What Is the Economics of Ecomodernism?

Decoupling and the Role of the State

What is the appropriate role of markets and the state when it comes to solving big environmental problems? A concurrent session at the 2015 Breakthrough Dialogue debated different economic schools of thought with respect to how ecomodernists think about growth, innovation, and the environment.

Harry Saunders, managing director at Decision Processes Incorporated, presented the capitalistic economy as a natural ecosystem that, on a long enough timeline (50-100 generations), evolves to a highly desirable state known as the Golden Age, where income inequality and poverty is eliminated.

“Evolution arises as a result of genetic variation and competitive forces prune the population. An economy acts much the same way. Progress comes from the choices made by individual agents and competitive forces maximize welfare,” said Saunders.

When asked if neoclassical economics would be enough for continued protection of the environment and lifting people out of poverty, Saunders admitted the system needed more.

“I have strong libertarian inclinations but government has to be in there. We have to find a way to get clean, cheap, abundant energy, and I don’t see that happening without significant public intervention.”

Paul Robbins, director of the Nelson Institute for Environmental Studies at University of Wisconsin, appreciated Saunders recognition of the state’s role in the economy, but embraced a different system: communal economics.

“Many of the most important, current economic innovations around the world are not exclusively capitalistic in nature,” said Robbins.

Robbins listed several examples of inventive markets and arrangements, including the Detroit Black Community Food Security Network and the Port Clyde Area Management Coalition, which involve collective and cooperative exchange in investment, self-imposed regulation, and depend on sharing and other non-market transactions. Robbins emphasized that these arrangements could be squared with ecomodernism.

“These (arrangements) are not relics of pre-modernity. They are proliferating precisely in the 21st century, amidst a burgeoning, modernizing, global capitalistic market. They are contemporary social technologies, and they are components of a good Anthropocene,” said Robbins.

Michael Lind, fellow at the New American Foundation and self-described “short-term optimist,” embraced the ecomodernist vision of innovation in both technology and institutional arrangements, but wasn’t convinced that planetary boundaries and physical limits could be completely dismissed.

To illustrate his point, Lind turned to traditional economics. He explained some of the internal forces at work in a capitalistic economy that could lead to its own demise, including under consumption, an autonomous workforce, and long-term overpopulation. Lind especially highlighted how traditional economists made a distinction between the inventive profit-making industry and landlords (owners of resources).

“Oil companies are innovative businesses to the extent that they might invent new fracking technology… but once technology is fixed, they essentially own the resources and its just pure rent. In a world where rent is more important than profit, the way to get rich is not to invent a new app, but to annex as many rent-paying people as possible.”

For these reasons, Lind wasn’t convinced that a market-based, capitalistic economy would be the appropriate system for achieving a good Anthropocene in the long term.

While all three different economic schools of thought were presented and discussed, there was no question that the panelists agreed the state has an important role to play. Lind highlighted how several of our most important technologies such as nuclear energy and the telegraph were not results of private enterprise, but of massive government intervention. He further emphasized that major innovation in energy markets would require a similar system.

The panelists also agreed the urgency for innovation. As put by Robbins, “We don’t have 50 generations to get to the Golden Age. There are some people who need lettuce today. It would be a colossal tragedy to think of it any other way.”