot lift it. To hell with the climate crisis – what does this have to do with the “real life” of board rooms?
The crisis of our time is happening slow enough and without big dramatic events – so far – that we are like the proverbial boiling frog.
Biden’s Federal Reserve has made a bold proposition: a corporate tax obligation on all corporate profits anywhere. Somehow, this time, it does not seem at all that this “will limit competitiveness” and so on. Should some of the profits be declared in discount tax havens, they’d have to compensate for that in the US. I think the EU should follow up on this. No corporate tax breaks inside the union. Even under the subsidiarity principle, almost all member states should be interested in this.
In the skills polarization job market, further taxing of capital can be necessary. Should the job markets play out in the extreme scenario – that there is a small class of highly skilled winners and a large masses of very low pay jobs – a capital growth versus wage growth capital tax could be introduced. If companies don’t pay their workers decently (yes, also Uber workers, not “partners”) then they’ll pay it to the state who then compensates for this. It should incentivize companies to treat their people right. It also restores competitiveness to those who already do.
In the same spirit, international emissions and waste taxes should be introduced and ruthlessly enforced. This means going to the sources and destinations of emissions and pollution. You are “carbon neutral” but your suppliers are anything but? Wham! You’re sending your plastic to a country where waste goes unregulated? Wham! All along the supply chain, proven harmful activities should be disincentivized. This needs a new kind of regulatory oversight and a new understanding of international business laws – a new legal definition of dominant entities in supply chains and job relations.
The start has been made with the extraordinarily swift G7 international capital tax system. Though it seems to have dangerous loopholes (e.g over the 10% profit margin to be taxed) that leave out some of today’s biggest companies, it’s an excellent start. But it is exactly this: a start. We need to figure out the changing world in so many new ways. We need to do that because the stakes are the highest, wherever you look.
First of three articles by Mihkel Kaevats, Estonia, Young Professional Advisor at United Europe and Advisor at the Estonian Ministry of Social Affairs. The other articles, “The Attention Economy: a threat to European values” and “The Green Transition and the European lifestyle” will be published in the next two weeks.