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“The climate challenge is an opportunity for capitalism”

Pierre Dockès
Pierre Dockès
Honorary Professor of Economic History at the University of Lyon 2

Cap­i­tal­ism has been the sub­ject of severe crit­i­cism, from its ori­gins and through­out its his­to­ry. What is the secret to its survival?

To under­stand the his­to­ry of cap­i­tal­ism, we must aban­don the idea that it is a sin­gu­lar term; it can­not be locked into a sin­gle descrip­tion. There are sev­er­al dif­fer­ent ways of see­ing it, and this is the secret of its resilience. Look at Chi­na, where we observe a very dif­fer­ent ver­sion of cap­i­tal­ism than that which we know in Europe or America. 

If you define it as an eco­nom­ic sys­tem based on free­dom of ideas, a mar­ket, pri­vate prop­er­ty, you miss much of the point. Rather, cap­i­tal­ist sys­tems are marked by the very strong pres­ence of a reg­u­la­to­ry, inter­ven­tion­ist and even author­i­tar­i­an state.

In the same way, a Marx­i­an def­i­n­i­tion, insist­ing on the rela­tion­ship between pro­duc­tion and the “wage-earn­er”, only cap­tures some of the pos­si­bil­i­ties (i.e., the first and sec­ond indus­tri­al rev­o­lu­tions). Some forms of cap­i­tal­ism devel­oped using slaves or enslaved pop­u­la­tions, while oth­ers, yes­ter­day or today, mobilise semi-depen­dent workers.

A Schum­peter-like def­i­n­i­tion, empha­sis­ing the ‘enter­prise’ and the fig­ure of the entre­pre­neur, also miss­es part of the point. That only appeared at a late stage.

The uni­ty and his­tor­i­cal coher­ence of cap­i­tal­ism is the dom­i­na­tion of mon­ey and of the class of hold­ers with finan­cial means – in brief, the bour­geoisie. When it emerged in the 16th cen­tu­ry, this new mod­el was at first mar­gin­al with­in an econ­o­my still not very mon­e­tarised and dom­i­nat­ed by agri­cul­tur­al pro­duc­tion. What ensured its suc­cess and led it to con­trol, and then absorb, a grow­ing share of pro­duc­tion and trade was its capac­i­ty for inno­va­tion or, bet­ter still: ‘cre­ative destruc­tion’, as Schum­peter put it, but which had already been hailed in the Com­mu­nist Manifesto.

So, the inno­v­a­tive pow­er of cap­i­tal­ism has enabled it to respond to the chal­lenges it has faced? 

Yes, and it is not lim­it­ed to tech­nol­o­gy. In the 19th cen­tu­ry, the indus­tri­al rev­o­lu­tion gave rise to the “social ques­tion” because of the increase in the num­ber of work­ers and the dra­mat­ic liv­ing con­di­tions that the free labour mar­ket imposed on them. As ear­ly as the 1880s, Bis­mar­ck cre­at­ed the first social insur­ance schemes. In the 1930s and post-1945, dri­ven by social and polit­i­cal protest, a “great trans­for­ma­tion” (in the sense of Karl Polanyi) took place in response to this chal­lenge, regen­er­at­ing capitalism.

State inter­ven­tion, the fight against inequal­i­ty and trans­fers con­sti­tutes a return of polit­i­cal con­trol over the econ­o­my (the ‘re-inte­gra­tion’ of which Polanyi speaks) that cor­rects the destruc­tive con­se­quences of self-reg­u­lat­ing mar­kets. And what is remark­able is the way cap­i­tal­ism has trans­formed these con­straints into a pow­er­ful engine.

Fordism is one form of this meta­mor­pho­sis. It was not to sell cars that Hen­ry Ford paid his work­ers more, rather it was to solve the prob­lem of turnover asso­ci­at­ed with low wages. This response to an inter­nal com­pa­ny prob­lem became, under the lead­er­ship of the state, the paragon of a new age of cap­i­tal­ism. Mass con­sump­tion and pro­duc­tion, the explo­sion of pro­duc­tiv­i­ty, the rise of the urban mid­dle class­es, the leisure econ­o­my, the devel­op­ment of ser­vices, etc., cor­re­spond­ed to the excep­tion­al growth of the Glo­ri­ous Thirty. 

The his­to­ry of cap­i­tal­ism  can be char­ac­terised by its rhythms, major crises – eco­nom­ic, social, polit­i­cal – and its rebound phases.

Chal­lenges and upheavals thus mark the his­to­ry of cap­i­tal­ism, a his­to­ry that can be char­ac­terised by its rhythms, major crises – eco­nom­ic, social, polit­i­cal – and its rebound phas­es: the some­times-vio­lent emer­gence of a prob­lem (wars play a major role), response and trans­for­ma­tion of the sys­tem, new prob­lem (some­times result­ing from the response), new response… And it goes on! 

Thus, it was from the cri­sis of Fordism, which could no longer raise its pro­duc­tiv­i­ty, that the rev­o­lu­tion of the 1970s and 1980s was born, embod­ied by Thatch­er and Rea­gan. A new ‘great trans­for­ma­tion’, this time neo-lib­er­al, in which finance is omnipresent, based on the third indus­tri­al rev­o­lu­tion, revived the inno­va­tion machine, hence the growth of 1994–2006 (the fab­u­lous decade). But it has again gen­er­at­ed the con­di­tions for the great finan­cial cri­sis that broke out in 2008, and the exhaus­tion of pro­duc­tiv­i­ty gains.

