COver the past two weeks, apitalism has polarized opinion in Glasgow. Prince Charles presented his award to global businesses that met their commitments of net-zero carbon emission. Terra Carta award, declaiming that only the private sector could and would deliver, while Mark Carney, co-chair of the Glasgow Financial Alliance for Net Zero, boasted of the $130tn (£97tn) of private investment funds – doubled in six months – committing to invest in companies signed up to net zero. However, activists and NGOs denounce capitalism, growth, greenwashing, and self-seeking advocacy as the root cause of the problem. Prince Charles and Carney were dismissed in the same breath as collaborators in our collective fall.
The reality is that we are witnessing a complex, but ultimately optimistic, dance. The climate crisis is being exacerbated by the growing conviction of consumers and voters, as well as Cop26 environmental campaigners, is forcing us to change. The news that Rivian, an electric pick-up truck manufacturer, was unable to produce a pickup truck, was even more important than what was happening at Cop26. floated for more than $100bnIt is valued at more than Ford or General Motors. It’s the kind of mind-boggling welcome Wall Street gave to young companies making petrol-propelled cars a century ago.
Companies riding the new consumer wave are receiving massive amounts of money. Their ability to drive gas-guzzling picks-ups through forests and hurricanes with unprecedented force won’t win them any favors in conservative America. The same phenomenon is behind Tesla’s stunning $1tn valuation. Europeans – the British in particular – living in countries where the capitalism is more ossified don’t get to see first hand how rapid economic transformation can be once entrepreneurs recognise where the new markets are developing: they can do good and make billions.
We are limited in what we can do as individuals and how we think. The despairing assessment that governments and big businesses will not act is too easy to dismiss. Despite growing green convictions, they are taking action with increasing urgency. 130 countries, including Australia, China, and the US, have made commitments to net zero carbon emissions. Sixty FTSE 100 companies have signed up to the UN’s “race to zero” campaign. Our changing views count.
Take a look at the evolution of societies for proof. I can recall when libertarians protested against the requirement to wear seatbelts. Councils now differentiate between recyclable and general household waste – unthinkable 40 years ago. What are the controversies surrounding smoking in public places? People today don’t want to inhale second-hand tobacco smoke, and smoking is considered antisocial. It’s the same story with gay marriage. In all these areas, cultural change preceded and laid down the foundation for progressive legislation. This law was a concrete and unalterable document that we can rely on no matter what the opposition.
The environmental genie is out the bottle. Europe greens are in government or coalition government in Austria, Belgium, Finland, Ireland, Sweden and Scotland – and about to be in Germany. Politicians are in the market for votes; Boris Johnson, who is closely tuned to voters’ preferences even if many in his party are not, has been quick to mount a volte face over the climate crisis.
Although the consequences of Cop26’s final outcome are unclear, it is more important that it happened. The momentum is to “keep 1.5 alive” The obvious is just as important as the detail. It is important to determine how international agencies and national governments can help a capitalism that understands, given its markets, that it must move in this direction.
There are many models that are better than others. Germany’s social market economy is built on a dense interaction between state and business and a whole skein of public/private institutions that ensure that its capitalism is responsive to societal and stakeholder wishes. The transformation of the old iron and steel Ruhr region into one of Europe’s greenest industrial structures could not be achieved without the German business bank, the KfW, or the way German companies embed social purpose in their corporate strategies. The negotiations in Berlin between potential coalition partners over the phasing out of coal and internal combustion engine production – key Green demands – are protracted because, once set, they will be met.
It is unclear whether politicians in the US have the ability to make Wall Street go where they want it to, or if capitalism has the ability to do it. Biden’s ambitions to phase out coal have been thwarted for now by Democratic senator Joe Manchin from coal state West Virginia, but the US asset management industry might achieve what politicians cannot. CoalMining could be investment-starved.
The UK is an outlier. It suffers from the most ossified capitalism, and a chronically weak framework between business and government institutions. Not for nothing, even predating Brexit, has the UK stock market been the world’s poorest performer for the past 20 years. Sir Patrick Vallance and Lord Browne co-chairs of Council of Technology and Science wrote to the prime minister in September to urge a reform of the financial system to support more risk. They even advocated the creation of a new banking system. UK sovereign wealth fund. That is all.
Marx admitted that Capitalism will always seek out the new. However, democratic governments must shape it. It will continue to build planes, cars, and ships powered with ammonia, hydrogen, and electricity, just as it did in the 19th Century. It will also build space-based solar power stations that provide electricity to Earth. Shell and BP will have to exit the fossil fuel industry by 2050 if they are to survive. Both have agreed to respond to shareholder pressure. It is not what is essential. Cop26It is not the person, but rather the movement, social change and process it represents. Humanity must save itself. It will be messy and imperfect – but we’ll get there.