6: The steady state economy - pathways out of capitalism
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Terry Leahy 2023
This chapter is on what has been called the ‘steady state economy’. I think that’s probably the most familiar term. The term that I use myself is ‘radical reformism’. I call it ‘radical’ because it aims at system change. The system that is being proposed is not really capitalism. So radical reformists are in favour of system change of a certain kind. Not through a revolution. They hope to use parliamentary democracy to bring in a set of measures that moderate, rather than abolish, the market economy. That’s why I’m calling it radical reformism. Like the welfare state on steroids. That will become clear as I explain it.
Radical reformists aim at a peaceful transition in the context of a market economy rather than a revolutionary overthrow and seizure of the means of production. I like Tim Jackson’s description of this proposal. Adapting a Dr. Spock quote. ‘Well, it’s capitalism, Jim, but not as we know it’. Other authors claim the proposal is to go beyond capitalism. For example, Serge Latouche, one of the founders of the ‘degrowth’ movement, suggests that various aspects of the capitalist economy continue but they are to be animated by a new understanding and practice — that implies an end to capitalism. Some aspects of capitalism that radical reformists intend to keep are the market, wage labour, and private ownership of much of the economy.
I am defining radical reformism as a strand of the environmental movement that argues that an end to growth is necessary, that we can’t have infinite growth on a finite planet. Economists usually calculate growth in relation to GDP (gross domestic product) — a measure of growth in the monetary value of transactions. Radical reformists argue that this monetary growth inevitably comes along with a growth in the use of resources, the production of waste and environmental damage. That argument is certainly backed up by the history of actual GDP growth and environmental impact.
Radical reformists reject a common strand of optimistic pro-capitalist thinking. That it is possible to decouple economic growth from the growth in resource use. As economies ‘mature’, so goes the argument, they produce less as material goods (toasters and washing machines) and more as immaterial services (digital games and MP3s). Radical reformists point out that while this may well work in theory, the reality on the ground is that industrial goods are still being produced, but in the global south. Meanwhile the rich countries have appeared to enter the ‘service’ economy. None of these ‘services’ float free of resource use — in energy used to store data and devices used to read it. A huge growth of industrial production, with vast amounts of resource use and carbon dioxide emissions.
Accordingly, radical reformists insist, what we need is a steady state economy. A steady and low use of non-renewable resources. With most being recycled. A low level of production. Wastes being produced only to the extent that they can be absorbed by the environment. A steady population. Renewables only being used to the extent that natural processes replace the resource. A constant stock of ‘capital’, meaning, industrial machinery, farms, and the built environment. This steady state is maintained by a low rate of throughput — from resources at one end to wastes at the other. The steady state comes about because very few resources are being extracted and very few wastes are being produced. These ideas for a ‘steady state’ economy were first developed by the economist Herman Daly in the seventies. Current versions of these proposals also talk about the need for ‘de-growth’, at least in the rich countries. We have already exceeded planetary boundaries. So, we need to get back to a steady state at a much lower level of resource use.
There is much in this analysis that is shared with other currents on the left and other proposals for system change. What makes this pathway distinctive is the proposals for change put forward by radical reformists. Degrowth and the final steady state economy are to be achieved by a combination of state regulation and cultural change. The cultural change means that the community, including the capitalist class, comes to see the necessity for a sustainable economy. This cultural shift provides the parliamentary majority necessary for state regulation. It also alters daily life — the behaviour of economic actors, whether we are talking about firms or everyday consumers.
Before I go into it in more detail, I just want to say that this viewpoint is very mainstream in the environmentalist movement now. Environmentalists — as in people who are seriously concerned about environmental problems and believe that the current system is creating these problems. That we need to move to a sustainable society. Most people who believe that also think that the steady state is the way forward. Here are a few examples. As I have said, Herman Daly is the founder of this perspective. More recent writers with this view are Paul Gilding, previously a chair of Greenpeace. Richard Heinberg, from the peak oil movement. Tim Jackson, an environmentalist economist writing about the need to end growth. Kate Raworth, the originator of the concept of ‘doughnut economics’ — there is a zone of possibility within which humans can use natural resources without destroying the planet. Naomi Klein, who refers to herself as a socialist, but in fact promotes radical reformism. Jason Hickel. A prominent author from the degrowth movement. Paul Mason, with his book on ‘post-capitalism’. In Australia, Haydn Washington an ecological economist and in his younger days an activist for the Northern Rivers rainforests. Lately another Australian social theorist, and a former socialist, Boris Frankel.
