From global civil society there are two dominant calls for change being heard right now, one is to end global warming and keep the earth sustainable for future generations; the other call is to end structural inequalities seen around the world, in other words to end global poverty. Both of these calls are significant not only in the scale of what must be done in each case but in the repercussions should they not be addressed. These two pursuits may appear on the surface to not be strongly linked; however, this essay will out line how neither one can be looked at without seriously investigating the reasons for the other. Global warming cannot be addressed without first addressing the structural poverty found ripe in the world, in addition poverty cannot be eliminated without seriously considering how we came to this environmental dilemma; after addressing these topics this essay will look at the economic paradigm which governs most markets around the world, and discuss how it is the connecting factor between these issues and must be changed if global society is to deal with these problems.
Among the scientific community there is a consensus that we are at a crucial point where global warming, caused largely by us, needs to be dealt with very soon. There are of course those who disagree with this opinion but generally it is accepted and acknowledged, though sometimes not pursued, by most major states. As the climate changes most countries will face things such as rising seas, increased temperatures and as some climatologists predict an increase in extreme weather such as droughts and hurricanes. There is little doubt that if we do not drastically change our habits as a species we will face very serious consequences. Prices have been attached to different aspects of climate change, some saying maintaining the status quo will cost trillions of dollars by the end of the century without even factoring in “biodiversity loss or unpredicted events.” Papers such as the Stern Report have put a price tag on the cost of actually changing our habits and restructuring our society to prevent global warming at roughly 1% of our GDP, as opposed to the 5-20% GDP he forecasts climate change could cost us in the same period.
There are also great costs related to the global inequalities, allowing poverty to exist as it currently does will have massive costs on our society only one of which is increasing environmental degradation. While there are many social reasons why global poverty should be a main priority of policy makers and citizens around the globe this essay will only be focusing on environmental and economic reasons. Global poverty is tied to the environmental problems we currently face in a number of ways. One contemporary way which is most widely acknowledged is the inability of developing nations to fiscally and technologically create green infrastructure and produce energy in an environmentally neutral or friendly manner. Countries such as China rely heavily, and will continue to do so in the future, on products such as coal as it becomes cheaper other countries begin to rely on different technologies. As recently as April 2009 China had planned to invest large amounts of money into the production of coal. On top of environmental concerns the poverty stricken countries of the South also are fiscally harmful, every year the global North pours in hundreds of billions of dollars in development aid. It is given in various ways but often is lent with economic restructuring requirements which can tie up vast sums of money and create dangerous scenarios such as when Argentina defaulted on US$ 100 billion debt from the IMF, potentially causing financial problems globally as many private investors were involved.
Through practices far more broad than inter state lending the world is in a very large way connected through ties of trade governed by a neoliberal economic model. Though the policies put forth by this ideology seem to common place to be questioned by most people, it must be seriously investigated if the two problems previously mentioned are to be addressed in a constructive manner. Neoliberalism is not a word used often by people not involved in the political or economic world of academia. However, for those involved it is defined as a political philosophy “that emphasizes the importance of economic growth and asserts that social justice is best maintained by minimal government interference and free market forces” or a “liberal who de-emphasizes traditional liberal doctrines in order to seek progress by more pragmatic methods.” Whether the term progress or economic growth is used it is a philosophy which centers on growth, and profit maximization. In the world we see it as the driving force behind globalization, as countries spread out over the globe to seek profits. Through it, markets are seen as a blanket saviour lifting up all who are involved whether rural African peasant or North American executive. We also know that when profit maximization is central things such as the environment or the livelihoods of others become peripheral. Capitalism is a system that depends on the market for the creation of jobs and stipulates that capital accumulation is necessary for growth as it allows individuals to reinvest in new projects to create jobs and growth, resulting in a precipitation downwards of wealth. One simply need look at the statistics and it is plain this model does not work, capital is accumulated and instead of reinvestment occurring and new jobs being created the divide is only widening. Within the frame work of liberal economics growth is the only end game, necessary for the survival of the economy.
Under the current thought process of growth maximization it is impossible to ‘develop’ the undeveloped world to the living standards of the global north. Perhaps the simplest way to understand this is to acknowledge that the earth is a finite object, while there are debates around how much the earth can produce and whether or not we have reached those limits it is clear there is a finite end and that we are very close to it, if not past it already in terms of resource extraction. A good illustration of the impossibility of lifting all impoverished peoples out of poverty through markets and growth is looking at ratios of wealth distribution throughout the world, according two the World Bank 20% of the population of the world consume 76.6 percent of the worlds resources. We now know the methods used for this resource consumption is largely responsible for the environmental degradation, moreover what this relates is that the remaining 80% of the account for 23.4% of global private consumption. If we were to ‘develop’ the developing world to the standards and means of the global north the earth would have to produce roughly 380% of what it currently does, this is a problem.
