Canadian Pugwash Group

This Changes Everything: Capitalism Versus the Climate
By Naomi Klein
Toronto: Alfred A. Knopf Canada, 2014
533 pages ISBN 978-0-307-40199-1

The climate crisis changes everything (14,15)

In 2010, world renowned climatologist and specialist on glacier melt, Lonnie G. Thompson stated that virtually all of us (climatologists) are now concerned that global warming poses a clear and present danger to civilization. In 2011, an International Energy Agency (IEA) report projected that we are on track for 6 degrees Celsius of warming. IEA’s chief economist stated that “Everybody knows that this will have catastrophic implications for all of us”. Six degrees of warming is likely to set in motion several major tipping points such as the breakdown of the West Antarctica ice sheet and massive releases of methane from Arctic permafrost. Indeed NASA and University of California, Irvine scientists revealed in May 2014 that glacier melt in a section of West Antarctica roughly the size of France now ‘appears unstoppable’. According to lead study author Eric Rignot, the disappearance of West Antarctica ice sheet comes with a sea level rise of between three and five meters – an event that could displace millions of people worldwide.” In short Lonnie Thompson’s clear and present danger contemplates a “terror of an unliveable future” (28). It is this prospect of terror that changes everything.

Proponents of capitalism have severely limited progress in reducing green house gas emissions

Since 1990, when negotiations toward a climate treaty began in earnest, global carbon dioxide emissions have increased 61 percent (11). To date progress in averting the climate crisis has been way too slow and far too inadequate. The reason for this monumental lack of progress is that the proponents in the environmentalist movement for averting the crisis of climate warming have been strongly opposed by the proponents of the “reigning economic paradigm of deregulated capitalism and public austerity” ( 63). And “right now capitalism is winning (the battle) hands down” (22).

And the following are their strategies:

The oil and gas industry has heavily funded think tanks with missions to deny that climate change is caused by their companies (38).

Other capitalists have funded right wing think tanks that strongly advocate neoliberal economic objectives: tax cuts, smaller government, more privatization of government operations and less regulation of private corporations, particularly regulations that affect green house gas emissions (38). Think tanks have been chosen as the medium for communication because they give the appearance of academic respectability and academics are generally far more trusted by the public than are politicians or corporations. Achievement of the objectives of neo liberalism since the 1980s has severely limited government sector’s willingness and capability to address climate change.

Corporate influence on government policies through the tactics of targeted campaign contributions, lobbying and interchanges of their personnel with government senior employees have induced governments to reject green house gas emission targets at international summit meetings on climate change (151).

Corporate funded right wing think tanks have successfully influenced public and political leaders to accept the false choice between fossil fuel extraction and job creation. The resulting fear of job losses and economic insecurity instilled in the public at large has meant that, during times of economic hardship, people’s environmental concerns go out the window (117).

Relentless corporate advertising in the media have extolled material consumption as a virtue and systematically influenced the public to buy things that they never knew they needed. In the US, shopping was even identified as a patriotic practice by President George W. Bush. Status and luxury goods and services sold to the affluent – and those aspiring to be affluent – are not only uneconomic but have relatively high carbon imprints.

Since the 1980s oil and gas companies have co opted big budget green groups by giving them access to power and generous support from large elite foundations. In return the green groups have bought into ideas about miracle products or carbon markets or bridge fuels – ideas that were either so weak or so high risk that trusting in them required “magical thinking” (210-211). The environmental movement was also distracted by a narrow focus on market mechanisms of carbon pricing which are relatively ineffective without supplementary government regulations on emissions. For example, the German government failed to introduce top down regulation to phase out the coal industry and instead relied on a weak market mechanism of carbon trading through the European emission trading system to try to put negative pressure on coal (138).

The oil and gas industry has distracted political leaders and the public with “magical thinking’. In the 1980s they argued that extraction of natural gas by the process of fracking would be a bridge to greater reliance on cleaner and renewable forms of energy. The result of lowering the price of natural gas reduced the incentive to invest in more expensive renewable energy. Other proposals such as the European emission trading system failed because businesses “gamed” the system. And “messiahs” like billionaire CEO of Virgin Airways, Richard Branson, reneged on public promises to fund climate change research to the extent of $3.5 billion. The latest magical thinking comes from corporate proposals for unproven geo engineering to pollute the skies to absorb CO₂ emission. It reflects the salesmanship tactic of promising anything to get the sale and worrying about delivery later.

Finally, as Klein puts it “our betters encouraged us to shop and gave us handy calculators on any one of dozens of green sites so that we could purchase an offset to instantly erase our sins (212). All of this enabled many to forget about Al Gore’s 2006 release of An Inconvenient Truth (211). Those familiar with religious history of the Catholic Church will recall the sale of indulgences to the rich to facilitate their entry into the kingdom of heaven.

