The challenge of mounting an adequate response to climate change has to be understood within the context of the larger systemic crisis facing the United States. The 1972 Limits to Growth, published when environmental movements were forming in this country, emphatically explained that our economic system was incompatible in the long term with the health and productivity of our finite planet. As the ecological rift widens, we must recognize the incompatibility of three interconnected imperatives of the current system that both push us toward climate catastrophe and prevent meaningful action—the unrelenting pressure for economic growth, the outsized power of corporations, and the United States’ extractive approach to resource use.
The Growth Imperative
Constant growth, fundamental to the capitalist economy, drives climate change and environmental degradation. All capitalist businesses embrace a “grow or die” imperative, constantly pursuing rising sales to accumulate wealth (or profit maximization). Capitalism’s embedded growth imperative exploded when banks started creating money by expanding credit, and, therefore, increasing interest rates.1 That move forced companies to impress financial markets by showing a growing profit. Companies that couldn’t sustain internal growth started merging with or acquiring other companies to grow, in turn creating a small number of mega-corporations. No longer just optional, as neoclassical monetary theory held, growth in a 21st century financialized and globalized economy has become the norm.
Just as companies look to their balance sheets to ensure that profits are maximized, the United States uses the gross domestic product (GDP) to evaluate performance and to guide national policies—neither of which the GDP was originally designed to do.2 Gradually, the capitalist firm has become our economy’s core institution, and the country has doubled down on the growth imperative by making GDP the end-all indicator of our society’s “well-being.”
This obsession with growth as the ultimate solution to all of our societal problems—full employment, an end to poverty, better education, health nationwide, more muscle to solve environmental degradation, and so on—has led our economic and political leaders astray. Yes, the average yearly growth of 3 percent over the past 70 years has made us the world’s richest country,3 but economic growth at any cost has also made climate change spiral upward and American communities and civil liberties decay. In Pope Francis’ words: “[t]he exploitation of the planet has already exceeded acceptable limits and we still have not solved the problem of poverty.”4 Notwithstanding the voluminous evidence of growth’s shortcomings in promoting equitable prosperity society-wide, our government continues to undermine effective action to limit fossil fuel production, pursuing short-term economic “health” instead.
The environmental perils of unrestrained profit maximization by corporations are exacerbated by “shareholder primacy.” A prime example: Fossil fuel companies keep adding new reserves to their portfolios to “prove to their shareholders that they have fresh carbon reserves to exploit after they exhaust those currently in production.” 5 To keep the extractive machinery going, companies take on more new loans and investments, and any promises of future extraction that materialize amount to guarantees that more greenhouse gases will be released into the atmosphere.
For energy companies, this preoccupation with growth creates a dangerous bubble in the financial markets. Continuous expansion and the overestimation of fossil fuel reserves and infrastructure will backfire if their capacity and assets can’t be used—whether for environmental reasons, such as stronger regulations, or economic reasons, such as changed market conditions—and eventually become stranded, showing up as losses on ledger sheets.6 Imposing huge risks on the US economy and the companies themselves in the long run, the hyper-focus on short-term growth blinds our government and companies to the ripening possibility of the fossil fuel industry’s own demise.
The Corporate Power Imperative
Capitalist markets further racism, classism, and sexism by privileging those who have inherited access to capital and wealth.7 In a constant-growth society where bigger is always better, a self-selected elite of winners has been able to amass ever more power and wealth—a feedback loop that further magnifies inequality in the country. Remarkably, three individuals heading major American corporations now own more wealth than the bottom half of the country (160 million people) combined.8 The energy sector fits the trend. As Oxfam pointed out few years back, 88 billionaires with interests in fossil fuel activities made the Forbes 400 list in 2015 (against 54 in 2010) with the size of their combined fortunes expanding to over $300 billion (roughly a 50 percent increase since 2010).”9
By leveraging their economic status, corporations, executives, and shareholders—the ultimate wealth holders—have gained unchecked power over politics in our increasingly winner-take-all system. Our government’s reliance on companies to promote growth to raise the GDP has left them beholden to shareholder interests. With government’s blessing, then, corporations push for profit-maximization, often sacrificing workers’ wages, communities’ well-being, and environmental protections.
As documented in such exposés as Naomi Klein’s This Changes Everything, some large corporations and their beneficiaries leverage their political power in diverse ways and have built a rewarding political machine of campaign contributions, post-retirement jobs for politicians, and other perks to politicians willing to champion their interests.10 Energy companies have used this machine particularly adeptly. The sheer magnitude of lobbying for oil and gas—$126 million in 2017 alone11—and the continuous revolving door for fossil fuel executives and government officials have shaped the American climate debate to corporations’ advantage across the political aisles.
