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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

reshaping capitalism « Previous | |Next »
February 9, 2012

The overarching theme of the 2012 World Economic Forum in Davos, which has just ended was The Great Transformation: Shaping New Models. Last week, in the run-up to the World Economic Forum Martin Wolf of the Financial Times launched an essay on “Seven ways to fix our system’s flaws”. Wolf argued that the system is already in crisis and requires a new direction and new wave of sustainable investment.

He lists problems with pro-cyclicality in financial markets as well as regulation, rising inequality across the world, the incentives to manipulate and loot under current corporate governance regimes, the need for taxation in order to redistribute, to invest, to employ and provide for (global) public goods. He also seeks to protect politics from being purchased by private interests by providing more direct public financing to political actors and parties.

The Great Transfomation refers to Karl Polanyi's book on rise of the market economy. Polanyi argued that the development of the modern state went hand in hand with the development of modern market economies and that these two changes were inexorably linked in history. His reasoning for this was that the powerful modern state was needed to push changes in social structure that allowed for a competitive capitalist economy, and that a capitalist economy required a strong state to mitigate its harsher effects.

For Polanyi, these changes implied the destruction of the basic social order that had existed throughout all earlier history, which is why he emphasized the greatness of the transformation.

A similar transformation today, given the urgency of the climate crisis, would be the shift to a low carbon economy in which there is a surge of economic growth through a transition to clean energy. This is a shift away from the western model of capitalism---neo-liberal capitalism that gives primacy to the market--- which assumes that nature is an infinite source of resources and an infinite sink for wastes, and that the whole economic growth machine would be powered by fossil fuels forever. It is a model that fosters the privatization of profits and the socialization of losses.

Standing in the way of this transformation are the fossil-fuel companies (the coal and oil industries) who defend their threatened interests with a campaign of heavily funded denialism, and record campaign contributions and their association with the libertarian think tanks in manufacturing doubt about science. In the US they have been able to keep at bay even the tamest efforts at reining in greenhouse carbon emissions.

Their disinformation campaign --climate change is natural not man made----has been very successful. The media accord the same weight to the "skeptics" (eg.,Christopher Monckton, Bob Carter) as it does to mainstream scientists. This is done in the name of journalistic balance---- different sides were given equal treatment---when the reality is that media cannot be bothered to inform themselves about the science through reviewing the literature. The media's construction of a raging scientific debate when there wasn't one indicates the negligence of the mainstream media. They were trading in illusions.

| Posted by Gary Sauer-Thompson at 4:16 PM | | Comments (3)


Global warming is happening much faster than the climate change scientists have judged and predicted from 1995 onwards.

Naomi Oreskes connects climate change denialism, the fossil fuel industry, and free market ideology in her Merchants of Doubt She showing how the ideology of free market fundamentalism (free markets, small governments and minimal regulation), aided by a too-compliant media, has skewed public understanding of some of the most pressing issues of our era.

As the science has gotten stronger the opposition has gotten stronger too. The scientists thought if they just explained it clearly and they just got politicians to understand what was at stake, then of course politicians would act. Yet the entire economy of the world rests on burning fossil fuels, so there’s going to be enormous opposition.

What is obscured is the underbelly of capitalism--that free markets have real and profound costs--the planet will get hotter.

"ideology of free market fundamentalism (free markets, small governments and minimal regulation)"

This ideology is so strong (a fundamentalism) that its adherents (eg., The IPA in Australia) cannot accept the empirical evidence of market failure: the demonstrable fact that human activities alter the environment in harmful ways that the free market could not correct.