“Blockadia” represents the political maturity of the environmental movement

In response to the duplicitous strategies of the oil and gas industry, the environmental movement has developed some new strategies and tactics in its “Blockadia” movement. Foremost among these strategies is civil disobedience in blocking pipelines and fracking processes. For decades the official climate change discussion revolved around trying to balance actions necessary to reduce the risk of climate chaos against the risk that such action would pose for GDP. In Blockadia this “balanced discussion” has been replaced at the barricades at the side of the road by a resurgence of the precautionary principle. The precautionary principle holds that, when human health and environment are significantly at risk, [i.e., unless there is scientific certainty that the risk is not significant] no action should be taken. Klein argues that the burden of proof that a practice is safe should not be placed on the element of the public that is being harmed (335). It was Keystone that provoked the historic wave of civil disobedience in Washington D.C. in 2011 and the largest protest in the history of the U.S. climate movement on February 2013 when more than 40,000 people assembled outside the White House (301-302).

Blockadia’s other strategies include citizen groups that challenge the claims of corporate marketing with academic research and community activism that identifies and advertises the sacrifices that oil and gas companies are foisting on people. They also include putting pressure on community political leaders to stop oil and gas development on behalf of those being sacrificed, and launching court challenges on behalf of those who are being sacrificed – in particular first nations.

With the political maturity of the environmental movement comes the recognition that the choice between extraction and jobs presented by the industry and its funded think tanks is a false one. The real choice is between public investments in renewable energy versus private investment in extraction. And the choice is an easy one because investment in renewal generates far more jobs than investment in extraction.

Klein’s new economic model substantially changes the nature of the capitalist system

The new model is aimed at simultaneously reducing the inequality of wealth and income, eliminating poverty and curtailing the extraction of fossil fuels so as to leave 80% of the estimated $27 trillion dollars of oil and gas reserves in the ground forever thereby dramatically reducing the current projections of green house gas emissions. The model spells the demise of the richest most powerful industry in the world – the oil and gas industry as 80% of its reserves will become “stranded assets”.

The new economic model features tough regulation of business, higher levels of taxation for the affluent and, in many cases, the reversal of privatization of energy production in order to give communities the power to make the changes they desire (128). It features a Marshall plan of state-led funding of investment in renewable wind and solar energy at war time levels (5,108).

The options for raising the cash to equitably fund the major investments to achieve this “Great Transition” from fossil fuels to renewable energy include the following (114, 115):

1. Low rate financial transaction tax (Tobin tax) on stocks, derivatives, other financial instruments
2. Closing tax havens
3. A one per cent tax on US billionaires
4. Slash military budgets of the top ten military spenders by 25 percent
5. A $50 per ton tax on CO₂ emissions
6. Phase out subsides to the fossil fuel industry

Free trade (including the liberalization of investment) that began in the early 1990s has been a package deal for cheap labour and more emissions at the expense of environmental sustainability. Therefore trade needs to be reduced and localized production and consumption needs to be increased.

Other policies for “selective de growth”, for more economic equality and less overall material consumption include (93):

• Luxury taxes to reduce wasteful consumption
• Infrastructure spending on mass transit renewable energy, weatherization and ecosystem restoration
• Increased size of the public sector and reduced size of the private sector
• Shorter work weeks of three to four days for more leisure time, less material consumption and a better balance between the supply and demand for labour
• A basic annual income

But it’s not the end of capitalism – only a variation

The part of the title of the book “capitalism versus the climate” might suggest the end of capitalism. Indeed, it has been argued that Klein has not precisely defined capitalism and consequently her “ever-present enemies on the right will call her a command-economy Stalinist” (Nelles). The reality is that Klein’s new economic model is a variation of capitalism. As Nobel prize-winning economist Joseph Stiglitz explains

“The battle between capitalism and communism may be over but market economies come in many variations and the contest among them rages on… Economies need a balance between the role of markets and the role of government – with important contributions by non market and non-governmental institutions. In the last twenty-five years, America lost that balance, and pushed its unbalanced perspective on countries around the world ( Stiglitz : xii).

Insofar as Klein’s new economic model provides a much more humane, fulfilling life style for the vast majority, it can be considered a variation that is consistent with the objectives of democracy.

The new economic model appeals to a broader grass roots coalition for change

Organizations of environmentalists can now be joined by organizations advocating for fairer taxation, less economic inequality, and for the reduction in the incidence of poverty because the new economic model serves the interests of all these groups. Furthermore the new economic model provides a far more humane, fulfilling life style for the vast majority than the current economic system does. At the same time the appeal to the majority makes the idea of a massive social movement to demand change a real possibility (33). Most importantly the new economic model’s primary focus on job creation and better incomes for the majority eliminates the public’s fear that reducing extraction will reduce job opportunities and economic security. But, as Klein says, the policies of the new economic model are the most politically challenging (93).