In 2010, the Supreme Court further opened the influence floodgates by allowing an unlimited influx of money from corporations to support political campaigns.12 Early in the 2016 presidential election campaign, corporate and individual donations from the finance and energy sectors comprised more than half of candidates’ funding.13 For the 2018 election cycle, oil and gas corporations, electric utilities, natural gas pipelines and coal mining companies had already shelled out close to $33 million in the first seven months of the year.14
Even such government-regulated monopolies as energy utilities, in charge of energy generation and distribution, have mustered their consolidated power to “regulate [their] regulators” and rigged the market to favor fossil fuels. In Virginia, the privately owned utility Dominion Energy notoriously limits meaningful action on climate change or environmental protection statewide, mainly through strategic philanthropic donations and political contributions.15 Now the state’s biggest corporate donor to political campaigns,16 Dominion Energy has been allowed to dump coal ash into Black neighborhoods,17 strip residents’ backyards for unnecessary natural gas pipelines,18 and stint on help for those in energy poverty.19
This powerful apparatus of permissive activities, combined with well-organized, capital-intensive, and highly-valuable assets, enable energy companies to protect their business model at all costs to the public and to thrive in an era where eliminating fossil fuel use is paramount. Our political oligarchy has no interest in going after climate culprits. Instead, the US government protects energy corporations by focusing, at most, on demand-side reduction, putting the onus on consumers. This piecemeal strategy can never undo the systemic problems of the energy sector and our political economy that are costing people and the planet so much.
The Extractivism Imperative
The imperative of extractivism is deeply rooted in US colonial history. For centuries, rich white settlers extracted vital resources from indigenous land and free labor from African slaves, decimating communities in the process. Today, true to capitalist form, corporations continue to extract as much of a resource as they can get away with at the lowest cost and greatest profit, particularly in places without the political or economic capital to object. The many consequences of the extraction ethos include below-living wages, unpaid care and housework, overexploited environments, and even the manipulation of democracy for corporate gain.
Extractivism is strikingly evident within the energy sector: Companies simply don’t pay the true costs of fossil fuel extraction, including ill health and climate change. Typically, dirty power plants, fracking waste sites, and gas pipelines are located in underprivileged communities. Slightly more than one in three people in the US live near a coal plant; of those, 39 percent are people of color.20 Especially egregious are discriminatory energy projects that seek to profit from indigenous peoples’ land resources and well-being, thus furthering tribes’ economic alienation. Think here of Line 3 in Minnesota and the Dakota Access pipeline fights. The Couchiching First Nation’s Tara Houska, the national campaign director for Honor the Earth, describes the impetus for the Standing Rock movement:
“It’s always this extractive project contaminated our drinking water; this industry is preventing us from exercising our rights to hunt and fish; our traditional foods are dying; our children are sick; our elders are sick; we have cancer clusters. Standing Rock has become for Indigenous people this moment where they’re all standing together because they all know what happens when something like this is allowed to happen to them and to their communities.”21
All forms of extractivism reduce resources to simple commodities—there to be conquered and having no value apart from their potential to be transformed in wealth. People and places without the potential to transform their resources into valuable commodities are not able to participate in society, and are reduced to throwaway objects. Deeply immoral, treating people and communities as worthless objects is also profoundly impractical in today’s carbon-constrained society since we need all people and places to stop greenhouse gas emissions and build the 21st century political economy we so desperately need.
Our last and best opportunity for climate action: a new political economy
Growth mania, unchecked corporate license, and extractivism together ensure that our current energy economy works for the elite but not for the well-being of all people, all places, and the planet. Within the system we have, we will never be able to push the needle far or fast enough toward a renewable energy system. Experience now shows that without system change entrenched extractive energy corporations can’t be coaxed into public-minded and pro-environment behavior except as public relations gimmicks. Experience also counsels that imperatives running this deep can’t be wished or reformed away. Instead, headway against the root causes of our climate-change and societal problems requires transforming the system before temperature rises breach critical thresholds.
- 1. Frances Coppola, “How Bank Lending Really Creates Money, and Why the Money Magic Tree,” Forbes, October 21, 2017, accessed August 16, 2018, https://www.forbes.com/sites/francescoppola/2017/10/31/how-bank-lending-really-creates-money-and-why-the-magic-money-tree-is-not-cost-free/#3a3ff9563073; David Schawel, “Why Loan Growth is Important and What it Says about Inflation and Interest Rates,” CFA Institute, July 23, 2013, accessed August 16, 2018, https://blogs.cfainstitute.org/investor/2013/07/23/why-loan-growth-is-important-and-what-it-says-about-inflation-and-interest-rates/.