Another reason why growth and markets, especially alone, cannot be used to alleviate poverty is that the poor do not create a significant demand. With in markets and their world of supply and demand curves the greater the demand the greater supply will meet that demand. With no financial incentive to create demand the impoverished are simply out of luck in this system, using housing as an example there is far more profit to be found in high income real estate than there is in building safe affordable housing. Therefore, affordable housing naturally generates less money less money goes into it, as less money is spent less money is made and so on. Thus there is growing profit in the upper class where houses are being produced, bought and sold often, but little money, or housing for that matter, trickling down to lower income levels unless governments specifically mandate social programs. Liberal economic policies simply do not have a place for the poor, the only time the needs of the poor are addressed economically are when the market is interfered with; this happens when governments or NGOs directly intervene, or when an entrepreneur explicitly decides to create a business model to involve impoverished persons.
As long as we live in a society dominated by neoliberal capitalism, it will not be possible to make a substantial change in global poverty. Each attempt by NGO’s and governments to seek justice and a fair lifestyle for citizens of the world, while well intentioned, is simply fighting against the grain of the overarching economic frame work we live in. Capitalists seek out profit by minimizing the cost of production, by using simple tactics such as finding ways to pay workers as little as possible. When workers in a Wal-Mart in Quebec unionized the company simply decided to pull out of the city rather than pay the workers what they felt was fair. As corporations seek out countries to invest in they look only at how much money can they save, one of the central questions is how cheap is the labour, not to mention how little taxes can be paid and how lax are environmental regulations. When one country in South East Asia has too high of a minimum wage a corporation will simply move onto another generating a demand for lower wages. This can be overcome and wages in an area can be increased, but it is a hard fought battle against the economic framework, not one supported by it.
Environmental degradation is linked in part to poverty in that as the more the 80% of the have nots in the world begin to live like the 20% of the haves our earth will lose its capacity to sustain any of our lifestyles. However; it is also linked in another far more substantial way, through the frame work of neoliberal capitalism. Incumbent in the drive to produce at the lowest cost possible is a neglect for the environment. In seeking profits companies extract resources from the earth as efficiently and rapidly as possible. Investors pour money into projects expecting to recoup their money within a relatively short period of time, and reaping profits there after. In a capitalist economy this is accepted as common practice; however, the time investors expect to get their money back in is much shorter than the outlook “needed to protect the biosphere.”
As the capitalist economy, especially as defined by neoliberalism, requires constant growth it is placing a greater and greater strain on the environment from which it extracts resources. Neoliberal capitalism views the market as a closed system between production and consumption with resources existing in a separate domain creating a dangerous justification for consumption. These resources used and where they come from are not considered to be an integral part of production and therefore defined by the capitalist as an externality, even though economists since the time of Malthus have recognized the limits of the earth, current economics talk only of balancing capital and labour to maximize profits. Some contemporary branches of economics are recognizing the effect of human consumption on the environment, however they are not mainstream and exist specifically under titles such as Natural Resource and Environmental Economics. “Externalities are costs or benefits arising from an economic activity that affect somebody other than the people engaged in the economic activity and are not reflected fully in prices.” The economists solution is to place restrictions such as taxes on negative externalities and subsidies on positive ones to incorporate them into the market, however many have argued that it is not sufficient or appropriate to reduce the environment to a commodity, especially in the case of practices which lead to environmental damages. Even if externalities were to be made internal many argue that corporations operating in a capitalist economy would not have sufficient motivation or information necessary to know how to properly compensate.
John Foster relates what he considers some basic contradictions surrounding the commodification of nature. Firstly he states that if capitalism were to commodify everything in nature it would not bolster our place in it but would rather alienate human society from surrounding nature, developing a more one sided egoistic relationship. It would also be a categorical mistake as nature cannot be parted out into pieces of relative value as it “constitutes the condition under which alone something can be an end in its self.” If we were to part out and view nature as individual commodities of relative worth to individuals it is certain that much would be lost in the translation as many have ascribed to the belief that in the case of nature the whole is much larger than the sum of its parts.
If the global problems were not of the magnitude and urgency they are it would be easy to ignore the flaws within neoliberal economics, however the world is in a state that can no longer allow this frame work to govern our lives. We as a world desperately need a means for interacting economically which considers human dignity and the environment as more than externalities to be compensated for, they must become central to any practice. Many alternatives have been proposed, from the contemporary such as ‘ecological economics’
to alternatives which have been around such as socialism or various adaptations and hybrids. One thing is clear, any resulting economic framework which may emerge must not be based, even partially, on a growth centered, profit seeking form of neoliberalism.
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