Restraining resource use
As you will know if you have read some of the books mentioned above, this is a very diverse collection of writings. The way I think of radical reformism, it is a cluster of ideas, a bag of tricks, from which different authors select different packages. Confusingly, many of these measures would also be endorsed as transitional strategies by people who might have quite a different end game in mind — democratic socialism or the gift economy.
Let’s start off by looking at some of the measures to restrain environmental damage and to bring about a steady state environmentally sustainable economy.
Cap and trade as a measure to restrain the use of resources is an option suggested by Herman Daly. There are cases of this legislative measure in place that we can look at to see that it works. For example, with fisheries, set a cap which is a weight of fish that can be caught in a month. People in the fish business bid for a certain proportion of this capped amount. The price is the effect of an auction. People bid more if there is more market demand. There must be policing so that when the fish are brought into port, their weight is measured by an independent authority. Another example is the auctioning of rights to water from a river, to be used for irrigation. The government sets a total amount that they think is consistent with sustainable use and auctions water rights from that amount.
So, cap and trade is that system. The government sets a limit to how much of the resource will be extracted and used in any given year (the cap) and firms bid for access to it (the trade). Obviously, the price goes up if there’s high demand and goes down if there’s low demand. But at the end of the day, the government can be confident that only a certain amount of the resource is being used. This system can be used to reduce carbon emissions. In the beginning, the cap is set at an amount similar to present usage. Then in each year, the cap is reduced, forcing the price of fossil fuels to rise, and limiting their use. Eventually, we get used to using less energy or we would find an affordable substitute for fossil fuels.
A similar option uses ecological taxes to affect market behaviour and reduce resource use. The aim can be to set the tax so high that the resource ceases to be used, or alternatively just to reduce use. For example, with carbon emissions. Set the tax low to begin with so that businesses are not driven into bankruptcy. Then gradually increase the tax to the point where it is cheaper to use renewables, or necessary to reduce energy use. Use the resource tax to replace income taxes or to fund environmentalist re-structuring. Let us take the example of a resource that is hard to replace with an alternative. Phosphates. There are deposits of concentrated phosphates around the world. However, there is a limited supply of these phosphates that could be mined. We use these mined phosphates to supply phosphorous — an essential chemical required by plants. Deposits of phosphates are running low, but so long as they are available, they will be mined and sold at competitive prices. Eventually, there will be a sudden collapse in supply and a drastic shortage of food. To avoid this disaster, governments could gradually increase the price of phosphates with a tax, growing every year. The tax would force most agricultural producers to think twice about using phosphate fertilisers. They would re-develop farming systems using manure, a traditional source of phosphate. That would become the cheaper option.
In both these cases, cap and trade, and eco-taxes, the intention is to shift the behaviour of businesses by changing the market context. To phase out or reduce the use of a resource. An even simpler measure is banning the use of a particular resource or regulating its use. Most European governments have now legislated to end the sale of petrol and diesel cars by a certain date. This is a ban. Falling short of a total ban are restrictions on sale. For example, only allowing gas to be used in industries that cannot be profitable without it. Aluminium plants but not cooking stoves. So, bans and regulations are part of the armoury available to change market behaviour.
How could measures like this end up with a zero-growth economy? The argument here is that growth in GDP cannot take place without a growth in resource use. The measures being proposed are all measures intended to cut resource use. The effect must be to reduce GDP. Since GDP is a measure of economic health, the aim is not to keep reducing GDP forever. But down to a point compatible with environmental goals. The aim then will be to achieve a steady state by tweaking these measures to allow the economy to function at this level. The reduction in GDP and the final steady state are not in fact the primary goals of these measures. The primary goals are to reduce resource use and reduce the impact on the environment. The decline in GDP and the final steady state are side effects.
Other economic measures
As explained, radical reformists do not believe that an economy can ‘decouple’ economic growth from resource use. Yet concrete proposals for the steady state economy often mention a shift from industrial goods to less materially intensive service industries. Obviously, any industry has some material impact, but some have less than others, per unit of monetary value. For example, therapeutic services, cultural productions. These industries will expand and provide employment while more environmentally damaging industries will contract.
Radical reformists envisage strong government support for environmental technologies. The government funds research and development. They provide subsidies for technologies that look after the environment — for example a taxpayer funded grant on heat pump hot water to replace gas systems.