Connecting the missing dot – the democratic deficit is the challenge

The genius of Klein’s book is connecting the dots, or more precisely the root causes that link the reigning capitalist economic system with the climate change. This connection was identified by Gustave Speth who was the environmental adviser to President Jimmy Carter, a co founder of the natural Resources Defense Council and dean of Yale School Forestry and Environmental Studies. Speth has thrown his lot in with the radicals and joined the warriors of Blockadia getting arrested for protesting the keystone XL pipeline (205).

Klein recognizes that climate change and the economic system are also linked to democracy. She argues that progressive can easily show that the real solutions to the climate crisis can also produce a more stable and equitable economic system that generates plentiful dignified work. However, before that can happen, the battle of ideas must be fought about the right of citizens to democratically determine what kind of economy they need (125). What she has missed here is Gustave Speth’s observation that “Today’s environmental reality is linked powerfully with social inequality and the erosion of democratic government and popular control (Speth p. xi).

The origins of democratic degeneration in the US can be traced back to the 1960s as professor and syndicated columnist E.J. Dionne Jr. explains.

What is striking about political events of the 1960s is that they allowed both of the nation’s dominant ideologies and both parties, to become vehicles for upper-middle-class interests. ….These constituencies were not concerned primarily with the political issues that mattered to less well-to-do voters – notably the performance of the nation’s economy, the distribution of economic benefits and the efficacy of the most basic institution of government including schools, roads and the criminal justice system. While upper middle class reformers left and right argued about morality, anticommunism, imperialism and abstract rights, millions of voters were confined to the sidelines wondering why the nation’s political discussion had become so distant from their concerns (Dionne 2004: 13).

One explanation for the upper middle class dominance in matters of economic inequality is the self disenfranchisement of lower income Americans. For example in 2010 only 30% of the 60% of Americans who earned less than $50,000 per annum voted in the US congressional elections that year while 68% of Americans who earned more than $50,000 voted (Venton: 211). The mathematical consequence of this is that the majority (i.e. 60%) of American voters earn over $50,000.

In these circumstances it should not be surprising that a study by Princeton University researcher Martin Gilens and Northwestern University researcher Benjamin Page concluded that US government policy making is dominated by powerful business organization and a small number of affluent Americans while average or ordinary citizens and mass-based interest groups have little or no independent influence on policy (Gilens & Page: 577). Gilens and a small army of researchers gathered data on 1,779 policy cases between 1981 and 2012 in which a national survey of the general public asked a favor/oppose question about a proposed policy change. Their data set included only policies thought to be important enough for a national opinion survey to ask a question about it (Gilens & Page: 574). Their study observed that policy preferences expressed by ordinary citizens – that is adult citizens with median incomes – are not always ignored but they are adopted only when policies happen also to be preferred by the economically-elite adults – i.e. those with incomes at the 90^th percentile (Gilens & Page: 568, 572). The researchers concluded that the majority does not rule – at least not in the causal sense of actually determining policy outcomes. When a majority of citizens disagrees with economic elites or with organized interests they generally lose (Gilens & Page: 576). America is not a democracy but rather an oligarchy.

The fact is that a large percentage of the American public with the lower incomes whose lives and environmental surroundings could be enhanced with the economic model that Klein proposes, are politically powerless by virtue of the fact that they are uninterested in politics and have chosen not to vote. The battle between the environmentalism and capitalism could easily be won if they did vote. For example, if all Americans were “conscripted” with compulsory voting along the lines of the Australian government where voter participation rates are close to 90%, then the 60% of Americans earning less than $50,000 per annum would comprise a 60% majority of voters (Venton: 2011). This, combined with a high quality education campaign for all Americans about civics, about the principles of democracy, about the responsibilities of citizenship and about the basic relatively simple high level elements of how alternative variations of the capitalist market system and environmental/ecological systems actually work, would likely change everything.

The democratic deficit in Canada is also a political challenge

Naomi Klein is reported to be a staunch Canadian and therefore will likely be chagrined to hear that the state of democracy in Canada is not much better than it is in the US. As Samara Canada’s Alison Loat has stated:

Canada’s democracy has lost its way, its purpose and the support of the public it is meant to serve. How did one of the world’s most functional democracies go so very wrong (Loat 2014)?

In my view Canada’s democracy does not serve the interests of the majority because a very large proportion of the electorate (the poor, the unemployed, those with incomes below the median) whose interests would be served by Klein’s economic model do not vote. As a result the majority of the electorate who do vote are the beneficiaries of the reigning economic system and aim to keep it that way. All political parties on the left tend to chase these largely affluent voters in the centre in order to maximize their political power and are reluctant to support the kind of economic model that Klein envisages. On top of this these political parties are splitting the popular vote and are consequently underrepresented in the House of Commons as a result of the First Past the Post electoral system. This is the special nature of the political challenge in Canada.

