Climate change, Gates and many economists argue, is an example of a market failure. Markets have failed adequately to ‘price’ carbon emissions, meaning we produce too much of them. If governments could only assign the ‘correct’ price to these emissions, the market failure would be corrected and the planet would be saved.
The challenges really come down to implementation. If we tax polluting activities more heavily to internalise the negative externalities associated with them, then who should bear the burden of paying those taxes: those extracting and burning the fuels, or the final consumers of the goods produced? If we have to subsidise green energy, or invest in research and development, then where should the money come from?
Gates’ plan is being hailed as progressive because he places a much greater focus on state investment to reduce what he calls the ‘green premium’—the additional cost of using a green alternative—than he does taxes, which would inevitably fall on consumers. More public investment in green infrastructure and innovation would create jobs, reducing inequality, while also constraining emissions.
But this characterisation says less about Gates’ plan than it does our understanding of the term ‘progressive’. The left-right divide on economic policy has been reduced to a question of state spending. Those on the ‘left’ of this divide (including, apparently, Bill Gates) argue that we can fix capitalism with a bigger state, while those on the right argue that state intervention is itself the problem.
The fundamental error made by proponents of both perspectives is the assumption that ‘the state’ is a self-contained entirely separate entity from ‘the market’. On this view, states are the realm of political activity and markets that of economic activity: the state can intervene in the market but in doing so, it will be ‘politicising’ a terrain which would ordinarily be governed by the pure, unadulterated logic of free market competition.
Those on the left say that’s a good thing: we need to impose some political control over the anarchic market to promote social justice. Those on the right say it’s a bad thing: trying to use ‘politics’ to control ‘the economy’ is only going to create unintended consequences – states trying to fix market failures simply create the far more significant problem of ‘government failure’.
When it comes to climate breakdown, the entire debate is structured around the relative importance of market versus government failure. But the terms of the exchange are all wrong.
‘States’ and ‘markets’ aren’t separate terrains, governed by different logics: they’re highly interrelated. States construct and act within markets, whether by using the law to set the rules of the game, or by using their economic might to shape the production, allocation, and distribution of resources.
And the exercise of state power is not neutral: it is itself influenced by market outcomes. Different groups struggle for dominance within state institutions, and that struggle is itself influenced by the wider balance of class power within society as a whole.
The failure to understand this point is precisely why most previous efforts to ‘save the world’ from climate change have been abortive. Emissions trading schemes, like that promulgated by the EU, involve attempts to tackle market failure by constructing new kinds of markets that can regulate themselves. But like any market, these new markets are shaped by the power of the economic actors constructing and acting within them.
States and international institutions, themselves influenced by powerful corporate interests, have constructed ‘markets’ for carbon that have simply created new opportunities for private interests to profit without creating the right incentives for firms to change their behaviour. The same can be said of ‘responsible investment’ initiatives like the ESG framework, which has channelled capital into financial institutions that lend to large fossil fuel companies.
Our reliance on big business and capitalist states to solve the climate crisis brings to mind the fable of the scorpion and the frog: a scorpion hitches a ride across a river on the back of a frog, only to sting the frog halfway through, causing them both to drown. The frog asks the scorpion why it had done such an obviously self-destructive thing, to which it responds: ‘I couldn’t help it. It’s in my nature.’
The destruction of nature is part of the nature of capitalism, the central logic of which is endless accumulation. Even if solving climate breakdown would ultimately promote the interests of the capitalist class as a whole, any intervention large enough to solve the problem (which doesn’t include ‘solutions’ that allow half the planet to be submerged by rising sea levels or desertified by rising temperatures) would disrupt accumulation too deeply to be entertained.
The capitalist state is supposed to solve this challenge by encouraging—or forcing—firms to take difficult actions in the short-term that will nevertheless promote their interests over the long term. But the state is also structurally constrained by the nature of the capitalist system: governments rely on capital accumulation to sustain both their legitimacy among the general public, and their valuable links with private interests.
Finding our way out of this cul-de-sac requires building power outside of these institutions in order to shape what happens within them. The only real counterweight to the power of the owners of capital is the power of organised labour; and the only real counterweight to the power of the capitalist state is the organised power of the majority of people.
We can’t rely on Bill Gates to solve the climate crisis, but nor can we rely on Joe Biden. The majority of people on the planet—the ones who will be harmed most by climate breakdown—have to mobilise to demand a different way of organising society: one based on meeting the needs of the many, rather than the greed of the few.