Steady state proponents are aware of the way in which private companies externalize environmental costs to increase profitability. To ensure that key drivers of environmental damage are rescued from this market context they suggest government ownership of some industries — such as energy, transport and even agriculture. As with democratic socialists, radical reformists see workers’ cooperatives as more likely to operate ethically where the environment is concerned. They consequently favour government support for cooperatives.
One measure that radical reformists often suggest is government management of money supplies. Using ‘modern monetary theory’. In other words, the government funds what is necessary to construct a sustainable society. Not by taxing people, but by printing money and allocating it to these purposes. A more conventional proposal is taxing the wealthy. The rich pay for an environmentalist retrofit.
Political support
Radical reformists envisage these government measures as being backed up by a cultural shift. Changing economic behaviour and driving the political change to strong government action. For the wealthy, a shift to ethical investment options — investments in projects that do not damage the environment, sustainable forestry, solar or wind power. Paul Gilding writes about this with great enthusiasm. The capitalist class itself, along with the military and other elites will come to an understanding of the environmental crisis and act accordingly. Other writers in this vein are more likely to see popular pressure putting limits on market elites. People become ethical shoppers; they vote for parties that put the environment first. They make a choice to reduce, re-use and recycle.
Representative democracy is clearly a key. The necessity to ‘get the political will’ to make these changes. Meaning that people will vote in governments prepared to make the necessary changes. Also, that these governments will collaborate to develop a global program of change. As with the various summits we have had on climate change. Imagine these summits having more teeth because there’s more popular support for drastic measures. This scenario seems more plausible for representative democracies such as the USA, Europe and so on. It seems less likely in more authoritarian political regimes.
Social measures and redistributions
What I have been talking about so far are the changes in the economy. How it is regulated and how it operates in practice. Radical reformists also discuss a range of social measures.
Recent radical reformist writings propose a degrowth of the economy to reach a steady state at a low level of throughput. For example, Serge Latouche and Tim Jackson envisage a cut in GDP to a third or less of what it is now in the rich countries. This contraction would be what we usually call a ‘recession’. With less value in total monetary transactions, there is less employment. People are buying less, there is less being produced for the market, there are fewer jobs producing things. Of course, some people are employed by the government in environmental restructuring. But in the economy taken as a whole, there’s less money going around and less employment. The effects of unemployment or inadequate employment can be dire. No money to pay for housing, food, education, or medical expenses. People proposing a zero-growth economy are totally aware of that. They have three major proposals to deal with unemployment as a problem for this strategy. All these work by redistributing the wealth of the affluent employed working class, the middle class and the rich.
One of the proposals most often mentioned is a universal, basic income (UBI). A UBI is universal because anyone getting less money than the basic income can receive the UBI. Alternatively, it is universal because everyone is paid the UBI as a basic starting point. The aim is to provide enough income for someone to live quite comfortably without a job. You are not even expected to look for a job to get the UBI. A recognition that the new degrowth economy cannot find jobs for everyone. Less stuff is being produced and marketed so there is less need to employ people. We could have up to seventy per cent unemployed and, with the UBI, it would not be a problem. The UBI would be set at a level that allowed a comfortable and secure living. People on the UBI would be enjoying their leisure or spending their time on useful but voluntary community work — community gardens, creative arts and drama productions, music festivals, and whatever. A redistribution from the employed taxpayers, or from the rich, to those who are unemployed. Some of the work that in the old economy would have been making goods and services for the rich would now be devoted to the needs of the unemployed. The total level of production would diminish but the unemployed would not feel the impact. They might be getting slightly less cash income than the employed people, but they would enjoy more leisure.
To explain why this affects the wealthy. One route is taxing this wealthy cohort to pay for the UBI. The other is Modern Monetary Theory (MMT). The government prints money to pay the UBI and the effect is to direct the economy to producing things for those who are on the UBI. How does this affect the rich? Because we have a steady state economy, there is no extra piece of the economic pie being made available through MMT — we cannot grow the size of the economy to produce more stuff, for those on UBI. What happens is that the incomes and assets of the wealthy have less value in real terms, their money can buy less. A form of taxation by the back door.
