The Paris Agreement (COP21) in December 2016 is intended to encourage fuel efficiency and develop non-fossil fuels so as to limit global warming to 1.50C above pre-industrial levels. Will it?
The USA has given notice that it will withdraw from COP21 by 2020. This will not help, but the strategy itself is flawed. As the discussion paper on Global Warming from the Communist University in South London (CUiSL), currently in the proof reading stage, argues, catastrophic climate change will only be avoided if fossil fuels are left in the ground. There is, however, no indication that this is happening. According to a forecast from the International Energy Agency, annual fossil fuel consumption is set to increase by the equivalent of 82 trillion barrels of oil by 2040[i]. This is 14% more than at present and is forecast despite a forecast increase in renewable and nuclear energy of 67% by 2040. These will still be contributing less than a quarter of our energy by 2040.
This failure to act to halt global warming should not surprise us. As the CUiSL discussion paper also argues, capitalism is simply incapable of addressing global warming. Its rationale is the accumulation of capital by generating profits. Due to market-based discounting, its time horizons are too near, leading it to under-estimate catastrophe in coming decades; there is simply too much profit to be made today and in future from fossil fuel extraction to leave it in the ground; and there is too much capital tied up in fossil fuel extraction to see it written off. Whether or not every apologist for capitalism recognises it, their mantra is “Pump, baby pump”. Ours should be borrowed from the Cubans: Socialismo o muerte (Socialism or death). Cubans use it to affirm their willingness to die to defend their system. We need to adopt it in recognition that our system, capitalism, will kill our grandchildren if we don’t begin to take steps now to replace it with socialism.
Writing this week in City AM, Diego Zuluaga, Head of Financial Services and Tech Policy at the Institute of Economic Affairs, seeks to defend capitalism. His article on 24 October Big Businesses Denigrating Capitalism Don’t Understand It is interesting not for its call on big business leaders not to rock the boat, nor for its arguments in defence of capitalism – even the author must surely recognise, deep down, they are disingenuous – but because it was felt necessary to publish such a defence at all.
For Marxists, a study of history and an analysis of capitalism and its instabilities leads us to conclude that capitalism is merely the penultimate stage in our evolving, class-based society, not the final equilibrium or ‘end of history’ envisaged by Francis Fukuyama. Marxists are sometimes accused of irrational belief, but belief has nothing to do with it. Our approach is a rational and scientific one. It is the defenders of capitalism who exhibit irrational belief. Their confidence that de-regulating markets will lead to the welfare of all is, at best, based on an elegant model built on unrealistic assumptions. In practice, it is based neither on economic theory nor on Zuluaga’s flimsy arguments but on the self-interest of the ruling class and those in their pay. Our theories, on the other hand, have concrete evidence to support them: the 2007 financial crash; historic levels of inequality; Grenfel Tower; global warming; the housing crisis; growing hospital waiting times; bloated expenditure on ‘defence’; and …. Readers of this blog are invited to complete the list.
It may be too soon to claim again, as did Marx and Engels in the Communist Manifesto, that ‘a spectre is haunting Europe, the spectre of communism’, but we can take comfort from the thought that something is spooking our ruling class.
 The Arrow-Debreu Model, a mathematical expression of Adam Smith’s ‘hidden hand’. Amongst its many unrealistic assumptions is perfect and complete markets.