The Eco-Social Market Economy in a Post-Environmental Age
Our economy and ecology are forever linked. The two words sound alike, as they come from the same Greek word “oikos” or “ecos,” which mean the home. But this treatise is about more than the roots of words. It’s about our creativity as human beings in both our ecology and the economy and also about trusting science and the goodness of human nature. We will start with a humanist philosophical bent or the idea that human life is worth living or something to be cherished and valued.
Applying humanistic ideas also means that we can use a thought and evidence approach to solve problems and improve the world in which we live in. In addition, this is a critique of the idea of “naturalness” in both ecology and economy, as many environmentalists expose a form of “eco-mysticism” where humans return nature to some golden age in the past, or really just an idealized past. This attitude bears a resemblance to many of the conservative or libertarian bent who are in love with “the market” and see anything that interferes with it as “unnatural.” Both of these attitudes were dangerous as we look at the challenges the greenhouse effect, or global warming presents. I like the term greenhouse effect because it was used most often when I was growing up and the subject of global warming has gloom and doom attached to it. Personally, I don’t see how anyone can deny the greenhouse effect because every major professional scientific organization has issued reports declaring it a reality. However, I don’t know that we can say human civilization will end because of it. Overall, this essay is a positive reaffirmation of our ability to build both an economy and ecology that serves our needs for improvement and growth.
The thesis I provide starts with the concept of the social market, an economic viewpoint significant to Germany’s rise to a major economic power after defeat in World War II. The social market combines the power of the market to create products and wealth with a certain amount of regulation of private business and conditions of employment, low unemployment and also social insurance to protect individuals and families from the sometimes chaotic market. The term social market was used to distinguish this model from the socialist model where the state owned and controlled the means of production.
This view was favored by the German center-right Christian Democratic party and its post-World War II leaders like Konrad Adenauer and Ludwig Erhard. These politicians, and the thinkers who influenced them, felt there were some socially desirable things that could not be provided by the market and that there’s some positive social and economic outcomes we need to work toward as a society. Those things favored by the advocates of the social market such as social insurance, workplace regulation, protection from the savory side of corporate behavior and low unemployment, could fit into a category called by economists as the commons. The commons are elements of our economy that are used by all and can’t or shouldn’t be reduced to private property.
The commons allow society to function. The environment – ecosystems, water, forests, rivers – are usually considered the commons, but so are infrastructure, public parks and public transport. I also think that there’s a strong case that unemployment insurance, retirement pensions, health insurance and workmen’s compensation, public science and public art can be considered a part of the commons.
The greenhouse effect is considered the primary environmental challenge of our time. In fact, the Defense Department considers it to be a national security threat, but on the other hand we’re unable and unwilling to do what’s necessary to act on the problem. Our climate, a key component of our ecology, is a part of the commons that we all depend on to sustain life. Austrian center-right politician Josef Riegler was the first thinker to expound on the concept of the eco-social market economy. Like earlier social market thinkers he believed in a strong and innovative market economy and saw that a certain amount of social fairness was vital to economic activity, but he also added environmental protection to the equasion. Like other social market theorists, Riegler rejected the socialist idea that the means of producing society’s goods should be socially owned and controlled. He advocated putting a cost on pollution through taxes on fossil fuel use because environmental costs should be included in the cost of the products the economy produces. At the same time, Riegler wanted to slash income taxes to pay for the increases.
Before moving further on the tax issue I’m going to draw from the thinking of an environmental thinker much more radical than Riegler – ecosocialist Barry Commoner. In his 1990 book “Making Peace With The Planet” Commoner classifies the earth’s ecological systems as the ecosphere and our technology as the technosphere. He saw the two as being at war with one another. Commoner advocated public control at least of the economy’s energy sector, an idea I find impractical and unnecessary. He also supported replacing fossil fuels and nuclear energy with solar energy, the internal combustion energy with the electric motor, organic farming for chemical agriculture and also the recycling of waste. Even though parts of Commoner’s ideas are unworkable or impractical, we will use his ecosphere and technosphere framework.