Now is the best time to change the economic model

Klein argues that there has never been a better time for the opportunity to meet these political challenges. Her argument is based on the premise of change theory that radical changes in a democratic society are only likely if there exists a major crisis. She asserts that our society is faced with two major crises today. The first is an economic one arising from an economic and political system that is characterized by periodic major financial instability, that features an excessive inequality of wealth and income not seen in 80 years, that exhibits excessively high rates of youth unemployment, that has failed to eliminate poverty in the most affluent nation on the planet and that faces another decade of slow economic growth accompanied by even more inequality. The second crisis is even more serious – that is the dangerous global warming that, if unchecked now, promises a “terror of an unlivable future”.

Being prepared for change is critical for success

The window for change is very narrow. It will come quickly and progressive forces need to be ready with a comprehensive vision of the new economic model as well as serious political strategies for achieving its goals (10). Klein’s insight on this matter was documented in her previous book, The Shock Doctrine with reference to General Augusto Pinochle’s coup that overthrew the Salvador Allende regime in Chile on September 11, 1973. The day after the Chilean coup, a 500 page revolutionary economic Plan was on the desk of the General Officers of the Armed Forces who performed government duties. The Plan’s proposals bore a striking resemblance to those found in Milton Friedman’s Capitalism and Freedom – namely privatization, deregulation and cuts to social spending (Klein 2007: 90). The shock of the coup itself was immediately followed by Milton Friedman’s capitalist shock treatment, a technique in which hundreds of Latin American economists had by now been trained at the University of Chicago and its various franchise institutions. To this was added the shock of the torture techniques disseminated by CIA training programs for Latin American police and military for those who might otherwise stand in the way of the economic shock. The point is that, without the Plan, Pinochet, who knew next to nothing about economics, would have been ill prepared to introduce the radically different economic system that had been overwhelmingly rejected within the confines of democratic debate during the Allende regime (Klein 207: 83.91, 90).

By contrast Klein notes the lack of preparedness of the Obama administration in the wake of the shock of the financial crisis of 2008. Obama had a golden opportunity to rebuild the Main Street economy into a new energy economy to create five million new jobs. However, he failed to seize the opportunity because the environmental movement was too weak, being narrowly focused on carbon pricing, while corporate power and influence over public opinion was too strong (120-122).

A new construct in the neoliberal rubble

In her 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein described a system of corporate greed and exploitation that was destroying the environment. Its foundation was a system based upon the neoliberal thinking and objectives. This Changes Everything exposes the lies, the deception and the failure of corporate-supported neo liberalism since the first monumental failure of the experiment in market fundamentalism in Chile in 1973. It provides the answer to the question “What do we want to build in the rubble of this failed system? All the interest groups in Canadian civil society for fairer taxation, for less economic inequality, for the elimination of poverty, for a healthy sustainable environment, for a better quality of life and for democratic reform should read this book and join the grand coalition to avert climate change and thereby eliminate the fear of a “terror of an unlivable future”.

Peter Venton is a former senior economist in the Ministry of Finance of the Government of Ontario.

References

Dionne Jr. E.J. (2004) Why Americans Hate Politics New York: Simon and Schuster. This is the second edition of the author’s 1991 book unchanged except for a 27 page introduction which he has added.

Gilens, Martin & Page, Benjamin (2014) “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens” American Political Science Association journal, Perspectives on Politics September 2014 Vol. 12/No.3 pp 564-581.

Klein, Naomi (2007) The Shock Doctrine: The Rise of Disaster Capitalism. Toronto: Alfred A. Knopf Canada.

Klein, Naomi (2014) This Changes Everything: Capitalism Versus the Climate. Toronto: Alfred A. Knopf Canada.

Loat, Allison and Michael MacMillan (2014) Tragedy in the Commons Synopsis by publisher Macmillan Random House Canada April 15, 2014.

Nelles, Drew “(2014) “A change is gonna come” Globe and Mail September 20, 2014.

Speth, James Gustave (2008) The Bridge to the Edge of the World: Capitalism, the Environment and Crossing from Crisis to Sustainability New Haven: Yale University Press.

Stiglitz, Joseph (2010) Freefall America, Free Markets and the Sinking of the World Economy New York: W.W. Norton & Co. paperback reprint with a new afterword.

Venton, Peter (2015) “Radical Changes in Canadian Democracy: For Ecology and the Public Good” in Ecological Systems Integrity: Governance, law and human rights eds. Laura Westra, Janice Gray and Vasiliki Karageorgou. Abingdon: Routledge pp. 201-219.