Green Capitalism: A Sustainable Salvation or a Profitable Illusion?

An ever-expanding body of critique maintains that lies at the heart of worsening climatic ramifications. Hawkins, Lovins and Lovins famously posited that “contemporary capitalism is an unsustainable aberration, that liquidates its capital and calls it income, neglecting to assign any value to natural systems it exploits”.

Illustration by The Geostrata

However, the other side of the scholarly spectrum, increasingly maintains that the climate crisis was not caused by capitalism, but the “corruption of capitalism”. This essay shall explore the contours of Green Capitalism, interrogating its theoretical promises against its practical limitations. 

Gracia Chichlinksy describes green capitalism as a new economic system that values the natural resources on which human survival depends. It aims to establish and sustain an amiable relationship between economic activities and the environment. It is based on the principle that entrepreneurial freedom, private property and market exchange are the most efficient ways of balancing natural resource utilisation and ecological exploitation.

The booming influence of green capitalism in climate discourses has also sparked intense critique, broadly from Marxist scholars who argue that, for any tangible change to be materialised, there needs to be radical economic and cultural transformations outside the capitalist framework. 

PRINCIPLES OF GREEN CAPITALISM

According to Ivan R Scales, green capitalism seeks to reshape markets by treating the environment, its ecosystems and biodiversity as valuable economic assets, aiming to align environmental protection with profit by embedding ecological concerns into the logic of capitalism itself.

This concept, sometimes also referred to as ‘climate capitalism’ gained prominence in the late 20th century after the Rio De Janeiro Earth Summit in 1992, which initiated the culture of sustainable developmentalism. 

It is rooted in the notion that ecosystems are not passive landscapes, but are life-sustaining systems underpinning societal well-being. They provide a spectrum of essential services like, the supply of food, water and energy, regulating mechanisms such as carbon sequestration, climate stabilisation and water purification, combined with cultural contributions which enrich human experience through recreation, ecotourism and aesthetic or spiritual value.

Despite the monumental nature of economic functions, this ecological foundation is often undervalued or rendered virtually invisible in traditional economic models. 

Central to this is the commodification of environmental services. Instruments such as carbon trading and biodiversity offsetting assign economic value to ecological functions, theoretically incentivising conservation through market dynamics. This is often projected to culminate in more efficient resource conservation efforts. However, Steffen Bohm and colleagues have repeatedly asserted that this approach will inevitably fail to secure ecological benefits. 

For this model to take root, businesses must be heavily regulated by enforceable rules which seek to facilitate sustainability promotion activities, like the EU’s Corporate Sustainability Reporting Directive. 

Advocates of green capitalism envision a “green industrial revolution” innovation, efficiency and biomimicry.

Essentially, this paradigm seeks to replicate the transformative power of the first industrial revolution, but purely tuned in the service of sustainability. Technological strategies such as biomimicry design, inspired by natural processes, and cradle to cradle manufacturing, where waste is reimagined as input, are positioned as solutions that align profitability with ecological integrity. These closed-loop systems are thought to reduce waste and resource depletion, aiding the growth of a “regenerative industry” model. 

TOOLS AND TECHNIQUES OF GREEN CAPITALISM

One key mechanism within green capitalist thought is the use of Pigovian taxes to internalise ‘externalities’. By imposing costs on polluting activities, such taxes incentivises companies to reduce harmful emissions and adopt cleaner practices.

Similarly, Pigouvian subsidies broadly encourage environmentally beneficial behaviour, such as renewable energy adoption or afforestation efforts. 

Despite its theoretical appeal, these policies remain fraught with implementation challenges. Determining the right tax level is difficult, and there arises political resistance, particularly from industries which indulge excessively in polluting practices, ultimately undermining its sheer efficiency.

Moreover, there are also studies which indicate the fact that it's mostly lower-income households that are disproportionately impacted by environmental taxes, raising questions about security and justice. Ronald Coase (1969) offered a complementary framework, which suggests that clear property rights and low transaction costs would allow parties to negotiate solutions to environmental fallouts.

This theory lubricated the moulding of Payments for Ecosystem Services (PES), wherein beneficiaries of ecosystem services compensate those responsible for maintaining them. However, these are voluntary mechanisms, and one cannot be fully sure how effective these can be in the absence of regulatory compulsions. 