Riegler type-tax thinking is alive and well in the United States by those who feel a carbon tax or a cap and trade system is the ticket to developing a clean energy system in saving the ecosphere from the greenhouse effect. Advocates feel that by making dirty energy expensive they can accelerate the growth of clean energy. As Mark Muro points out in this wonderful story
“What a Carbon Tax is and isn’t Good For” on the Breakthrough Institute’s website, a carbon tax of $15 per metric ton wouldn’t bring the country close to cutting carbon emissions 80% below 1990 levels. Why? According to Muro renewable energy isn’t ready for widespread technological deployment He also references a Breakthrough Institute story that states the revenue raised by a $20 per ton carbon tax wouldn’t be equal to the amount of government money being allocated to clean energy right now and renewable energy only makes up 12% of the United States energy portfolio.
What could be done to jumpstart the renewable energy sector? As Ted Nordhaus and Michael Schellenberger, of the Breakthrough Institute, point out in their essay “Breakthrough: From the Death of Environmentalism to the Politics of Possibility” the answer to making renewable energy a real player is making it cheap enough that it attracts the interest of the business community and the consumer. They point out that the personal computer wasn’t created by a “market-based cap” on typewriters and the internet wasn’t created by taxes on telegraphs and fax machines. They were aided by public investment, as the federal government supported the computer industry for years through government procurement and it created the internet through investment in research and development. Nordhaus and Schellenberger support an $80 billion dollar investment program to commercialize renewable energy and they compare the idea to John Kennedy’s Apollo Space Program. Maybe some sort of modest carbon tax should be used to fund this program. If a government research and development program were to bring such technologies to scale, then the private sector would capitalize on the technology and then an economic chain reaction would create millions of jobs and products.
When discussing carbon free energy the subject of nuclear energy always comes up, as it’s the most scalable form of carbon free energy available. Environmentalists like James Lovelock and Stewart Brand support it and long-time champion for action against the greenhouse effect James Hansen does as well. Given the limited state of renewables at this time, I feel it’s hard not to take nuclear seriously. Most interesting are fourth-generation nuclear reactors which produce lots of energy and exist on paper but aren’t expected to be deployed until the 2030’s. These reactors will mitigate the problem with nuclear waste because they can run on existing nuclear waste. What’s needed to make these paper reactors into the real thing? Like renewables, research and development.
Another interesting energy technology on the horizon is the smart grid, a low transmission computerized electrical grid much like a smart phone is a phone with a computer. This will allow for a communication between suppliers and consumers of energy; consumers will be able to buy electricity at times when it’s most cheap, as smart appliances which will communicate with the grid and collect energy when it’s cheapest. Also, those with rooftop solar panels and geothermal systems will be able to sell their electricity back to the grid. Since the smart grid loses less electricity in transmission than a regular grid it’s also less efficient. This means it will take less radioactivity producing nuclear power plants, natural gas plants (of the carbon capturing type, of course) and land consuming renewable energy to provide our electricity. Sound exciting? Why not some research and development dollars to speed the process along?
For those who feel we have to pay the price to nature for the damage of our technology could also support public investment because it’s the public’s tax dollars that are paying for it. Public investment in research and development and technological deployment also avoids the higher energy costs that a high carbon tax or cap and trade system would hurt lower income people, those that can least afford to be hurt, or those that the social market is supposed to protect.
Although environmental groups continue to address the issue of urban sprawl, less attention is paid to the amount of land allocated to agricultural use. Lab grown meat using tissue engineering techniques would generate up to 96% less greenhouse gasses than normal beef cattle farming, according to a recent study by Oxford University and the University of Amsterdam. Tissue engineering would lower energy, water and land use. The free and open land could then be used to increase forest cover. Like nuclear energy, food biotechnology is also controversial in environmental circles. Some feel it isn’t “natural,” but what in agriculture is natural? One could argue that plant and animal breeding aren’t natural. Like tissue engineering, plant biotechnology could open up valuable land for forest because less crop would be lost to pests and diseases, which suck carbon out of the air and return it to the soil.