Another proposal with a different strategy to produce somewhat similar effects is a limitation to the working week. The available work would be parcelled out in equal shares to each working adult. The economy would shrink — but we would not have some people with a 40-hour week, making a decent income, and other people scraping by on unemployment benefits. If the economy shrank to thirty per cent of what it is now, the government might restrict you to two days of paid work. A huge expansion in leisure. As in the UBI scenario, this time could be spent putting your feet up — or getting involved in community pursuits. Organizing dance festivals. Seasonal rituals. Wood carving. This is also a form of redistribution. One aspect is redistributing paid work, and with that income. The other is government provision of guaranteed employment. So, no one is out of a job. The monetary cost of this must come from taxes or MMT, just as with the UBI.
This model has implications for relationships between the global south and the rich countries. One of the most common critiques of ‘degrowth’ is that degrowth cannot apply to the global south. Do people who are going hungry, have no clean water supply, no sewerage and no electricity need degrowth? Surely what they need is growth — in consumption and infrastructure. Responding to this charge, radical reformists advocate a policy of ‘contract and converge’. The rich countries contract their use of resources while the global south expands. With both ending up with a steady state at a much lower level of resource use than we have today. Radical reformists usually make this analysis and go on to say that the rich countries must assist the global south with renewables. In fact, this redistribution would be necessary to get political support for radical reformism from the global south.
A critique of radical reformists
As I have pointed out, some version of this package is very popular with environmentalists. I hate to be the party pooper. In the context of a largely capitalist economy, there is a lot in these ideas that I like. I just doubt whether a strong package of these reforms can work as envisaged by radical reformists.
If we look at the situation described in the second chapter, we can see why radical reformism is such an appealing idea and how it hangs together as a package. The first world bargain is the deal in which capitalism promises the people of the rich countries increasing affluence — and they give up on dreams of an anti-capitalist revolution. The environmental crisis puts that deal on notice. The cost of an environmental retrofit and the cost of environmental damage must reduce the standard of living for ordinary people in the rich countries. A possible consequence is a revolution. Radical reformists don’t want that outcome. They equate a socialist revolution to terror and totalitarian dictatorship. What they want instead is a peaceful transition that will encompass an environmentalist re-structuring. They think that is most likely if we move towards something, that’s not too different to capitalism. A welfare state on steroids.
This explains why all the redistribution measures proposed by radical reformists are considered to be necessary. They are politically necessary to enable environmental reforms. From a purely environmentalist point of view, we could cut resource use and just let ordinary people in the rich countries cope with high levels of unemployment, poverty, and economic insecurity — as many do now in the global south. That would not be an environmental problem. But it would quickly become a political problem. Political support for radical reformism would crumble.
I will argue that to be effective, the reforms proposed by radical reformism would destroy the market economy — with unpredictable consequences. You certainly would not end up with anything like what is proposed by radical reformism. A more mild and palatable set of reforms would be unable to deal with the environmental crisis. They would not go far enough and full-scale capitalism, with all its problems, would come back.
To make this argument, I’m going to look at two key groups. One is business owners and the second is ordinary people — workers, in the broadest sense.
Business owners
For business owners, competition for market share and increased profits is not an option. It’s a necessity. If you don’t always try to get increased profits and an increased share of the market, some other firm will come along and take your market. Getting more sales, while your products just sit on the shelf. Your capital, your means of production, will be worth nothing because some other firm has grabbed your market. Your workers will end up without a job, your workplace will be lying idle. Pushing hard to make more money and more profits is absolutely necessary. It is a mistake to think of this pursuit of growth as a cultural mindset, something that could vanish if the capitalist class were converted to environmentalism. It comes out of the economic structure of a market economy, with competing firms owned privately. This applies to firms at every scale. Whether we are talking about huge multinationals, ma and pa corner shops or workers’ cooperatives.
In fact, it’s this drive to compete and increase market share, which creates the efficiency that radical reformists want to retain. Every firm is trying to find a cheaper way to do things — so they can increase their market share and their profits. But at the same time as the market drives this monetary efficiency, it also creates economic growth. People are competing to get more profits. They are doing this by producing more with less money, increasing the number of items that they are selling and (in most cases) the resources that they are using.
