Capitalism and Climate: Fossil Fuels, and the Earth, Will Burn Until the Revolution

 Wolfgang Streeck is frequently called on to bring some insight to whatever socioeconomic antics seem to be in play.  His primary background is in sociology, thus viewing economic turmoil in the context of the interaction with society in general.  This perspective produces a rather jaundiced view of the path down which neoliberal capitalism is taking us.  His views are summarized in a collection of essays in his book How Will Capitalism End?: Essays on a Failing System. 

Streeck sees capitalism as a highly unstable construct that is incapable of self-regulation and must be continually forced to remodel itself as society and stakeholders, such as its needed workers, constrain its behaviors.  Economic crises would arise regularly except during world wars when matters were highly controlled by nations with their own crises to battle.  The slow relaxation of state control after World War II led to a few decades of relative stability but comes the 1970s and capitalism began to escape from state constraints by promoting neoliberal ideas.  Meanwhile, capitalists yearned once again to flex their muscles and once again make outrageous profits.

However, neoliberal capitalism is inconsistent with the welfare state democracies produced in the postwar era.  The continued accumulation of wealth in the hands of a very few, that is an intrinsic property of market capitalism, has supported a herd of oligarchs who use their money to influence political policies, and they use their philanthropy to recast society into a form with which they are more comfortable.  Streeck points out three trends that have been running in concert over several decades that suggest the problems with capitalism are long term and intrinsic.  He focuses on lower growth, increasing inequality, and ever larger levels of both public and private debt.  These are long-term global trends.  The three feed off each other.  For example, low growth justifies wage stagnation, but wage stagnation and the inability to accommodate more debt limit aggregate demand, leading to continuing low growth.  Extreme inequality and low demand lead the wealthy to seek essentially nonproductive ways to increase their wealth.  This is likely a source of the extreme risk taking that has permeated financial markets.  Wealth, with nowhere productive to go, bids up asset prices and leads to bubbles and crashes.

A society in which a few extremely wealthy people continue to make money while everyone else treads water and watches cannot go on forever.  Streeck considers a few situations which could drive a need to shed the current version of capitalism and create a better model.  Climate change is the driver of change of interest here.  Global warming has the potential to impose catastrophic changes on climate and the environments in which nations must exist.  This will require advanced planning and resource allocation on a broad scale.  Will states weakened by generations of neoliberal market-driven propaganda have the strength to counter the profit-driven oligarchs and their legions of lobbyists?  Can profit-driven capitalists be expected to come to their own rescue?  Streeck believes change will be difficult.

“Not just capital and its running dogs, but also their various oppositions lack a capacity to act collectively.  Just as capitalism’s movers and shakers do not know how to protect their society from decay, and in any case would lack the means to do so, their enemies, when it comes to the crunch, have to admit that they have no idea of how to replace neoliberal capitalism with something else….”

“Before capitalism will go to hell, then, it will for the foreseeable future hang in limbo, dead or about to die from an overdose of itself but still very much around, as nobody will have the power to move its decaying body out of the way.”

This has been a modest introduction to a detailed description of capitalism’s behavior in our era of climate change provided by the book Overshoot: How the World Surrendered to Climate Breakdown by Andreas Malm and Wim Carton.  These authors argue that by the time of the Paris Accords of 2015 the nations who could have made a difference in the carbon emission rates had already resigned themselves to the fact that they could not or would not take the steps necessary to meet the 1.5°C warming limit, tacitly believing somehow later it would be able to return to lower atmospheric carbon levels.  They refer to this as the “Overshoot” strategy and ask how this view came to arise.

“How was it that —despite all the reports, summits, pledges, agreements and, above all, observations and experiences of disasters striking harder and harder—the curves were still pointing in the wrong direction, the emissions were still growing, the expansion of fossil fuel infrastructure proceeding apace as if nothing was happening?  What spell had been cast on this world that just would not be broken.”

The short answer is simply, as Streek feared, states weakened by generations of neoliberal market-driven propaganda did not have the strength to counter the profit-driven oligarchs and their legions of lobbyists.  Malm and Carton provide an in-depth answer that is quite interesting in its details, but in the end, it is the nature of neoliberal capitalism to argue that the goal of any economic endeavor is to maximize profit.  One CEO after another will make the claim that “it is my duty, it is against the law for me to not maximize the profit of my investors.”  Perversely, as time went on it became more and more difficult and expensive to gain new fossil fuel sources while renewable sources such as solar and wind became much less expensive, it would be the economic nature of fossil fuel extraction that would make it more profitable than the development of free renewable solar and wind energy.

A few corporations tried to live in both worlds, developing renewable energy as well fossil fuel projects.  They soon discovered profits on investments of 4-8% on renewables, and 20-30% on fossil fuels.  The obvious result was to move all investments to the most profitable sector.  While scientists and much of the public believed that new fossil fuel sources must not be developed and as little of existing fossil fuel reserves as possible should be utilized if warming limits were to be met, fossil fuel corporations knew their best strategy was to continue on as if global warming did not exist.

“Not one more pipeline could be built if the world were to avert warming by more than 1.5°C.  But in 2022, there were 119 oil pipelines under development—planned, under construction, nearing completion—with a total length of 350,000 km, enough to encircle the globe at the equator more than eight times.  Not one more gas pipeline could be added: but in 2022, there were 477 in progress, with a combined length girdling this planet twenty-four times.  Over 300 liquified gas terminals were in the works.  Not one more coal mine or plant could burden the Earth, but underway were 432 new mines and 485 new plants.”

The more expensive the search for new fossil fuel resources, the more powerful the fossil fuel corporations became.  The bigger they became as a component of the economy, the bigger the disaster of limiting their activities would become.  Terminating their exploration and eliminating the value of their fuel reserves would pose existential threats to the companies themselves, to the technical and financial enterprises that serviced them, to the shareholders who invested in them, and to the industries that consumed their products.

The authors tell us it would be impossible to derive an accurate fiscal answer to the consequences of stranding the assets of the fossil fuel producers, but they would be great.

“One study found that the stranding of reserves would directly rob the producers of fossil fuels of between 13 and 17 trillion dollars, if temperatures were to halt at 1.8°C or 1.5°C.  By way of comparison, the great recession of 2009 reduced world GDP by a little more than 3 trillion.  Another study rather put the sum at a maximum of 4 trillion for 2°C, while yet another reached a whopping 185 trillion in a scenario with a fifty-fifty chance of staying below that limit.  In 2022, world GDP was 103 trillion.”

So, the strategy of the fossil fuel companies provides the world, and our leaders with the choice of maintaining the status quo or limiting a long-term climate disaster by causing an immediate economic and social disaster. The fossil fuel providers seem destined to keep winning.  Their plan to continue growing their activities matches the consequences of constraining them relative to the growing climate threat.

How does this end?  Malm and Carton conclude that there is no alternative to ending the status quo.  This would require a revolution in which a nation’s leaders take control of the assets and powers of the economic elites and do what is necessary to limit the climate threat. 

“When carbon budgets run out and temperature limits come into sight, a war of manoeuvre is the option that remains.  There has to be a lightning strike, a coup de main that knocks down enemy defences precisely because there is so little time left (if any).”

“As things now stand, the crisis will not wait for anything less than a blitz to strip elites of the assets they hold and defend.”

Streeck predicted that neoliberal capitalism would die from an overdose of itself.  Such a result could be coming.

 

You can learn a little about a lot of things or you can learn a lot about a very few things. Guess which is the most fun.

Source: http://letstalkbooksandpolitics.blogspot.com/2025/11/capitalism-and-climate-fossil-fuels-and.html