Over the past few weeks I’ve been reading all the books that have been selected as finalists for the Shaughnessy Cohen prize for political writing (not including my own), and writing up my reactions — mainly to promote conversation. Today we have Naomi Klein’s This Changes Everything: Capitalism vs. The Climate.

Readers of this blog may know that I’ve been having an entirely one-sided argument with Naomi Klein for over 10 years now (since the publication of the book that I co-wrote with Andrew Potter, The Rebel Sell, which despite having only 5 pages or so criticizing Klein, was widely seen as a “response” to No Logo). It is certainly the case that I have spent years of my life trying to get the left in Canada to stop writing books like the ones that Klein writes. As a result, the success of This Changes Everything represents, in a very real sense, the failure of one of my more important life projects. That makes it difficult for me to be entirely dispassionate in my analysis.

Also, if there is one thing that I have discovered over the past decade, it is that criticizing Naomi Klein is kind of like criticizing J. K. Rowling. Even if you’re right, nothing that you say really changes the trajectory of the universe – everything will continue to unfold in precisely the same way that it would have, had you not existed, or never set pen to paper.

So in order to keep myself on track, I would like to focus quite narrowly on just one issue raised by This Changes Everything, which is closely tied to the central thesis. Unfortunately, figuring out the exact thesis is not quite as straightforward as the subtitle of the book (Capitalism vs. The Climate) suggests. The subtitle, as well as some of the early rhetoric, make it sound as though she is going to be arguing that there is no way of fixing the problem of climate change that is compatible with maintaining a capitalist economic system. In other words, it sounds as though she is going to be taking a line like Joel Kovel’s, who in his 2007 book: The Enemy of Nature: The End of Capitalism or the End of the World? argued just that. This is, however, not what Klein is saying, since she doesn’t actually want to abolish the market, or even profit-oriented firms (at one point she declares, “there is plenty of room to make a profit in a zero-carbon economy”[252]).

Furthermore, when she articulates the conflict in the book, she never exactly pits “capitalism” against “the climate.” She will say things like: “It is time to turn this thing around now. Is it possible? Absolutely. Is it possible without challenging the fundamental logic of deregulated capitalism? Not a chance” (24). Or she will criticize “most leftists and liberals” for their failure to realize that “climate science has handed them the most powerful argument against unfettered capitalism…”(157). But of course “deregulated capitalism,” “unfettered capitalism,” or “free market fundamentalism” are not the same thing as capitalism tout court. And one would be very hard-pressed to find a leftist, liberal, or environmentalist who thought that the problem of climate change could be solved without some sort of regulation of the market. There is, unfortunately, throughout the book an enormous amount of slippage between the entirely obvious and uncontroversial thesis that solving the climate crisis will require regulation of the market, and the extremely unobvious and highly controversial thesis that solving the climate crisis will require the abolition of capitalism.

So what is she arguing? While her positive thesis is rather difficult to discern, she does advance one clear negative thesis. She claims that the standard prescription for solving the problem of climate change within a capitalist system cannot work, and thus, in order to solve the problem we must contemplate fundamental structural changes to our patterns of economic organization. Hence her frequently repeated claim that the far right, in claiming that climate change is a “socialist plot,” or that it is a “cosmic gift” to the left, has a better understanding of the stakes than the mainstream left (43). So what I propose to do in what follows is not to focus on her proposals for what the stage beyond capitalism is supposed to look like, but rather to consider why she rejects the standard set of regulatory prescriptions for resolving the climate crisis within the framework of capitalist economies. In particular, I want to focus on why she rejects carbon pricing (a position she takes that came as a rather rude surprise to some commentators).

