At the beginning of April, the economy and public life come to a standstill in most industrialized countries. The lockdown leads to an immediate global economic recession. Fragile structures of just-in-time supply and value chains, designed for cost minimization, become obvious. Most importantly, the new situation illustrates the growth imperative for capitalist economies. No growth = system in crisis.
At the same time, monitoring stations around the globe record a dramatic decline in CO2-emissions. Historically, economic growth has correlated almost linearly with a corresponding increase in greenhouse gas emissions. Significant – short-term – reduction have only occurred in the context of major crises: The 1973 oil crisis, the collapse of the Soviet Union, the 2007/2008 financial crisis, and the current Corona crisis. So far, it is unclear how many deaths have been avoided due to lower air pollution – some scientists even speak of a “Corona effect”. However, the example impressively shows how closely economic growth and greenhouse gas emissions are linked. If the economy grows, economic space expands at the expense of ecological space. If the economy stops growing, emissions also decline.
Excessive economic growth also causes ecological overexploitation. Industrial monocultures for palm oil and animal feed, factory farming or large-scale mining destroy habitats and lead to a dramatic extinction of species. The few more adaptable species that take over carry pathogens more frequently, and are driven into close proximity to humans. Therefore, the human’s mode of living (better: his specific social formation) caused the emergence of Coronavirus, previously also Ebola, bird flu, SARS, Zika virus or HIV.
The social life of the pandemic
While pandemics such as Coronavirus become more likely due to ecological depletion, the speed of spread increases dramatically with greater mobility. Yet it is those who benefit most from economic growth and increased mobility who can best protect themselves from the negative long-term effects. The Coronavirus pandemic reveals shocking inequality: Differential access and opportunities for homeschooling reduce already deficient educational and opportunity equity. A lockdown in a spacious family home is not at all comparable to a lockdown in a small apartment. The lockdown and guarding of entire poor neighborhoods in Johannesburg and Rio de Janeiro are evidence of an already existing two-class society. Some groups, such as South America’s indigenous peoples, are largely helpless in face of the pandemic.
These tendencies could deepen in the context of the Corona crisis. In the global context, it enhances nationalism and state competition (for example regarding the procurement of facemasks or access to vaccine). In countries like Germany or Austria, which have extensive fiscal policy leeway, the scramble for emergency aid and emergency funds resembles a tug-of-war between the most powerful lobby groups. As expected, the cultural sector remains underrepresented. In the long term, ECB’s expansive monetary policy and low real interest rates will lead to further increases in real estate prices and relatively higher capital market returns compared to labor income. Also in these countries, a significant widening of the gap between rich and poor is therefore foreseeable. Clive Spash calls this uneven ability of nations and people within nations to respond to crises a reflection of the structure of the globalized political economy.
Sustainable consumption instead of post-growth?
In capitalism, success is measured by the accumulation and reinvestment of money in order to accumulate more money. So it’s all about turning the wheel as fast as possible, accelerating it further and further. Instead of the society’s or the planet’s well-being, it is primarily about maximizing profit. Capital accumulation has long since become an end in itself.
Even before the Corona crisis, the capitalist economic system was therefore in (a multiple) crisis. Just a few months ago, the global climate crisis was the dominant media topic. Unlike the Coronavirus pandemic, for more than 30 years CO2-intensive lifestyles (or behavior in general) were not regulated or limited. In this context, lithium mining should also be seen as a “false solution”: It targets at replacing the drive technology instead of transforming individual transport. Recent experience now shows that politicians – under extreme circumstances in their own backyard – are willing to act against corporate and financial interests.
Politicians and society now have the unique opportunity not to return to the (socially unjust and environmentally destructive) “normal”, but to turn their backs on an economy purely based on growth and consumption and to structure an economic system around meeting essential needs. Instead, policymakers primarily focus on protecting unsustainable jobs, securing liquidity, and a rapid return to future economic growth to combat the economic consequences of the pandemic. Since the 2007/2008 financial crisis, and due to movements such as Fridays for Future, the social mood regarding climate change has changed significantly. However, after the presentation of the German economic stimulus package some environmentalists were positively surprised because of the absence of a new edition of the scrappage premium. This is now realizes in the form of a VAT reduction and additional subsidies for plug-in hybrids. The increase in the purchase premium for electric cars will, next to a “windfall effect”, largely evaporate due to the insufficient capacities of the automotive industry.
Whether the Austrian Corona aid package, the German economic stimulus package or the European Commission’s multi-billion euro European Recovery Plan, the goal is a return to the past and to a business-as-usual. There is no actual redesign or transformation of the economy beyond the growth paradigm. However, we now know that rapid policy responses and actions are possible. The Coronavirus pandemic has already claimed thousands of victims. In view of the ecological crisis, we should see it as an important warning.
PhD in geography & heterodox economist, works on the global political economy of decarbonization, especially lithium and hydrogen. Strong focus on global production networks, human-environment relations and photography.