A common misconception is that capitalism destroys the environment. I propose that it is not capitalism per se that is at fault but rather profit-seekers in an environment where protecting the environment is not rewarded.

Take the example of a gold mine or of virgin forest. The current situation is that miners will take all that there is and leave a big hole in the ground and that the slash and burn farmer will burn the forest for arable land. This happens. The reason they do it, though, is because there is no cost associated with doing so but a lot of profits to be made.

What if the situation was different? What if preserving the natural environment could become a source of income? What if money itself were not infinitely printable but was linked somehow to available natural resources? (a different kind of gold standard)

Capitalism is the way to make best use of scarce resources. If money can be created by the stroke of a banker's pen, the supply of money dictates that it will always be profitable to destroy the environment.

Possible solutions:

  1. make it extremely expensive to destroy the environment
  2. drive the price of natural resources up (this will eventually happen if the supply runs dry but can be done artificially by imposing taxes) to encourage more efficient use of them
  3. make it profitable to develop ways to save the environment
  4. change the very nature of money itself

Personally, I like the idea of changing the nature of money, though I have no idea how to do it. It would be a very interesting paradigm shift.

As a stopgap measure, stiff taxes should be placed on non-renewable resources. This would be political suicide to everyone except the Green parties but would be preferable to actually waiting for the stuff to run out before the natural supply and demand mechanisms drive the price up.

Successfully implementing a new paradigm where recycling actually makes money, where it makes economic sense not to abuse forests and fisheries and where the limitedness of natural resources is respected will have to be done someday (or the human race will die out from a lack of resources... damn, I'm starting to sound like Malthus) but it is better done sooner than later.


"I’d like to share a revelation that I’ve had during my time here. It came to me when I tried to classify your species. I realized that you’re not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment, but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed. The only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet. You are a plague. And we are the cure.

-- Agent Smith, The Matrix

Actually, the capitalist point of view is that the government destroys the environment by regulation and government ownership of land. The basic argument is that it is easy to get away with polluting land that is not privately owned because the government is too big and slow to really stop it. Because it is public land, no one really takes responsibility for it and there's no immediate victim. Capitalism advocates private ownership of land, in which case pollution would not be as big of a problem because it would be damaging private property, and the owners of that property would be better able to take legal action against the polluters than the government.

That's the theory at least...

Two other ways that capitalism will help save the environment.

Saving the environment will save you money! Well, in some cases. The strain on the environment comes from too many people using the same resources. When there is a high demand for a given resource the price goes up. Gasoline is an excellent example. Therefore, technologies that use less gas, electricity, water, or other resources become more attractive as the supply of the resources dwindle. Of course, even when your water bill is already low, most people would still like to have it lower, so new water saving technology in a capitalistic market will tend to do better than old water wasting technology.

Aside from the stark economic truth that using less costs less, capitalism has another stronger tool. Supply and demand will ensure that, all else being equal, the consumer gets what he wants. If the consumer wants polluting Hummers and stretch-SUVs, they will get them. if the consumer wants organic vegetables and cars that run on those same vegetables, they will get that. In a society of people who want to save the environment, the free market will provide good that will save the environment.

The big question now is if we really do want to save the environment.


There's a third way that capitalism 'helps' the environment. When economists talk about environmental problems they are often thinking of the environment in strictly human terms. The worst environmental problems are those that kill the most people, and these problems are by far the most severe in third world countries, where pollution in the atmosphere and diseases in the water are the big environmental problems. Bringing these communities up to a higher standard of living would result in lower levels of pollution and desease, lowering death rates, and thus 'help the environment'. It is entirely reasonable to assume that the free market will help improve these people's lives, given time.

This type of thinking is great for the humans, but doesn't do the spotted owls any good.

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