The world’s economies are totally unprepared for rapid climate change, rising social inequality and the end of cheap energy.
As access to cheap, plentiful energy dries up and the effects of climate change take hold, we are entering a new era of profound challenge ― and free market capitalism cannot dig us out. This is the conclusion of a report produced for the United Nations by Bios, an independent research institute based in Finland.
Signs of a world in turmoil are not hard to find. People are increasingly feeling the effects of rapid climate change. Cities boil in more than 120-degree heat, California burns and the Arctic thaws. Meanwhile, biodiversity loss is reaching terrifying levels, with animals going extinct at about 1,000 times the natural rate. In addition, as societies, we’re facing increased inequality, unemployment and soaring personal debt levels.
Flames roll over a hill toward homes near Lakeport, California, on Aug. 2. The effects of rapid climate change are being felt across the world.
Faced with these interconnected crises, says the report, our economies are woefully underprepared: “It can be safely said that no widely applicable economic models have been developed specifically for the upcoming era.”
The paper, commissioned to feed into the U.N’s 2019 Global Sustainable Development Report, looks specifically at the next 20 to 30 years as a key transition period during which the world must radically cut emissions and consumption to have a hope of stopping climate change.
Traditional ways of economic thinking have been based on the assumption we will continue to have access to cheap and plentiful sources of energy and materials, says the report, but the “era of cheap energy is coming to an end.”
The thrust of the authors’ argument is that, for the first time, economies are moving to sources of energy that are much less efficient ― meaning more and more effort is needed to get smaller amounts of energy. There are plenty of fossil fuels that can still be pulled from the ground but doing so would shoot through climate commitments and accelerate global warming. In addition, we have used up the planet’s capacity to handle the waste generated through all our material and energy use.
In other words, we are at an ecological crunch point and we don’t have the economic tools to deal with it.
“Trusting that the free market capitalist dynamics will get us there, that of course is not going to happen,” report co-author Paavo Järvensivu, an academic who specializes in economics and culture at Bios, says in a phone call with HuffPost. Economies that rely on the power of markets, notes the report, don’t even recognize the problem as they’re too focused on short-term profits to take account of longer-term issues like climate change and environmental destruction.
But Järvensivu is also keen not to fuel an argument about whether capitalism is dead.
“I think it’s harmful to think of capitalism as this one big lump, or capitalism as this kind of ‘either, or’ question: that we either have capitalism or something totally different,” Järvensivu says.
“The social and material need for this transformation [away from cheap energy and mass consumption] is so acute and societies have to go through a very dramatic shift over 20 to 30 years to get their emissions dramatically lower,” he adds, “so we are past this discussion of should we have capitalism or should we have something else.”