How would this play out in the economic system envisaged by radical reformists? The market continues to operate, and firms attempt to grow their market share. But the government steps in through cap and trade, through taxes and regulations to stifle growth by restricting resource use. You come up with a great new idea to produce more widgets and make more money. But the government moves in and increases the price of some essential ingredient. You end up unable to sell any more widgets than last year. From the firm’s point of view, the government is constantly making it difficult for you to grow your income. Making you vulnerable to competition. For the people who invest in businesses, every investment is less likely to be profitable than in a growing economy. In a growing economy, you lend some money to a firm, and you’ve got a reasonable expectation of getting it back with interest. The debtor firm can grow their business because the economy, taken as a whole, is growing. When the economy is flat lining, that becomes more difficult. The typical reaction of investors to a situation like this is to keep their money in the bank, rather than invest it. The market has ‘lost confidence’ in the economy. An investment strike. With unemployment and poverty for ordinary people, and a downturn in taxable income for the government.
What can the radical reformist government do if this happens? Step in and fund projects to boost the economy and employ people. Moving away from radical reformism and ending up closer to a democratic socialist economy. The capitalist class responds by pulling out even more investments. The government responds by taking over even more of the economy. With all the problems of the democratic socialist model. The other response could be to restore the confidence of the market by reducing taxes on the rich, reducing taxes on resources and easing caps. The business-as-usual solution. With all the typical environmental problems of capitalism. As likely a scenario is that the government will just muddle through, sticking to their caps and regulations. The market economy will fail, with social and political breakdown. A collapse. The drastic alternative would be to abandon the market economy lock stock and barrel. Abolish money and invite workers to take over their businesses and run them as gift cooperatives. The zero-growth model itself is not stable. It will not work in the long-term.
For the rest of us
I’ve now looked at the problems of radical reformism for business owners and talked about how they might be likely to respond. Let’s look at the problems where ordinary people are concerned. I am going to suggest that the social measures that radical reformists recommend would undermine the market in labour. At present, the market functions because people need a job. They need a job, they become employed. They produce something which goes on the market. Other workers who’ve been paid, in their jobs, can then buy it. That’s how it all works. If you undermine the necessity to get a job, you undermine a key pillar of the market economy.
Let us look first at the proposal for a universal basic income (UBI). The UBI must be enough to live comfortably. That is because it must help people to cope with the economic contraction consequent on de-growth. To give these changes continuing political support at the ballot box and in everyday life. Quite a lot of people will be unemployed — maybe even 70 per cent. We don’t want that to become a political problem. So, we’re going to pay people a comfortable income. You, as a worker, don’t need to get a job. You can leave the paid workforce and live comfortably, spending your time in hobbies and voluntary community work.
In the worst-case scenario for radical reformism the effect of the UBI could be an instant general strike. Who wants to go to work? But in a more likely scenario, those who did stay on in a job would find their bargaining power massively strengthened. Imagine you are one of the small number of people who are fully employed. You turn up at work and the boss says, ‘We’re going to do it this way.’ And you and five other workers in that unit go, ‘No, we’re not. Now you can do it our way, or we’ll just go and get the basic income.’ This change in power relations would undermine the economic logic of the market, what it means for a market to be a market. The supposed owners of capital would lose the power of ownership. They would be unable to control how their workers were using the capital. They could not run their business to ensure a profit. There would be no work discipline.
This could go even further. Workers could end up challenging the market in a hundred other ways. Let us talk about a business that is not owned by a capitalist boss. Instead, imagine a cooperative that decides not to sell their products to those with the money to buy them at a market price. Instead, they are going to undersell them to people who cannot afford them otherwise. Or to their friends and relatives. They are not worried that they are not getting a market price. They will just live on the UBI if their firm is not making enough to pay them. Living comfortably while their cooperative makes decisions that make no market sense. Such behaviour could well be expected with the cultural shift radical reformists anticipate. To sociable generosity and away from competitive greed. In a situation like this, money would have no predictable value. The UBI itself — as a monetary payment — could end up being useless.
When radical reformists consider critiques of the UBI the one they most often engage with is this. What would motivate people to work when they can live comfortably on the UBI? How can a market economy function in such a situation? The answers from radical reformists are always the same. People have an innate desire to express themselves creatively through their work. They like the sense of public participation that work enables. This reply misunderstands the issue. The issue is not whether people like to work and do socially useful things with their time. It is whether people are willing to work under the conditions of a market economy. Working under a boss who is more interested in money than anything else — and must be to keep the business competitive. Marketing things that people want to buy and selling them to those who are prepared to pay the most. Running your enterprise to compete with other firms trying beat you to that market. Well, yes, people will clearly put themselves under those constraints if (as now) the alternative is economic insecurity and stigmatizing poverty. But maybe not if the alternative is the UBI. Even if people do go to work, they cannot be expected to remain within limits that make a market function as a market. Who is going to behave like that when the UBI is available?