Because of this rather narrow focus, I’ll be talking mainly about the first part of the book, which is the most controversial. (After that, the book basically turns into Fences and Windows Vol. 2: Dispatches from the Front Lines of the Climate Wars. In other words, the last 250 pages or so are mostly reportage, where Klein jet-sets about the world, visiting the latest site of resistance, then reports back on the heroism of the protestors, the brutality of the police, and the perfidy of the corporations. This sort of writing is what Klein does best, and for the most part what she presents in this latter part is, again, both uncontroversial and unsurprising: we discover that Richard Branson is untrustworthy, geoengineering is dangerous, farmers don’t like pipelines going through their land, and so on. There’s not much argument here, most of it seems to be aimed at the worthwhile goal of galvanizing people to action and giving added encouragement to those who are already engaged.)

As far as the more argumentative first section goes, it is worth noting that Klein’s book constitutes an entry into an already crowded field. It is essentially a contribution to the policy debate, in the rather broad sense that it takes the scientific facts as given, then focuses on answering the question “what should we do?” This is already a very mature discussion, given that it has been going on for over 20 years, all of the major positions have been staked out, and all sides are fairly familiar with the arguments made by their opponents. What it means, as well, is that there is a “mainstream” environmentalist view that has emerged, which represents, if not a consensus, then at least a majority view on the question of climate policy. This view maintains that what we need is an appropriate system of carbon pricing. This is the view that Klein rejects (indeed, it is one that at various points she actively disparages, e.g. arguing that “a fight for a minimal carbon tax might do a lot less good than, for instance, forming a grand coalition to demand a guaranteed minimum income”[461].)

Klein’s book is not the first piece of work to come along that challenges mainstream environmentalist views. For example, the standard view on carbon taxes is that they should be in the neighbourhood of US$30 per CO2-tonne. Then along came the Stern Review on the Economics of Climate Change (commissioned by the Blair government in the U.K.) which argued that the figure should be closer to US$300. Now that obviously got a lot of peoples’ attention. The response among those who adhered to the more conventional view was therefore to sift through the 700-page report, focusing on the question, “What’s different? Stern is starting from the same facts as everyone else, so how does he get to this radically different conclusion?” For him to come to a conclusion so far outside the mainstream, there must have been something different in his analysis – either a different system of forecasting, a different growth model, etc. As it turns out, there was a key difference – Stern rejected the standard approach to balancing present against future costs – and this accounted for the divergence. The result was a very productive debate about the correct approach to that question.

Now it seems to me that Klein’s book should be approached in the same way. Most people look at the current situation and say “we need carbon pricing.” Klein looks at it and says “we need to change everything” (or “we need to dramatically restructure capitalism,” or something along those lines). So how does she get to that conclusion? What is different about the way that she sees things, that could account for this fairly radical difference in policy prescription?

I must admit that, at the outset, my suspicion was that there wasn’t really anything that different, but that Klein was simply suffering a strong case of what Larry Summers once called “now-more-than-ever-ism”:

Here’s how it works:
1. You have a set of policies that you favor at all times and under all circumstances, e.g., cut taxes, remove regulations, drill-baby-drill, etc.
2. You see a problem that needs fixing (e.g., the economy stinks).
3. You say, ‘We need to enact my favored policies now more than ever.’

Some of what Klein says does reinforce this impression. She herself admits that, as she began to take the problem of climate change more seriously and to think about it more deeply, it did not cause her to change her mind about anything. On the contrary, it reinforced everything that she had always believed (7). “I was propelled into a deeper engagement with it partly because I realized it could be a catalyst for forms of social and economic justice in which I already believed”(59). It is also a rather conspicuous feature of the book that everything she is advocating is exactly the same stuff that she has been advocating since forever.

