How the free-market addled your brain, and why it can’t fix climate change

October 2021

It often seems as if the economy has become all and everything, with widespread angst whenever growth rates slow. Almost everything has a monetary value, from a hectare of rainforest to finding new love. Market-based solutions are generally preferred.

An article (in German) by Swiss-based physics professor Henrik Norborg questions this dominance of economic ideas over most people’s lives.

Prof Norborg argues that the free-market system has become a form of authoritarianism. Like all authoritarian systems, it offers only one way to think and resists challenges to its power. It requires citizens to be compliant, and accept what they are told.

He has a point.

In authoritarian systems, children are taught not to think for themselves. If they ask a question, which is discouraged, the answer is “because I say so”. Children brought up like this gradually lose the ability to make objective judgements. They come to believe that those in authority know better. They are taught to be obedient citizens, and support those who claim to be strong leaders.

To prosper, an authoritarian system has to convince people that it can provide simple solutions to almost all their problems. These solutions don’t always need to work. People just need to believe they work.

This means that those brought up in authoritarian systems tend to have a relatively simple view of the world. Almost everything is black and white because divergent views are condemned. They seek simple answers, no matter how complex the questions.

Sound familiar?

The free-market system fits this mould well, especially in English-speaking countries. People are encouraged to have a simple view of the world, with little room for shades of grey. So they vote for Donald Trump. They choose Brexit. Republican is good. Europe is bad. America is good. China and Russia are evil.

Lies and half-truths

At the core of this authoritarianism lies the push for small government and individual freedom. The free-market is portrayed as the solution to almost every problem, a one-stop shop to make life better.

In the free-market system, it’s the chance to make a profit that is the single, compelling, driving force. The fact that the rewards end up in the pockets of a tiny number of people is brushed under the carpet. If anyone mentions this flaw, the trickle-down effect is invoked, even though it’s a myth.

People are told that the free-market will reduce poverty. Yes, billions are poor. But fixing this is simple, they are told. The neo-liberal system can do it. All that’s needed is the power of free trade and minimal regulation. This will give the poor jobs. Businesses can make more money.

Everyone can move up together.

Easing the plight of the poor will happen itself, as if by magic, the people are told, conveniently ignoring the fact this approach has already been tried for more than 75 years and yet two-thirds of the world’s population is still living on less than $10 a day.

A glimpse inside the mind of a free-market economist

People are also told that economic growth is the solution to inequality, though this is not true. The free-market system actually widens the gap between rich and poor, because wealth flows to those with money to invest – the rich – and away from the poor. That’s why societies are more unequal now now than they were in 1820, before widespread industrialisation took off.

In exactly the same way, people are told that economic growth creates jobs. This is mostly untrue because growth typically destroys jobs. Growth comes from boosting productivity, which is frequently the result of companies cutting the number of people they employ, by replacing workers with machines.

There are many more lies and half-truths buried deep in the foundations of the free-market system that have been widely accepted: the idea that the private sector is more efficient, that the destruction of industries and communities is creative, that privacy is not important and that individual freedom is the pathway to collective liberty.

Then there is climate change.

Climate change changes everything

The free-market narrative has consistently underplayed the scale and urgency of this existential problem. This makes sense, because climate change is the single biggest threat to the neo-liberal system.

So people are told that the free-market will solve the problem.

Clever money will flow towards new opportunities in renewable energy, carbon-capture and electric cars. People will have the chance to save the world by changing what they buy. Farmers will see the earnings potential of planting more trees and organic crops. Innovators, lured by the chance to profit, will soon develop wonderful new technologies to cut emissions. Thanks to the free-market, societies can sidestep the climate challenge, while making a profit and boosting growth at the same time.

Neo-liberalism did this

This story conveniently ignores the fact that it is the free-market system that is the cause of planetary warming. The push for more output needs more energy. As more than 80% of this comes from burning fossil fuels, the desire for economic growth creates the gases that are upsetting the balance of the atmosphere.

Economic growth = faster climate change.

Moreover, and despite what people are told, societies can’t wean themselves off their fossil dependence any time soon because the alternatives are simply not reliable or profitable enough.

