By Philip Mirowski, Jeremy Walker and Antoinette Abboud on neoliberalism, climate change and the Left
We live in a winter of disconnect. As the permafrost melts and global warming accelerates, bringing us to the cusp of catastrophic environmental changes, governments and corporations continue their campaign of denial.
Ian Plimer’s latest book, launched by John Howard at the Sydney Mining Club, encourages schoolchildren to get expelled for harassing their science teachers. Plimer’s book, targeted at fellow mining executives and free-market ideologues, was never intended to make a contribution to scientific knowledge or education. Nonetheless, it warranted an exhaustive point-by-point refuta tion from the Department of Climate Change and Energy Efficiency.
When we are not tied up defending the firmly established position that anthropogenic climate change is occurring, we find ourselves – albeit sometimes reluctantly – getting behind ‘market based’ solutions as the only plausible policy option. Those still defending the Labor government’s legislation hope that people will one day remember that the ‘toxic’ carbon tax is only a temporary stop-gap, one that is to be phased out in the construction of an enduring carbon-market solution.
The exhaustion of the Left (defined here in its broadest sense) is exemplified in Robert Manne’s article in the August edition of the Monthly. ‘The long war the denialist movement had fought against science and against reason,’ he writes, ‘in the US and throughout the English-speaking world, had indeed achieved a famous victory. This is a victory that subsequent generations cursing ours may look upon as perhaps the darkest in the history of humankind.’
Nick Feik goes further in a recent piece in the Age, castigating environmentalists for failing ‘to convert scientific consensus into action’. Since the denialists have won, he argues, it’s time to embrace the full range of speculative, high-risk geoengineering technologies as our only remaining hope in the face of planetary disaster.
Many of us are caught up in the public theatre of climate policy, confounded that something so transparently illogical as outright science denial has been so effective. Why has the Left, which has always regarded itself as having science on its side, been so paralysed by climate policy?
While we agree that the situation is indeed dire, we want to highlight another dimension to the tragedy: the unacknowledged dominance of neoliberal ideas across the spectrum of accept able climate debate. It is crucial that analyses of the politics of climate change look beyond the tactics of’the denialists’. We also believe that the vagueness accompanying discussions of neoliberalism contributes to the intellectual paralysis preventing the Left from articulating any kind of viable alternative.
Neoliberalism is a coherent political movement embodied in the institutional history of the global network of think tanks: the American Enterprise Institute, the Cato Institute, the Institute of Economic Affairs, the Institute of Public Affairs (the key Australian node of the network) and their dedicated spin-off counter science think tanks. All can be traced back to the Mont Pelerin Society, the central think tank of the neoliberal counter-revolution, founded in 1947 by Friedrich Hayek and Milton Friedman.
One reason neoliberals have triumphed over their ideological rivals is because they have ventured beyond a single ‘fix’ for any given problem, instead deploying a broad spectrum of policies from the most expendable short -term expedients, to medium-term politics, to long-horizon utopian projects. While these may appear as distinct and contradictory policies, they are in fact integrated in such a way as to produce eventual capitulation to the free market.
We think most people on the Left don’t fully realise that the phenomena of science denialism, emissions trading and geoengineering are not in fact unrelated or rival panaceas but rather constitute together the full neoliberal response to global warming.
Why has the Left, which has always regarded itself as having science on its side, been so paralysed by climate policy?
The reasons this array qualifies as ‘neoliberal’ are twofold. First, they all originated from within think tanks and academic units affiliated with the neoliberal thought collective; second, the net consequence of all three is to leave the problem not to the state but to the market. Denialism buys time for the other two options; financialisation of the carbon cycle gets the attention in the medium term; geoengineering incubates in the wings as a techno-utopian deus ex machina for when the other two options fail.
The Left has naively believed that the Right’s atavistic embrace of cargo-cult science and wonky statistics was doomed to failure, that once the din produced by Murdoch’s shock jocks and Alan Jones’ wingnuts subsided, a reasonable and ‘rational’ debate on climate policy would emerge based on the transparent neutrality of science.
The Left has traditionally thought science was on its side. Yet ‘nature’ and ‘the economy’ have never been clearly separated in the history of political economy. Because economists have understood themselves as scientists studying a natural phenomenon called ‘the economy’, ecological meltdown throws conventional habits of thought into confusion: ‘economic growth’ is, after all, a reassuring biological metaphor that describes: the rate at which humans convert land once occupied by ecosystems into coal-pits and industrial technomass.
