The world is faced with the same crisis. However, different countries are responding in different ways. Much could change over the coming weeks but, even at this stage, there is a great deal of variety in terms of government response. Some of the most successful at battling the pandemic so far have been countries in East and Southeast Asia, including China, South Korea, Singapore and Taiwan. These are all countries that are following (or have followed) the model of the “developmental state”, rather than more laissez faire, free market-based capitalism.

There are other crises facing the world. Climate change has not gone away, biodiversity loss is still a pressing issue, resource scarcity, environmental degradation, ocean pollution – all of these are still happening (albeit on completely different time horizons from the coronavirus crisis). Furthermore, as with the coronavirus crisis, different countries are responding differently to all these challenges.

Could free market capitalism be particularly unsuited to responding to environmental crises? Is the short-termism and individualism of laissez faire capitalism good for generating short-term economic growth, but bad at responding to long-term or system-wide challenges?

What do our readers think? We had a comment from James, who argues that free markets struggle when it comes to environmental protection. He says:

Free market? The free market is notoriously bad at long-term planning (that’s kind of the point). There’s nothing to stop the free market driving the environment off a cliff (a market can’t be self-correcting if all the consumers and producers have been poisoned). So, a mixed approach is needed, with sensible, proportionate government regulation (not an oxymoron) as a necessary evil.

Is he right? Can free market capitalism be environmentally sustainable as long as it is properly regulated by governments, or is capitalism inherently unsustainable?

To get a response, we spoke to Christian Kreiß, Professor of Economics at Aalen University, Germany. He has spoken publicly about why our current economic system is not sustainable, so how would he respond to James?

Capitalism in its current form, with its extreme imbalances of power and limited government regulations, cannot be sustainable. The shareholder value principle – based on maximising profits and maximising returns – essentially guarantees an unsustainable economy.

According to Greenpeace, the average middle class citizen in Europe has about ten thousand products at home. It is completely absurd. Everyone [should consider the absurdity of this] for themselves, because [the response] will also depend on individuals.

Firstly, however, we need sensible laws and regulations, because they are far too weak today. Secondly, we will need greater media plurality than we currently have, because our leading media are extremely one-sided and keep guiding us towards this craze for consumption. Thirdly, the theory of economics must also be changed: the shareholder value principle (and this selfishness) must change.

For another perspective, we also spoke to Otto Brøns-Petersen, Director of Analysis at the Centre for Political Studies (CEPOS), a free-market think-tank in Denmark. What would he say?

No, I think actually the opposite is true. I think the necessary stewardship of natural resources is only possible when we have private ownership and free-market capitalism. The prerequisite for not over-using scarce resources is that we have private ownership and the owner can benefit also from not abusing a scarce resource today.

The challenge we have is not scarce resources, as such, it’s resources that are not owned by anybody. Especially if we have a problem with our atmosphere – there’s no price generated from private ownership on the emission of greenhouse gasses. And there, we need to put a price on emissions to compensate for the fact that we don’t have private ownership. But, generally, private ownership is a prerequisite for stewardship of the environment, so I think free-market capitalism is very much needed. And, actually, if you look at it in the West, we are using fewer and fewer resources to sustain our economic growth.

Is capitalism sustainable? Can free market capitalism be environmentally sustainable as long as it is properly regulated by governments, or is capitalism inherently unsustainable? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

IMAGE CREDITS: BigStock – (c) Dipak Shelare; PORTRAIT CREDITS: Kreiß (c) Dirk Waechter

10 comments Post a commentcomment

What do YOU think?

  1. avatar

    In neoliberal stage of today is a criminal organization worse than Mafia

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  2. avatar

    yes if it is not interfered by self serving politicians

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      in nowadays everybody is claiming for More State… why, dear neoliberal?

  3. avatar

    We’ll soon know after general shutdown with virus.

  4. avatar

    Capitalism is sustainable, but it needs to be heavily regulated, and the States should be able to intervene in the economy through strategic public companies. A mixed system, with strong private and public companies, and strong regulatory agencies will have the best results.

  5. avatar

    There are many necessary tiers required to run society instead of choosing one system. Basic needs, infrastructure, science, medical research, defence, security, health, environmental protection and sustainability is the foundation tier. Then we need a means of barter, which is money. Then we need capitalism for non-essential but desired goods. Then we need tighter regulation on corporations from taking advantage of cheap or slave labour, pollution, tax evasion. The system as it stands cannot meet all these needs. Create money for essentials on the foundation tier, not for the mega-rich 1%. Nationalise banks and remove interest ( a handful of clever people renting money created out of thin air from debt creation for their private undeserved mega profits). Green energy. What would be great is if it were a globalised system that evens out the playing field. People are greedy and selfish so this has to be taken into consideration for any system reform as it this will never change. Ideals are not reality. My 2 cents worth of thoughts.

  6. avatar

    Capitalism should be controlled and better distributed. Too few have too much, and excessive profit should be controlled. It must be the role of the state to be the “referee” for the rules of the game in order to give the opportunity to have a better life, health, etc for everybody.

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