Now this is clearly not a great habit of mind, and it does create the suspicion that the whole thing is a giant exercise in confirmation bias. (My own experience was rather different. For instance, I started out as a fairly trenchant critic of cost-benefit analysis as an approach to determining policy. Thinking seriously about climate change is one of the factors that led me to soften my position, and eventually to become a somewhat reluctant advocate [for a stylized account, see here].) But anyhow, let’s assume that it is not just intellectual inertia or political opportunism, and take a look at what the book says. In terms of specific changes, Klein is fairly explicit that what she wants to see is primarily growth of public spending as a fraction of GDP (92), or as she puts it “growing the caring economy, shrinking the careless one”(93). More specifically:

We will need comprehensive policies and programs that make low-carbon choices easy and convenient for everyone… That means cheap public transit and clean light rail accessible to all: affordable, energy-efficient housing along those transit lines; cities planned for high-density living; bike lanes in which riders aren’t asked to risk their lives to get to work; land management that discourages sprawl and encourages local, low-energy forms of agriculture; urban design that clusters essential services like schools and health care along transit routes and in pedestrian-friendly areas; programs that require manufacturers to be responsible for the electronic waste their produce, and to radically reduce built-in redundancies and obsolescences (91).

In other words, she wants us to become more like the Netherlands. Which is fine, except that the Netherlands is very much a capitalist economy, with government spending as a fraction of GDP only about 5% higher than in Canada. So why are their urban environments and transportation systems organized so much differently? Largely because of the higher price of fuel and energy (both gasoline and electricity are approximately twice the price as in Canada). By discouraging driving, this creates the demand for transit, bike lanes, and pedestrian-friendly cities, just like the electricity price creates the demand for efficient housing. This is what drives the style of planning that predominates in that country. (You can do all the “planning” of urban development you want, but unless people actually want to live in the high-density houses you’re building, they will remain empty. The reason they are attractive to people in the Netherlands is that the alternatives are unattractive, largely because of the cost.)

Given the impact that prices have on behaviour throughout the economy, it is clear that the ability to control prices is by far the most powerful policy lever that the state has in its possession. Thus the natural upshot of a wish-list like the one Klein presents is that the state should start to price the carbon externality generated through fossil-fuel consumption, through either a cap-and-trade system or a carbon tax. And yet this is not what Klein recommends. Instead, she wants us to leave this incredibly powerful policy lever untouched, and instead try to accomplish it all through top-down planning and control (e.g. mandating technology). She thinks that the state should focus on, as she puts it, “planning and banning,” and not adjusting prices.

The resulting position strikes me as being genuinely strange, and frankly, not very well thought through. For example, in her discussion of natural gas, she says that one of the problems with the idea that it might serve as a “bridge” away from more carbon-intensive fossil fuels is that, being relatively inexpensive, it does not just displace oil and coal, but displaces renewables like solar and wind (128-129). So she sketches out a plan for a complex regulatory structure to stop this from happening (129). But of course the only reason that it displaces both is because of the absence of a price on carbon. A large carbon tax would dramatically increase the cost of coal and oil, while lowering the relative cost of renewables. Natural gas would wind up somewhere in between, and so would no longer crowd out renewables, because their price would now reflect the fact that they are cleaner. So what Klein is picturing (at least implicitly) is a world in which petroleum products and coal-fired electricity would still be incredibly cheap, but where use of them would either be banned or strictly controlled through regulation. The biggest question that this raises is then simply, “Why?” as is, “What reason could there be for doing things that way?”

Now one possible explanation might be that Klein does not believe in the power of economic incentives, and so she thinks that people would simply not respond to a carbon price in the appropriate way. (Strangely enough, the only time I’ve heard this argument seriously being made was by a Suncor representative, who told me that the problem with carbon taxes is that they won’t work, because “people aren’t going to change the amount they drive just because of the price of gas.” I told him that, if that were true, then capitalism as a whole would not function. I presented this as a reductio of his argument, but perhaps with Klein it’s not so much a reductio as it is a feature of the view.)