Since the Left has sometimes conflated neo liberalism with neoclassical economics, or hoped that ‘environmental economics’ might inform a rational climate policy, it’s important to clar ify the differences between these quite distinct approaches.
Neoclassical economics and ‘the environment’
The reason economics is one source of our political paralysis is that it presumes, both at the level of formalism and at the level of ontology, that the market is identical to nature.
‘Political economy’ (think Smith, Ricardo, Mill and Marx) had always assumed that industrial society was riven by conflicts over land, labour and capital. Inequality, coercion and power were obstacles to the emergence of the neutral, math ematical science of society that the founders of neoclassical economics sought to develop in the 1870s. The general equilibrium model of an ideal, self-regulating society of self-interested individu als eliminated ‘land’ and ‘the political’ from the equation. The ‘scientific’ character of neo classi cal economics remains tied to the assertion that market prices are the most basic fact of social existence, mechanically determined by natural scarcity constraining the ‘naturally’ infinite drive to accumulate wealth.
The standard way of dealing with environmental degradation within the orthodox neoclassical framework has been to ask how a rational economic agent should respond to the wrecking of its environment by the normal operation of the market. But because the economy is always portrayed in economics as natural, posing the question in this manner leads to paradoxes. In particular, there can be no notion of existing markets as implacably hostile to the natural environment: how can nature be at war with itself?
‘Environmental economics’, exemplified by the work of William Nordhaus and the widely read Stem report, extends orthodox economics to ecological meltdown. It contends that if the rational man shows no sign of rousing himself to do anything about global warming, it is because of ‘market failures’: something is gumming up the works, perhaps in parallel to the adulteration of the atmosphere.
The interventions of professional economists have served to shift our focus towards the abstract modelling of rational economic man, thus preventing a comprehension of the economy as the realm of the inherently artificial and of the intentional transformation of natural resources into artifacts like leafblowers, McMansions and iThings. If environmental degradation is encountered in orthodox economics as a ‘market failure’ and attributed to ‘externalities’, then this amounts to arguing that climate change has not yet been priced into investment decisions because private property rights to the atmosphere cannot yet be assigned in financial contracts. In conventional economics, pollution isn’t wrong because it disrupts and debilitates nature, but rather because it somehow derails the market. The general prescription is to concede a role for government to restore the market to its pristine natural state, rather than to actually do something to repair nature or to stop doing the things that mess it up.
Discussing climate change in this way mostly serves to divert attention from the political questions that economics is inherently incapable of addressing. Which kinds of nature can we hope to preserve or consign to be wiped off the face of the planet? Are we prepared to dig up and export every last bit of coal and gas to live in an air-conditioned bubble, watching our widescreens as the navy intercepts those ex-residents of Bangladesh or Kiribati who were resourceful enough get to on a rickety boat before it all went under?
Neoliberals do it differently
While the neoliberals share with the neoclassical economists an exalted view of the naturalness of the ma1ket, and while it is true that numerous neoclassical economists (most famously the Chicago School) are also neoliberals, there are crucial differences in their positions. Neoliberals have a very different conception of what a market does, and expound a novel doctrine as to the role of the state. Rather than merely claiming to prac tise a neutral science capable of rational analysis of ‘the economy’, neoliberals are political activ ists dedicated to an all-encompassing project of social transformation.
What emerged in the later part of the twenti eth century was a significant shift from the older definition of ‘the economy’ as the ‘allocation of scarce means to given ends’ by invariant laws of supply and demand, to the neoliberal reification of’the market’ as the omniscient arbiter of truth, a shift inspired by Hayek’s insistence on prices as a self-organising system of distributed knowledge, always at risk from government intervention and rational planning.
From the Depression onwards, Hayek’s career was defined by his opposition to the economic policies derived from the work of Keynes, policies he insisted were a slippery slope to totalitarian socialism. In elaborating his critique of Keynesian social democracy, Hayek came to view even the orthodox framework of neoclassical economics as dangerous to ‘freedom’, insofar as the claim to possess a science of economics tempts experts to believe that government planning might be possible.