Another flagship policy is the cap and trade system, which seeks to limit pollution levels while enabling firms to buy and sell allowances. Unfortunately, this can provide a dangerous leeway to wealthy polluting firms, letting environmental harm persist as long as it is paid for. 

Consumer sovereignty is also an indispensable aspect of green capitalist action.

Through eco-labelling and ethical consumption patterns, consumers are called to “vote with their wallets”, selecting environmentally responsible products, thereby (even marginally) reducing the dependence on products from harshly polluting industries. Sooner or later, this could pressurise firms to pivot towards greener approaches. 

This form of green consumerism assumes that individuals will make moral purchasing decisions if given the right information or direction. However, Marx argued that this reduces extremely convoluted problems to branding exercises, reinforcing the “fetishisation of commodities”. Or more simply, this leaves the structure of mass consumption untouched. 

MONOPOLISING ON SUSTAINABILITY?

Andrienne Buller, in her critical examination, ‘The Value of a Whale: on the Illusions of Green Capitalism’, identifies two core tenets which support the justification of green capitalism. First, it represents an ideological strategy focused on settling climatic repercussions, without fundamentally settling the structural architecture of contemporary capitalism, or more simply by preserving existing economic systems and political power they accumulate. 

Secondly, green capitalism ensures that the transition to a decarbonised future remains fertile ground for the accumulation of capital. Rather than embracing transformative solutions, like collective transit systems or degrowth approaches that prioritise public welfare over private gains, this model favours technological substitutions such as replacing internal combustion engines with electric vehicles, because they maintain market opportunities for profit and rent extraction by private enterprises.

In synopsis, she argues that it is a vision of climate action that fuels capitalist imperative rather than challenging it. 

Marxist theorist Jerry Harris argues that capitalism’s inherent drive for perpetual growth and profit maximisation is radically at odds with environmental stewardship. They contend that market-based solutions will only deepen the social inequality gaps and perpetuate environmental harm, rather than mitigating it. 

Foster also expands Marx’s concept of metabolic rift, arguing that capitalism severs the organic connection between societies and ecosystems. Therefore, by this logic, green capitalism is a self-contradictory concept. 

Schnaiberg’s treadmill theory projects that any and all profits generated by capitalism will be reinvested into further expanding production, that is, innovations that could possibly reduce environmental impacts are co-opted into increasing output capacity. This idea also extends into the treadmill theory of consumption, which churns out a view that inexhaustible cultural norms and advertising continuously produce new consumer desires.

And industries would go the extra mile, inevitably at the cost of superseding the ‘idealistic’ green capitalist agenda to meet consumer demand. Therefore, the service-based economy envisioned by green capitalists remains marginalised in a society built on the symbolic value of possessions. 

There also exists the danger of green nabbing, where appropriation of land and other invaluable natural resources would be guised under the garb of environmental protection. This would then be in the form of neoliberal land enclosures, transforming communal or customary land into tradable land assets to serve the interests of companies and environmentalism.

For instance, in the Mexican state of Oaxaca, transnational actors are constructing a strong network of wind mills by clearing land that is historically associated with indigenous communities, leading to the displacement of groups which are already brushed to the sidelines. But as aforementioned, commodity fetishism is reconfigured through eco-labelling norms, as these ‘green’ products would instigate a sense of ethical participation, prompting consumers to over-indulge in them without guilt-tripping, which uniquely degrades ecological sanctity as a result of mass hyper production.

Therefore, it is safe to say that green capitalism also risks metamorphosing into a system which merely reassures consumers of their moral virtue, whilst not attempting to alter the underlying dynamics of exploitation. 

Synoptically, it can be broadly deduced that this concept in question is another indicator of the surge in greenwashing conventions. Real change calls for a fundamental rethinking of ownership, production means and the goals of the economy itself; the emphasis cannot exclusively rest on better information and ‘greener’ choices. 

Climate change as an existential threat was only belatedly identified, and worse, it took us exponentially more time to treat it as one. We are now truly running out of time.

In the backdrop of a burdening chain of unfortunate environmental tragedies, the world cannot risk playing around with incremental market-based solutions, which will prove to be us no use. As Greta Thunberg popularly remarked, if positive changes within existing systems are so difficult to incite, then the system itself should be changed.

---

BY NAKSHATRA H M

CENTRE FOR ENVIRONMENT AND CLIMATE ACTION

TEAM GEOSTRATA

info@thegeostrata.com