But what about the role of organic farming as advocated by Commoner? True, organic uses less energy intensive fertilizers, chemicals and concentrated feed, but like renewable energy, it’s too expensive for segments of the population, but that doesn’t mean that organic doesn’t have something to teach us. Pamela Ronald, a geneticist, and Raoul Adamchak, Ronald’s husband and an organic farmer, penned an interesting book titled “Tomorrow’s Table.” They argue that by combining organic farming with biotechnology one can come to a sustainable system of food production. The husband/wife team want to use biotechnology to build seeds that are resistant to disease and pests and use organic methods to build fertile soil and also control pests.
What does the future of food production look like? Local food companies producing fruits and vegetables on small amounts of land in greenhouses selling to local markets and reducing energy costs by selling to the nearest city? Could the same sort of practices exist for meat producing laboratories? Something like a high technology version of today’s farmers markets?
While we’re on the subject of land management, we can’t ignore the contribution that our agricultural sector can make in the fight against the greenhouse effect. According to a recent study by the Pew Center for Climate Change the conversion of 115 million acres of marginal agricultural land to forest would sequester an addition 270 tons of carbon. Naturally, most farmers wouldn’t want to reforest their land without an economic incentive. One can find a model for a reforestation of marginal lands in the New Deal’s soil conservation program. The Dust Bowl, a period of dust storms in the 1930’s which caused major ecological damage to the American prairie, led to action on the part of the federal government. The New Deal’s soil conservation program paid farmers to switch from soil depleting crops to soil building crops like legumes and grass. A modern version of this would pay farmers to return marginal lands to forest.
Commoner was also famous for formulating four laws of ecology: everything is connected to everything else, everything has to go somewhere, there’s no such thing as a free lunch and nature knows best. I think there’s a lot of wisdom in three of the four laws. I take issue with the fourth. If we acknowledge that we have an impact on the environment, and it’s hard not to, then isn’t adaption to the greenhouse effect as important as mitigation?
Michael Lind, also a contributor to the Breakthrough Institute’s efforts, penned an interesting piece called “Hurricane Sandy and the Cast for Adaption to Climate Change” in which he argues that adapting to the greenhouse effect makes more economic sense that attempting to mitigate through renewable energy. He recommends higher seawalls, New York subways with storm doors, construction of buildings on high ground and putting power lines below ground instead of above ground. This approach acknowledges that “everything is connected to everything else,” as we prepare for nature’s reaction to our tampering. Although this approach isn’t big with environmental groups it certainly makes a lot of sense to those who realize how interconnected we are to the environment we are and how cost effective this can be. Such remedies are rejected by environmentalists because they aren’t “natural.” Along the same lines of adaption is the concept of geoengineering the planet’s climate to turn the thermostat down until our energy problems can be solved. Mentioned methods include using sulfur dioxide in the upper atmosphere or space based satellites to bounces some of the sun’s rays away from the earth.
Of course, one can’t ignore the issue of transportation when discussing the greenhouse effect. In recent years oil magnate T. Boone Pickens has made himself know as an advocate of switching our fleet of 18 wheelers to natural gas would help lessen our dependence on foreign oil. In addition, natural gas would help drive down carbon emissions, as natural gas is the least carbon intensive of the fossil fuels. According to Pickens website natural gas vehicles emit up to 95 percent less pollution than gasoline and diesel vehicles.
Biofuels are also an important part of our future energy mix. According to a study released by the Proceedings of the National Academy of Sciences biodiesel produced from soybeans produces less greenhouse gas emissions than corn based ethanol and for that reason it’s worth more in subsides. What would happen to our energy future if we ran all the 18 wheelers on natural gas and all urban transportation systems on soybean biofuels? Algae is also sometimes mentioned as an important biofuel. Kiplingers Biofuels Market Alert has stated that Algae is set to eclipse all other biofuel feed stocks. Solix Biofuels, a company that grows algae for biofuels, has stated that replacing all diesel use in the United States would require only one half of one percent of the agricultural land in the country today. They promote the relevant fact that algae can be grown in ponds on marginal lands and that ponds are not used for growing foods for humans. Could we run our planes on algae biofuels or a mix of algae biofuels and regular fuel?