In your book on Cap­i­tal­ism and its rhythms (Gar­nier, two vol­umes, 2017 and 2019), you insist on the endoge­nous char­ac­ter of these crises, and on the fact that cap­i­tal­ism always push­es its lim­its. This is a mark of its dynamism, but isn’t it also its weakness?

Cap­i­tal­ism is marked by an accu­mu­la­tive log­ic, which rad­i­cal­ly dis­tin­guish­es it from pre­vi­ous eco­nom­ic sys­tems (ancient, feu­dal etc.). “Accu­mu­late, accu­mu­late,” said Marx in Book I of Cap­i­tal, “this is the law and the prophets. This unlim­it­ed accu­mu­la­tion leads cap­i­tal­ism to deep contradictions.”

It is in this that crises are endoge­nous, and I am not just talk­ing about finan­cial crises. It cre­at­ed the social ques­tion, but also, at the turn of the 20th cen­tu­ry, the ques­tion of monop­o­lies, hence the response of antitrust in the Unit­ed States, of Ger­man decarteli­sa­tion after 1945, etc. In the same way, this regime of pre­da­tion on nature has cre­at­ed the envi­ron­men­tal issue that is today a major challenge.

The cli­mate and envi­ron­men­tal chal­lenge is throw­ing the com­pass­es out of kil­ter. With col­lap­sol­o­gy, we are see­ing the reap­pear­ance of apoc­a­lyp­tic think­ing: we will be pun­ished for our sins against nature, as we were yes­ter­day against God! But it has helped to make peo­ple under­stand the impor­tance of the chal­lenge, for politi­cians and for eco­nom­ic agents, house­holds and busi­ness­es, who are now play­ing a lead­ing role in devel­op­ing a response.

Like its pre­de­ces­sors, this new chal­lenge will have its answer. Changes in men­tal­i­ties and behav­iours, and the reg­u­la­to­ry push will pro­duce tech­no­log­i­cal and social inno­va­tions in which cap­i­tal­ism, once again reg­u­lat­ed by the state and its indus­tri­al poli­cies, will be a stake­hold­er. The new alliance between cap­i­tal and the state will active­ly par­tic­i­pate in the devel­op­ment of the next world, a world of clean ener­gy where the envi­ron­men­tal foot­print of each addi­tion­al point of GDP will be ever small­er, an evo­lu­tion that has already begun.

I will go fur­ther: the cli­mate chal­lenge is per­haps an oppor­tu­ni­ty for cap­i­tal­ism. It is an oppor­tu­ni­ty to respond to anoth­er chal­lenge: that of “sec­u­lar stag­na­tion”, an old con­cern that was revived in 2013 by Lar­ry Sum­mers, for­mer chair­man of Barack Oba­ma’s Nation­al Eco­nom­ic Council. 

Sum­mers, along with oth­ers such as Robert Gor­don, has observed the decline in pro­duc­tiv­i­ty gains over the past thir­ty years. He explains it by a grow­ing deficit of invest­ment oppor­tu­ni­ties. A cri­sis of lan­guish­ing demand, a cri­sis of matu­ri­ty: the hap­py days of easy growth are behind us.

It is per­fect­ly pos­si­ble that the envi­ron­men­tal chal­lenge will pro­vide an answer to this lan­guish­ing demand. The envi­ron­men­tal tran­si­tion is a huge under­tak­ing. With the end of coal and oil, the rise in ener­gy prices promis­es prof­itable invest­ments. It also offers a wel­come return of infla­tion, which has desert­ed the goods mar­kets to con­cen­trate on real estate and finan­cial assets alone. It is also an oppor­tu­ni­ty to elim­i­nate waste and unnec­es­sary production.

Of course, one can dis­cuss the neg­a­tive effects of high­er ener­gy prices, espe­cial­ly for areas like Europe that will be lead­ers in this tran­si­tion. There is a price to pay in terms of com­pet­i­tive­ness, and unless we want to be the butt of the joke, we will need a car­bon tax at the bor­ders. There is a prob­lem of inter­na­tion­al coor­di­na­tion here, which is no small mat­ter since the eco­log­i­cal tran­si­tion must be glob­al. But the new con­straints also promise a rebound. The “cap­i­tal­ist machine”, sup­port­ed by the old, but inter­mit­tent, accom­plice, the state, may find in the cli­mate chal­lenge an oppor­tu­ni­ty to bounce back again.

Interview by Richard Robert


Pierre Dockès

Pierre Dockès

Honorary Professor of Economic History at the University of Lyon 2

Pierre Dockès specialises in historical economics (Le Sucre et les Larmes, Descartes, 2009), the history of economic ideas (the Complete Works of A. and L. Walras (ed.); Hobbes. Economie, terreur et politique, Economica, 2008). He is particularly interested in the globalisation of capitalism (Le Sucre et les Larmes, Descartes, 2009), its evolution and its crises (Le capitalisme et ses rythmes, 2 volumes, Classiques Garnier 2017-2019).

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