Neoliberals invest the market with superhuman qualities of information processing – it is the Ultimate Cyborg, taken to be smarter than any human being and capable of conveying just the right information to those who need it in real time. As Hayek put it in his famous 1945 article on ‘The Use of Knowledge in Society’: the estate agent whose whole knowledge is almost exclusively one of temporary oppor tunities, or the arbitrageur who gains from local differences of commodity prices, are all performing eminently useful functions based on special knowledge of circumstances of the fleeting moment not known to others … It follows from this that central planning based on statistical information by its nature cannot take direct account of these circumstances of time and place … it is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications.
Neoliberals still treat the market as one special aspect of nature – no-one is ready to renounce that – but nature itself is portrayed (drawing on notions developed in cybernetics, ecology and systems theory) as ineffably complex. The market is adaptive, non-linear, chaotic – an undesigned order evolving in response to the ineradicable ignorance that, for Hayek, continually confronts all individuals and organisations. This is the core of the neoliberal critique of socialism: no human intelligence could ever understand itself, much less the chaos that constitutes its natural environment, to a degree sufficient to plan any part of the economy, because the reason we muster is always less complex than the phenomena we wish to master.
In the neoliberal version of the world, nature is not something external that hems in or constrains the economy. Rather, nature is something that we humans can never really know, except for the information that is absorbed by the market and distilled for us into price signals. Science is not an independent mode of truth discovery: it is a boutique knowledge format only validated by ‘the marketplace of ideas’. Consequently, natural scientists cannot pronounce on economic policy, because this would imply that the market could be wrong.
Neoliberals don’t believe in simple laissez faire, although they have been known to promote this doctrine as a distraction. Rather, they subscribe to the doctrine of a strong state, one poised and willing to build and maintain the world of markets. This sometimes appears confusing to outsiders who cannot understand how neoliberals can so blithely demonise the state and yet simultaneously seek to capture it. Their prescription for market failures is always more markets – yet that prescription can only be imposed by a strong state capable of keeping the electorate in line. The state must be stripped of obligations to society and used instead to insulate the market from democracy.
Science on a neoliberal planet
For neoliberals, human beings can never be trusted to know whether the biosphere is in crisis or not, because both nature and society are daunt ingly complex and evolving. The neoliberal solution is thus to enlist the state to ensure that the market will decide what, if anything, will be done in response. This can only be accomplished, however, if the market is allowed to manifest itself fully.
This is why neoliberals attack scientists claiming to speak in the public interest, meanwhile subjecting the entire institutional structure of public education and scientific research to the ethos of corporate management and knowledge privatisation, thus producing a new kind of entrepreneurial scientist.
At each step along the way, the neoliberals guarantee their core tenet remains in force: the market will arbitrate responses to biosphere degradation because it knows more than any of us about nature and society. As a bonus, some segments of the Left, operating under the impression they can oppose one or more of the neoliberal options by advocating another – that is, they might think they can defeat science denialism or geoengineering by advocating emissions trading – end up as unwitting foot soldiers for the neoliberal long march.
Each component of the neoliberal response is firmly grounded in neoliberal economic doctrine and has its own special function. Similar to the strategies of tobacco companies, science denialism is intended to quash immediate impulses to respond to the crisis, thus buying time for commercial interests to find a way to profit. The think tanks behind the denial of climate change don’t seriously believe they will, in the long run, win the war of ideas within academic science. But bashing pointy-headed elites lends them a certain populist cachet, while protecting the commercial interests of the oil companies , coal miners and gas drillers.
The project to institute markets in emission permits is a neoliberal mid-range strategy, better attuned to appeal to centrist governments, NGOs and the educated segments of the populace, as well as to the financial sector. In effect, the strategy is an elaborate bait-and-switch manoeuvre, where political actors originally bent upon using state power to curb emissions directly are instead diverted into the endless technicalities of instituting and maintaining novel markets for carbon permits and offsets, while carbon emissions grow apace.
Let’s be clear: carbon trading doesn’t work – and was never intended to do so. Once permit trading is put in place, lobbying and financial innovation will flood the fledgling market with excess permits, offsets and other instruments, so that the nominal cap on carbon emissions never actually stunts the growth of emissions. This, in turn, leads the prices of the permits to trend towards utter collapse, which is precisely what has happened a number of times with the European Union Emissions Trading System since its inception in 2005. Prices of the EU ETS dropped to zero in the first phase in 2007, and have fallen again, even though, concurrently, emissions have risen more or less continuously, excepting a hiccup during the early phase of the financial crisis. The engineered glut of permits is not temporary. In New Zealand, the emissions market has suffered a similar fate, with the carbon price opening in 2009 at around NZ$20 per ton and currently trading at a 90 per cent discount. The Chicago Climate Exchange, a voluntary scheme that traded emissions reductions in anticipation of the US eventually embracing reform, has now closed; the certificates’ value collapsed to zero in the wake of the financial crisis and never recovered.
