2010s >> 2019 >> no-1384-december-2019

Cooking the Books II: A capitalist own goal

A capitalist own goal

In July we drew attention to an article by George Monbiot in the Guardian (25 April) in which he announced that he had come to the conclusion that capitalism as such – as a profit-driven system geared to the endless accumulation of capital – and not any particular variety of capitalism, was the root cause of environmental damage.

We were not the only ones to comment on this. Apologists for capitalism sprang to its defence. Robert P. Murphy wrote an article (1 October) for the Institute of Energy Research entitled ‘No, Capitalism Doesn’t Threaten Humanity’ (http://bit.ly/3204I5y). He picked on Monbiot’s rather daring statement, in the subtitle of his article, that ‘the economic system is incompatible with the survival of life on Earth’.

Over-interpreting this to mean that ‘capitalism, left unchecked, will cause the literal extinction of humanity’, Murphy did not have too much difficulty in refuting such a claim.

Monbiot’s statement was not based, as is Extinction Rebellion’s, on global warming eventually making the Earth uninhabitable, but on resources eventually running out due to capitalism’s imperative to pursue endless growth. We have heard this argument before as when in 1972 the Club of Rome predicted that the world would run out of gold by 1981, mercury and silver by 1985, tin by 1987, zinc by 1990, oil by 1992, and copper, lead and natural gas by 1993 (https://wattsupwiththat.com/2013/01/19/great-moments-in-failed-predictions).

None of this happened as there is a distinction between ‘exploitable’ resources and physical resources. The physical resources are there in the ground, but what under capitalism is exploitable depends on whether or not it is profitable, which in turn depends on the cost of extraction and the price that the particular resource can command on the market. As a resource becomes more difficult to extract and the paying demand for it continues, its price rises and it becomes profitable to extract it from places where previously it wasn’t.

What is extracted is, as Murphy pointed out, ‘only a small fraction of the physical stockpile’ in the ground because ‘at any given time, it’s only sensible to have located the precise deposits of a healthy margin of such depletable resources.’

This is why there is no danger even under capitalism of material resources becoming exhausted. Capitalism threatens humanity in all sorts of way, but this is not one of them.

So, Murphy marks a point against Monbiot but he goes on to score an own goal when he writes:

Even if we imagine a scenario—contrary to reality—where humanity did run into a crisis because of natural resource crunch, the best way to deal with the situation would be reliance on private property and market prices’.

But academic economics argues in effect that there is, and always will be, a ‘natural resource crunch.’ Because human needs are (absurdly) assumed to be infinite, its textbooks teach that resources can never be enough to satisfy people’s needs and that therefore they have to be rationed through being ‘private property’ and people having to pay for what they need.

In refuting Monbiot’s claim that if capitalism continues resources will eventually run out, Murphy is also refuting the basic tenet of economics textbooks. If only a ‘small fraction’ of resources in the ground are used – and so there is no ‘natural resource crunch’ – this means that ‘private property and market prices’ are not imposed by nature and that humanity can make other arrangements to satisfy its material needs, namely, the common ownership of resources and their use to directly meet people’s needs without the intervention of the market and money.