Robotic cars, being developed by Google, will play a role in the future of transportation. Having a highway full of robotic cars taking passengers will decrease the number of cars on the road, as the car you take to work is busy taking others where they want to go when you’re at work. The company Zipcar currently rents cars on a short term basis and customers pay for the time they used, just like cellular phones. Might this approach merge with robotic cars and the customer saves money on automobile usage and pollution is cut? At the same time public transit will work in the more densely populated areas on the country. What about the local drive for bike trails, transit and walkable communities? Such things are good for communities and the environment, but they don’t carry support in every community. In the 70’s the Nixon Administration instituted a revenue sharing program that allocated federal dollars to cities. The program lasted until 1986. If we could revive the program then communities where sustainable transportation holds political favor will receive the funds for their projects and those where it doesn’t hold favor will receive revenue for their projects.
Although it doesn’t seem to catch the public’s eye like renewable energy, recycling could be used in the fight against greenhouse gas emissions. According to the Campaign for Recycling solid waste landfills are the largest source of man-made methane gas in the United States. The Campaign for Recycling saves more greenhouse gas emissions than any other activity beside source reduction. In addition, recycling reduces the need to mine and produce resources for product production.
Using refurbished products has become more and more popular in our online world, as Ebay and Amazon.com are major successes. When looking at this trend it’s time to take a second look at our tax system. Lind wrote a fascinating story titled “The Liberal Case for Regressive Taxation” promoting a Value Added Tax for the United States. Economist Pat Choate stated in his book “Saving Capitalism” that a VAT “is the most powerful and efficient way ever invented to raise government revenue.” The VAT tax is a tax added to a product at each stage of production. For example, when a manufacturer buys raw materials a VAT charge is added in, a charge is added when the product moves to the retailer and again when the customer buys the product. Since the charges are added but not paid until the customer buys the product then the only one who really pays is the customer. Choate said in his book that some countries leave food, religious and cultural services and health care. Choate feels that we could replace the corporate, payroll and income taxes with the VAT. Corporate taxes are paid by the consumer because the cost is built into the cost of the product. Repealing the corporate income tax and payroll tax, also a cost of doing business, would lead to more business formation and make the United States a great place to invest in. In addition, this will help drive the popularity of refurbished goods.
To bring the ideas together this country could implement an industrial policy, which usually means a strategic effort to support sectors of the economy. Research and development centers could dot the land full of lab coat wielding scientists researching renewable energy, smart grid technology and fourth generation nuclear energy. The government could mandate and subsidize biofuels for our airline industry and subsidize trucking companies for new natural gas vehicles. Continuing to update fuel economy standards on cars would ensure our fleet would become more and more efficient. As fourth generation nuclear, renewables, natural gas and biofuels grow we could balance our trade deficit. A government funded entity which will works with the profit and non-profit sectors to promote recycling is also a possibility. Yours truly did a story on recycling in the St. Louis area and the St. Louis-Jefferson Solid Waste Management District could serve as a national model. The Federal Emergency Management Agency could be revamped to deal with climate change adaption.
To summarize my views to beat the greenhouse effect we should replace regular agriculture with a combination of organic agriculture and biotechnology. We should replace our current system of automobile travel with robotic cars, more fuel efficiency and natural gas/biofuels driven transportation and our current energy system could be replaced by natural gas, fourth generation nuclear energy and renewable’s. The emphasis on biotechnology, new, fourth generation nuclear, reforestation and geoengineering to solve our problems are are often termed post-environmental thinking. Thinkers affiliated with the school, like Shellenberger and Nordhaus, feel that the ideas of the environmental movement aren’t relevant to face our future challenges. But their ideas easily fit into the idea of an eco-social market economy.
This guest post has been provided By Jason Sibert
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