Trading systems tend to reinforce oligopolistic power, since they always grandfather in the largest emitters and penalise new entrants. And it is well understood that trading systems tend to stifle further technological measures to curb emissions. Money that might have been used productively to transform energy infrastructure instead gets pumped into yet another set of speculative financial instruments, leading to ultra-short-term investment horizons, windfall profits for traders and all the usual symptoms of financialisation. It is difficult to imagine why Australia will be any different when the trading scheme takes effect in 2015. But, of course, extreme turbulence in the markets does not perturb neoliberals, since they take the longer view. The neoliberal fallback after the ‘cap-and -trade’ model inevitably fails will be geoengineering, which derives from the core neoliberal doctrine that entrepreneurs will innovate market solutions to address dire environmental problems.
Geoengineering is a portmanteau term covering a range of intentional large-scale manipulations of the Earth’s climate. It encompasses such phenomena as Earth albedo enhancement through ‘solar radiation management’ (through dumping vast layers of reflective particles into the stratosphere or giant space mirrors); CO, sequestration (through ocean seeding, burying biochar, introducing special genetically modified organisms or carbon capture and storage); and direct weather modification (through cloud seed ing or storm modification).
This is the whiz-bang futuristic science fiction side of neoliberalism, seed-financed by inspira tional billionaire ‘thought leaders’ like Bill Gates or Richard Branson. As Branson understands it: if we could come up with a geoengineering answer to this problem, then Copenhagen wouldn’t be necessary. We could carry on flying our planes and driving our cars.
Hence the rush to patent geoengineering tech nologies, something that so compromised the British scientific team behind the Stratospheric Particle Injection for Climate Engineering (SPICE) project that its field trials had to be cancelled. Similarly, the scientists who co-authored a report on geoengineering with various military technologists and neo-con policy hawks (including veteran think-tanker Thomas Schelling) for the Bipartisan Policy Center, a Washington think tank, have already staked out potentially lucrative positions as patent holders and senior executives in geoengineering start-ups. Ken Caldeira – a manager of Bill Gates’ fund for ‘climate innova tion’ and Chief Technology Officer of Intellectual Ventures – is a co-signatory of numerous geoengineering patent applications, including five for ‘hurricane management’, with his famous patron. Like most neoliberal prescriptions, the most important aspect of this tortured marriage of science and corporate commodification is that it doesn’t work. Geoengineering presumes corporations can take unilateral actions violating international treaties and not have to own the consequences. It doesn’t resolve the root problem – increasing CO, concentrations – and it will not stop ocean acidification, itself so dire that some scientists have called for a suite of novel ‘ocean engineering’ techniques to prevent the collapse of coral reefs.
Perhaps the utopian promise for entrepreneurs lies in the fact that geoengineering, once implemented, will have no exit strategy, requiring for centuries to come uninterrupted and ever more drastic attempts to deflect solar radiation. Until Mars can be geoengineered, the Earth’s people will be corralled into the ultimate captive market.
If science had ever been solidly situated on the side of the Left, those days are long gone. For neoliberalism, denialism is just one short-term expedient in a much more elaborate political program, one that also involves a vision of fully privatised science. Science is being wrested from the domain of the ‘public good’ and will increasingly be made to conform to the market imperative, as can be seen from attacks on high school science teachers and the re-engineering of the university for the knowledge economy.
The way out of our current impasse involves a serious reconsideration of what ‘the economy’ actually is. Rather than allowing ourselves to be enrolled pragmatically in the neoliberal script, we need to remind ourselves there are other policy options. For example, fixed high or rising carbon taxes applied universally to wholesale coal, oil and gas transactions deserve our serious consideration, as they might actually accomplish the effect of a ‘price signal’ and spur disinvestment in the ever-expanding fossil-fuel sector. It is not surprising that the Right has so vilified this strategy.
Rather than our governments adjusting economic activity to the needs of society and the planet, neoliberals seek a planet re-engineered by market forces so business as usual can continue forever. It is neoliberalism, rather than merely ‘denialism’, that needs to be defeated. If we fail in this task, we might as well get used to the murky, synthetic sunlight of a user-pays atmosphere.