The Pope will spark off a media frenzy this week with his much awaited Papal letter, due to be sent to the world’s 5,000 Catholic Bishops on Thursday. It has been billed as an 'explosive intervention', which will call for an end to the 'tyrannical’ exploitation of nature by mankind.
Added on 16 June 2015 by Eve Poole
He's right, and major change will be needed to correct it. This is because capitalism is on a collision course with the environment on three fronts: its adherence to a belief in the invisible hand, its emphasis on maximising utility, and its commitment to market pricing.
First, a belief in Adam Smith's ‘invisible hand’, through which individually self-interested behaviour will produce benevolent outcomes overall. It turns out that this optimistic myth just serves to offer a reassuring but inaccurate justification for self-interested behaviour.
While order does frequently rise out of chaos, there is no evidence to suggest that this always tends towards the good, and certainly none sufficient to justify society’s reliance on it. Leaving things to the ‘invisible hand’ naturally skews the market in favour of the strongest, because they have more 'votes' in the system. This maximises their utility, but not that of society or the world at large. If we continue to believe that somehow the market will auto-correct, we have no reason to try to avoid tragedies of the commons. So there is nothing to stop us individually using up the earth's resources, in the naive hope that somehow it will all net out.
Second, maximising utility. If our only duty as market citizens is to maximise our own utility with no regard to others, again there is nothing to stop us behaving selfishly in our use of the earth's resources. Particularly if we think the Invisible Hand will ultimately bail us out. But we are increasingly becoming aware that some sort of co-ordination is required if we are to avoid environmental collapse. Of course, we can rely on governments to compel helpful behaviour through regulation, but the quickest way to address the problem is to widen our notion of utility.
To do this we simply need to rediscover its original heritage as a short-hand for the public good. If so, the ebbs and flows of supply and demand will adjust to take this into consideration. There are lots of good examples of this kind of adjustment, particularly in solidarity with the world's poor.
But the thing that might stop that happening is the third issue, pricing. While we think that the right price for something is whatever the market tells us that it is, we will crowd out the wider debate on 'externalities', or those spill-over costs that are not normally factored in.
For example, the International Center for Technology Assessment reckons that while a gallon of petrol costs $3 at the pumps, if you add back in costs relating to climate change, military protection of the oil supply, oil industry subsidies, oil spills, and treatment of car exhaust-related respiratory illnesses, the real cost is more like $15 a gallon. The encouraging thing is that we know people are willing to 'overpay' for social benefit. Fairtrade and organics have taught us that.
So the bad news is that our current version of capitalism contains the seeds of its own destruction, because it looks set to kill off the planet that currently hosts it. The great news is that these same seeds are seeds of hope. Supply and demand are simply messages that are infinitely influence-able. All we need to do is demand more from our market. Utility is not enough. Utility for what? There are no customers on a dead planet. The best way to safeguard our future income streams is to start correcting our course early, while there are still icebergs that we can see.