They’re not even close.

Electric vehicles, gigantic off-shore wind farms, carbon-pricing and solar panels haven’t had any noticeable effect on the rate of warming, despite billions of dollars spent, and they certainly won’t have any meaningful effect in the next ten years. Which is a problem, because that’s all the time that remains to avoid a catastrophe.

Because an energy transition away from fossil isn’t possible, the only way to slow the rate of climate change is to reduce the amount of coal, oil and gas that’s burnt. This means reducing the size of the economy. To give humanity a 50:50 chance of survival, emissions need to fall by 8% a year. That means economies need to be 60% smaller by 2030.

People shake their heads. That simply can’t be true.

A lure to distract you

Me, or the planet?

This is because people don’t think.

They are distracted instead by meaningless goals like achieving net-zero by 2050 or by fake solutions which promise to fix the problem for a profit.

Of course, there’s money to be made from the crisis. But market-based solutions can only fix a minuscule part of the problem.

The unfortunate truth is that most of what’s needed to avoid a catastrophe will not make any profit at all. There’s no money to be made leaving fossil fuel reserves in the ground. There’s no money to be made closing the cement industry or ending deforestation. There’s no money to be made from banning nitrate fertilisers, or making public transport free to reduce private car use.

As the impact of climate change accelerates, opportunities to make money will actually disappear. There’s no profit in farming land that has no water. There’s no opportunity to make an income from millions of people if they’re homeless and starving. It won’t be possible to create wealth trying to grow crops without pollinators, or fighting endless wildfires. There’s no money to be made from abandoning southern Florida, the Greek islands or parts of California when it becomes impossible to live there.

Slowing the rate of climate change = write-offs and expenditure.

Slowing the pace of climate change ≠ profit.

Dr Norborg and I wondered if Covid-19 might change all this and, for a while, we saw encouraging signs.

For more than a year, the virus proved that it was possible to quickly cut the volume of damaging emissions, and pay people to stay at home. There even seemed a chance that people might start to question the system, to understand that there is a better way. There was a chance that people might see that it’s possible to live without 60-hour a week jobs, and that they could release themselves from their duty-to-consume chains.

But neo-liberalism quickly bit back. It piled on the pressure to return to ‘normal’ with debate swiftly executed. Open up. Travel again. Your selfish consumption break is over. Don’t let the economy suffer like this.

This will change, of course, because humanity can’t continue using the world’s resources at the rate of two planets when there’s only one. The free-market system cannot solve the existential problems it has caused while continuing to make them worse.

There’s a choice

Break free

That leaves two ways out.

The first is by design.

Sometime soon, the consequences of the decades of environmental destruction caused by neo-liberalism will become blindingly obvious to almost everyone. Then, the small number of people who currently see that the free-market emperor is decked only in soiled underwear, and not a magic suit, will grow.

This will give societies the chance to make a transition to a better system of human development, based on sustainable foundations. It’s not hard to imagine a better future, where people work less, consume less, and live in greater harmony. It’s not difficult to believe that the majority of people would be happier that way.

But achieving this transformation will not be easy because the impact of climate change will worsen, thanks to lags in the atmospheric system, and a small and powerful minority will oppose any change with every plasticised cell of their soulless beings. It’s also hard to imagine who will drive the change if those in charge are unable admit to themselves that everything they once believed was wrong.

The second option is harder.

It is that the Babelish free-market edifice will simply fall apart. As the system kills itself, those in charge will invent ever-more elaborate ways to deflect attention from what’s happening. They’ll blame the curse of unexpected viruses, once-in-a-century floods (even when they happen every six months), supply chain breakdowns, the intransigence of farmers, political enemies, and China or Russia for the problems. They’ll redefine what sustainability means, tell you that a wildfire-season is natural and talk airily of what can be achieved through geo-engineering. People will be told that they need to adapt and become more resilient, even when that’s impossible.

Keep the faith, the people will be told. The free-market’s functioning just fine. People are still getting rich.

Don’t reject neo-liberalism.

You’re not allowed to think like that in free-market heaven.

Want to know what societies need to do to avoid a crisis? Click here.


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