Quite a few radical reformists do not propose the UBI. Instead, they want available paid work to be shared equally. For example, the government might enforce a 10-hour working week. On the face of it, this seems to avoid the problems of a UBI. You must have a job to get income. But perhaps it is not too different really. Everyone’s working for only 10 hours. In the rest of the week, what are they doing? They’re doing voluntary community projects. Community gardens, wildlife restoration, amateur theatricals, public sculpture or whatever. Hanging out with friends and producing things. Things which are generally useful. Things produced for free — making it difficult to sell the same goods on the market. Your community garden is growing a glut of lemons and giving them away. The local supermarket cannot make a cent out of lemons.
The huge preponderance of this voluntary community work reminds us every day that we do not actually need the market. The things we are doing in our paid work — obeying a boss, competing to corner the market, distributing to those with the money to buy. All of this is really beside the point. We could do without it by expanding voluntary community work to cover the whole economy. The restriction of paid work to ten hours a week invites people to experience unpaid voluntary work as a way of life — not just as a hurried snatched moment. People have an experience of working collectively and democratically. They have been doing the things that they think are important and distributing their productions wherever they want. And then they are expected to go along to their paid job and do what they’re told and what the market requires? Not unlike the UBI, this situation undermines market discipline. Especially if joined to this, is a job guarantee. You can leave any job you are unhappy with and expect to get another — or at least to be secure on a generous welfare payment. With reasonable prices for essentials, some of which are provided free by government.
The long and the short of it. The market economy depends on alienated labour. If you allow people to escape alienation, you undermine the market economy.
Bureaucratic overkill
Looking at the democratic socialist vision I talked about the difficulty of combining public ownership, democratic planning, and a market. In some ways the problems of a radical reformist economy are not that different. In the democratic socialist vision, the government owns the bulk of the means of production and provides money to carry out the tasks that the government sets. This turns out to be a lot more complicated than you might think. The money that the government provides creates incentives for people to interfere with the plan. Massive bureaucratic oversight is required to keep lining things up. In the radical reformist vision, the market has a lot more freedom — in theory. There is no central plan to determine what will be produced. Nevertheless, in any case where an issue of social justice or environmental impact is concerned, the government steps in and uses market incentives and regulations to guide the market to politically required outcomes. The basic premise of the radical reformist position is that the unregulated market understates the real value of social justice and environmental goods. A ‘market failure.’ Accordingly, government must intervene to restore the supposed ‘real’ values and translate them into monetary incentives. I think that’s a very fraught exercise, with complications that are not immediately apparent.
One thing. It’s actually impossible to compare values according to some universal standard. There is no way we can get a computer programme to answer these questions to the satisfaction of all concerned. For example, how much is a polar bear worth compared to twenty sleepless nights in a stressful job? These are both values, which we could consider, but, quantitatively, how would we measure this? It is hard to think of a production decision that does not have implications for social justice and environmental impact. For example, how many kinds of plastic are in the world and what is the correct way to price these diverse plastics to avoid environmental impact? Which environmental impacts are the ones we should be worrying about? What are the social consequences of regulating these plastics? Remember that in the radical reformist vision, these decisions are all to be made democratically — if possible, through participatory democracy. Then, having decided, the government must pay for the necessary enforcement. In a market economy — where every player has an incentive to cut corners to stay ahead of the competition. Am I the only one who thinks this is a bureaucratic nightmare? We can adjust the market through measures like this on a small scale — and get away without a massive bureaucratic headache. But we are only scratching the surface of the problems we need to fix. Look at the debates raging between environmentalists about renewable energy. One environmentalist is saying, every solar panel you buy has been produced by slave labour. Another is saying, we need to replace fossil fuels with renewables to give working class men a job.