- 2. Dirk Philipsen, The Little Big Number: How GDP Came to Rule the World and What to Do About It (Princeton: Princeton University Press, 2015).
- 3. “United States GDP Annual Growth Rate,” Trading Economics, accessed July 25, 2018, https://tradingeconomics.com/united-states/gdp-growth-annual.
- 4. Pope Francis, Laudato Si (2015).
- 5. Naomi Klein, This Changes Everything: Capitalism vs. The Climate (New York, NY: Simon & Schuster, 2014).
- 6. For more on stranded assets and the carbon bubble see “Unburnable Carbon—Are the world’s financial markets carrying a carbon bubble?”, Carbon Tracker Initiative, 2011.
- 7. Thomas Piketty, Capitalism in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014); William Darity, Jr., et al., “What We Get Wrong about Closing the Racial Wealth Gap,” Insight Center for Community Economic Development, 2018, https://socialequity.duke.edu/sites/socialequity.duke.edu/files/site-images/FINAL%20COMPLETE%20REPORT_.pdf
- 8. Chuck Collins and Josh Hoxie, ”Billionaire Bonanza: The Forbes 400 and the Rest of Us,” Institute for Policy Studies, 2017.
- 9. “Extreme Carbon Inequality: Why the Paris climate deal must put the poorest, lowest emitting and most vulnerable people first,” Oxfam, December 2, 2015, http://policy-practice.oxfamamerica.org/static/media/files/extreme-carbon-inequality-021215-en_UPDATED.pdf.
- 10. Naomi Klein, This Changes Everything: Capitalism vs. The Climate (New York, NY: Simon & Schuster, 2014).
- 11. “Influence & Lobbying / Lobbying / Sector / Energy & Natural Resources,” Center for Responsive Politics, accessed July 25, 2018, https://www.opensecrets.org/lobby/indus.php?id=E&year=2017.
- 12. Citizens United v. FEC, 558 US (2010), https://www.supremecourt.gov/opinions/09pdf/08-205.pdf.
- 13. Nicholas Confessore, Sarah Cohen, and Karen Yourish, “The Families Funding the 2016 Presidential Election,” New York Times, October 10, 2015, accessed July 25, 2018, http://www.nytimes.com/interactive/2015/10/11/us/politics/2016-presidential-election-super-pac-donors.html?_r=0.
- 14. “Influence & Lobbying / Interest Groups / Energy, Natural Resources / Oil & Gas / Money to Congress,” Center for Responsive Politics, accessed July 25, 2018, https://www.opensecrets.org/industries/summary.php?cycle=2018&ind=E01.
- 15. “Dominion Rules: How the Richmond-based utility company became one of the most influential political forces in Virginia,” Richmond Times-Dispatch, October 13, 2017, accessed July 25, 2018, http://www.richmond.com/news/special-report/dominion/.
- 16. Patrick Wilson and Graham Moomaw, “Dominion executives bundle donations to Virginia lawmakers’ campaign accounts,” Richmond Times-Dispatch, October 13, 2017, accessed July 25, 2018, https://www.richmond.com/news/special-report/dominion/dominion-executives-bundle-donations-to-virginia-lawmakers-campaign-accounts/article_2dc5e500-ae9e-11e7-825f-cf7d0872e492.html.
- 17. “Virginia’s Toxic Coal Ash Problem: The Need to Protect the Health, Safety and Water of Virginia,” Virginia Conservation Network, 2015, https://earthjustice.org/sites/default/files/files/VA%20Coal%20Ash%20Report.pdf.
- 18. Lorne Stockman and Kelly Trout, “Art of the Self-Deal: How Regulatory Failure Lets Gas Pipeline Companies Fabricate Need and Fleece Ratepayers,” Oil Change International, 2017, http://priceofoil.org/2017/09/19/how-gas-pipelines-fleece-ratepayers/.
- 19. “The Myth of Virginia’s Rate Utopia: A comparison of Rates, Riders, and Bills,” Virginia Poverty Law Center, 2017, http://www.vplc.org/wp-content/uploads/2017/05/VPLC_EnergyReport.05032017.pdf.
- 20. Statistics referenced from 2012, Adrian Wilson, “Coal Blooded: Putting Profits Before People,” National Association for the Advancement of Colored People, 2012, https://www.naacp.org/wp-content/uploads/2016/04/CoalBlooded.pdf.
- 21. Alexis Celeste Bunter, “Indigenous Resistance: the big picture behind pipeline protest,” Cultural Survival Quarterly Magazine, March, 2017, accessed July 25, 2018, https://www.culturalsurvival.org/publications/cultural-survival-quarterly/indigenous-resistance-big-picture-behind-pipeline-protests.