Green Economics and

Green Consumerism

The capitalist economy is based on economic liberalism

This is parallel to political liberalism and draws on many of the same tenets: individualism, self-interest, preferences, free will, property rights, contracts, etc.

Profit is a critical motivating factor in the functioning of capitalism

Without the possibility of profit and accumulation, individuals will not strive to produce more than needed for subsistence—and there would be little innovation and only limited production—or, so goes the common argument…

Consequently, capitalism seeks to institutionalize scarcity to stimulate desire

Classically speaking, nature is regarded as a bundle of resources to be exploited for profit

Depending on who “owns” the resource, rents and royalties may be paid, but profit is only realized through use in goods that can be sold in markets

For the most part, nature (resources) is treated as essentially “free” and there is no inherent penalty to its

degradation, depletion or destruction

For such outcomes to be avoided, nature must be properly valued and “priced,” so that its “true” cost is internalized in production

But the “value” of nature depends on a price established by supply and demand

Since nature has no “price,” how can value be established?

Scarcity can be created via property rights!

An example of this can be seen in the atmosphere: there is too much & it has no market value

What do you pay for oxygen?

The “problem,” therefore, is that we need to find ways to place a value on, or impute a value, to nature

There are a number of ways this might be done

We can ask people what they think the contingent value is of nature & environment

The problem is that people are often not willing to pay up when they are actually asked to do so

We can impose taxes or fees on various forms of resource use (and give rebates to the poor)

Taxes named as such are not favorably regarded, and their effect relies on price and demand elasticities. But people may be willing to absorb such added costs.

Another approach is to create property rights to pollute and then establish a

market to trade in them

“Cap and trade” creates property rights, which limit emissions, make permits scarce, and commodifies the right to pollute—but does this lead to the “right” price?

“Green consumerism” relies on supply of environmentally-friendly goods to meet a demand for

them

If enough people demand and purchase such goods—even if they are costly—the “market” will provide them and, eventually, become “green”

“Ecological modernization” addresses the benefits of reducing waste through new technologies, and also

reducing the costs of waste and disposal

This might be achieved through regulation, economic incentives, or systemic changes in consumer demand

A variant of this is that high rates of economic growth generate technological innovations and

make available surplus resources for environmental protection

All of these continue to rely on market mechanisms, in the view that interventions should not seek to radically

change underlying incentives to consume

Yet another approach is “corporate social responsibility”

This is based on self-regulating codes of conduct and practices, on the theory that Greening will reduce costs and attract environmentally-oriented consumers—does it work?

But will any of them work?

Can consumption be harnessed to save the Earth? What about the problem of “consumer choice?”

Contrast market-based approaches with more radical & critical analyses

• The “treadmill of production” continues to consume resources and produce pollution, no matter how it is reformed, and because of economic growth

• The “second contradiction of capitalism,” according to Jim O’Connor involves rising prices as nature and resources are exploited and degraded, undermining the productive basis of the system

• Provision of alternative forms of market-based commodities (e.g., through ecotourism) in place of resource extraction imposes other forms of exploitation and relies on low-wage service workers

• Capitalism cannot be reformed and must be replaced by an alternative system of production and reproduction

But what would it look like?