The effect of re-pricing and regulating resources, goods and services is that each of these re-pricing decisions produces a ripple of consequences, which are difficult to foresee in advance. Let us make an example of an issue that governments are taking up now, with varying degrees of determination. One of the key uses of fossil fuels, especially in the rich countries, is private transport. In fact, driving to work in your own car is pretty well a necessity in suburbs built to be car dependent. Using public transport can end up meaning that you spend more than two hours commuting. Driving your car can cut that in half. The logical approach for a radical reformist government would be to boost the price of petrol and diesel through a carbon tax. Or ban the sale of cars using these fuels. The radical reformist government might promise that EVs would replace petrol and diesel cars. The most politically palatable option. This is where the largely unpredictable effects of a market economy kick in. A global policy like this would see a drastic increase in demand for electric vehicles. Accordingly, a steep increase in the price of the mineral ingredients for the batteries and motors. Increasing the cost of EVs to the point where most people could not afford them.
Suddenly the radical reformist government would be in an untenable political situation. They have intervened to reduce the use of fossil fuels, promising the electorate they can still travel to work in their own car. But there has been an unexpected market impact that makes that promise untenable. This example concerns just one little part of the current economy. In an economy seriously devoted to the environment and social justice, ripples like this would be endemic. To constantly adjust for these effects, to predict them, to legislate, to impose market limits and to enforce these solutions. Mountains of red tape, paperwork, and costs to government.
To which discussion I am sure some people are saying, ‘So what is the alternative?’ The gift economy alternative avoids this. A decentralized decision-making process with money taken out of the equation. That alternative could make these adjustments without bureaucratic overkill.
Conclusions
I have argued that radical reformism is not a viable long-term post-capitalist option. I can see why it seems to be a good idea. Everything that is being proposed is a version of something we have already done to regulate the market. These measures are just to be ramped up to the point where degrowth to a steady state takes place. What could go wrong? As I’ve explained, the minute you ramp it up to that extent, you destroy the market economy. The foundation on which the whole structure of radical reformism depends.
Faced with this argument, I can imagine many environmentalists would respond like this. ‘Your concern is that what we propose will destroy the market economy. Why is that a problem?’ Well, to begin with, that kind of thinking is gaslighting where the population at large is concerned. We are going to promote this idea, knowing it can never work. Furthermore, the most likely outcome is that you do not have a peaceful transition at all. You create economic chaos — which could of course be followed by a revolutionary transition to the gift economy. Whoop whoop. But just as likely is right wing fascism or the return of business as usual, with collapse as the outcome.
At the same time, I recognize that this is the mainstream alternative to capitalism being proposed in the environmentalist left. Even people who get labelled as ‘socialists’ are moving in this direction. I am thinking of the ‘Green New Deal’ associated with the Bernie Sanders campaign in the US or Jeremy Corbyn’s campaign in the UK. Not to mention people who are much more readily identified as environmentalists — such as the Green parties, Greenpeace, the peak oil writers, permaculture activists and a large part of the degrowth movement.
I have very mixed feelings about this. It makes sense to propose demands that sound realistic. Pushing for small reforms we may get something better than nothing. That is certainly the strategy of the Greens in Australia. I can understand that. But I do not think that a host of these small reforms can be stitched together to make a stable post-capitalist society. So far, some of these reforms get put in place and they’re not strong enough to make a huge difference. Or they get wound back as the capitalist class pulls the usual strings. Julia Gillard was the Labor party prime minister in Australia between 2010 and 2013. Her carbon tax was a classic of how these things work out. While I supported it, I knew it was a minimal intervention — inadequate according to the science. The conservative parties scared people and the usual capitalist interests spent lots on media campaigns. Australian industry cannot compete if we are hobbled by the carbon tax. You will lose your jobs. The conservative coalition was voted in at the next election and the tax was scrapped. Even now, ten years later, the ALP is not brave enough to suggest a carbon tax.
The radical reformist political strategy is based on this reasoning. Let’s not scare the horses. We are not going to overthrow the market economy. Instead, we will engineer a peaceful transition through measures people can understand. But in fact, to get the ground swell of support for these measures we need a population prepared to go to any lengths. I do not believe that a population angry enough to take such a drastic step would stop at radical reformism. Ideally, what I’d like to see is a groundswell of recruitment to the gift economy perspective. At the moment, that seems extremely unlikely. But if I had to say what I think could in fact work, that would be it.
Defending the radical reformist position, a common argument is this. We do not have the time to build a groundswell of political support to overthrow capitalism. Let’s start with something that is not too far out of the Overton window. To which my short reply is, we do not have time to try something that can’t work. At the same time, many of the current projects of radical reformism make sense even if your long-term objective is the gift economy. More on this in later chapters. In the next chapter I will consider the transition to the gift economy.
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Notes
Notes