Topics: Regenerative Capitalism
Group members: Franz and Clara
“System change not climate change” is one popular Fridays for Future slogan. So, do we have to overcome capitalism, or could it be reformed internally for regenerative purposes? We will argue a combination of progressive economic policy and the creation of broader political participation opportunities makes the latter feasible. To do this, we ourselves have to regenerate two seemingly lost insights: The economy always serves a purpose, but the important question is, which one, and markets are always embedded. We live in a world where most Policymakers, citizens and businesses assume that the capitalist system allows private enterprise to fulfill the demands and needs of the market. However, we see time and time again that the capitalist system fails to respond efficiently in times of crisis. This paradox has become evident in the unresolved climate crisis, when private enterprises fail to deliver critical infrastructure to respond to the immense wildfires, floods, and droughts, which are becoming more and more common. This becomes even more evident when the climate crisis intersects with other international crises - like the war in Ukraine. The situation in Lützerath,a now destroyed village in Western Germany in order to expand a mine, shows us how short term, unsustainable, solutions are implemented in times of crisis, because the capitalist system has not yet generated a framework for sustainable long-term solutions. The decision to expand the mine in Lützerath was legitimized by the increasing concern about a severe winter gas shortage in Germany due to loss of supply from Russia. Research conducted since then has embarrassingly shown that the coal under Lützerath is not needed to secure energy (as energy sources had already been secured by then), but to meet estimated industrial demand for coal briquettes and coal dust.
Regenerative capitalism One of capitalism’ strength is its ability to index actors which projects are worth doing and which not through the price system. So, it can efficiently organize production utilizing dispersed knowledge without needing a central authority to do so. On the other hand, it is senseless maximizing efficiency without addressing effects. In view of accelerating climate change and growing social inequality, we need to redefine the purpose of doing economics. Here, we borrow from the economist activist Kate Raworth proposing we should economically aim for not transgressing planetary boundaries and guaranteeing every human basic wellbeing needs.
Thus, we suggest, firstly, implementing a world-wide, reliantly rising carbon price, indexing fossil fuels inclining unattractiveness. However, private enterprises would substitute oats with barley, if the latter became more expensive, but they are not going to substitute fossil infrastructures with renewable ones, just because it is too risky for them. This, in turn, shows us, markets are not self-sustaining and are embedded in other spheres, i.e., in the society and the actions of governments. As it has been shown by the work of economist Mariana Mazzucato, it is, secondly, the government’s responsibility initializing processes, also including enterprises and the civil society, to innovate wide-ranging green infrastructures and technologies market actors can use as substitutes once the fossil once become unattractive. Thirdly, European governments could finance all these life-saving projects if they were not restricted to balance their budgets. Interestingly, several central banks and regulators, like the ECB and the Bank for International Settlements, have been requiring governments for years to conduct strict green fiscal policy and therefore offered a collaboration of monetary and fiscal policy.
Finally, those proposed measures will only be inclusive and just when all stakeholder-views have been taken into account. So, broader possibilities for political participation need to be created as well as power, income and assets must be more equally distributed, i.e., by implementing global (and progressive) income, corporate, heritage and financial transactions taxes.
Capitalism and the politicians are not preparing us for the new era where climate-, humanitarian-, and sanitary crises will become more frequent. To build resilient societies, we need to handle our current critical situation with a long-term perspective, and not only lower our carbon-footprint, but invest in lifestyles, infrastructure, technologies (tech can’t solve it all though!) that gives back and that gives our society ways of not only responding to a crisis but also growing with it, incorporating it. So, we make sure that we not only put out the fire of the world (a fire caused partly by briquettes) but that we cultivate it in a manner where fires are both less damaging and less likely to happen in the first place.