This interpretation is bolstered by the fact that carbon taxes only get mentioned twice over the course of the entire book (114, 400), and both times they are put forward as a revenue-generating mechanism for the state, not as a way of discouraging fossil-fuel consumption. This suggests that Klein may be disregarding the incentive effects that such taxes would have (a suspicion that is further raised when she argues that a carbon tax, “unlike a one-time pipeline investment,” would continue to raise revenue “year after year”[400]. That’s a rather strange thing to say, since the point of a carbon tax is actually to discourage consumption, so the expectation is that the revenue will decline rather precipitously over time.) Also, she makes various dismissive remarks about the ineffectiveness of “modest carbon pricing”(87) or “gentle” economic incentives, thereby assuming (without any sort of justification) that the carbon price would be set quite low. But as the Stern review shows, there are a lot of very serious people involved in current policy debates who are pushing for massive carbon taxes. She cannot argue that this is politically infeasible, since any government with the power and the mandate to make the kinds of massive changes that Klein is proposing would also be able to impose carbon taxes at whatever level it likes.

Compounding the mystery is the fact that she mentions several times with approval the province of Ontario’s “feed in tariff” scheme to promote investment in renewables – which is generally regarded as a rather troubled scheme – but says not one word about B.C.’s very successful carbon tax. The fact that she spends several pages talking about the salmon run near her country house on B.C.’s Sunshine Coast, and says nothing at all about that province’s most important policy initiative to combat climate change – a policy that is the clear favourite for becoming the template for a national action plan – is a rather extraordinary omission.

Klein has a bit more to say about carbon trading than she does about carbon taxes. There, however, all she does is repeat the standard criticisms of the European emissions trading system. There is nothing in her criticisms that one cannot also find in The Economist magazine. Everyone agrees that a poorly structured trading scheme fails to deliver much in the way of reductions. Indeed, the failures of this trading mechanism is one of the major reasons that so many people favour carbon taxes over a cap-and-trade system. In any case, Klein does not say enough on this topic to be able to ascertain her considered view. What is surprising, however, is that later on, when discussing the cap-and-trade scheme that was implemented in the United States to curtail sulphur dioxide emissions, she straightforwardly concedes that this approach “worked” (208). But this immediately invites the question, if it worked for sulphur dioxide, why couldn’t it work for carbon dioxide?

So we keep coming back to the basic puzzle. What’s wrong with a properly designed, properly implemented carbon pricing scheme?

The answer that I finally settled on is that these pricing schemes violate a moral intuition that most of us have, but that Klein applies in a particularly uncompromising way. Despite her endorsement of the “polluter pays” principle, she actually rejects one of the logical implications of it, which is that if you’re willing to pay, then you should be able to pollute. The moral intuition that conflicts with it is that if a particular action is immoral, that in itself gives you reason enough not to do it. You cannot therefore demand that others give you an incentive to stop. On the contrary, if you fail to stop, others are entitled to punish you. For example, Klein points out that we did not get rid of slavery by pricing it out of the market (462-463), or by taxing it, but by abolishing the practice. She sees environmental regulation in the same way. For example, she asks the rhetorical question: “Why aren’t we ordering companies to stop putting our future at risk, instead of bribing and cajoling them?”(225). So fundamentally, I think the reason that she opposes carbon pricing is simply that she finds the very idea morally offensive – like having to pay a kidnapper to give you back your child.

She is not alone in this regard, lots of people start out with the same intuition. But the argument that dismantles it is well-known, to the point where it is really a bread-and-butter point in environmental economics. The “abolitionist” approach only works in cases where a substance or practice can be, or needs to be, banned entirely – like slavery. Releasing carbon dioxide or methane, however, is not intrinsically harmful, and no one wants to reduce it to zero. And while there are some things that could be banned outright (one can imagine coal mining being banned, for instance), there are many others that cannot. Consider the case of concrete, which is responsible for approximately 5% of global CO2 emissions (a byproduct of the chemical reaction that takes place when it hardens). Obviously no one wants to ban concrete – not even Klein, since she speaks in glowing terms about “straw bale” construction, which typically involve encasing the bales in cement after they are stacked. So what we need to do is increase the price of concrete, so that a person who is trying to decide whether to use a cement or a clay-based mix on the walls of their new straw-bale home will be pushed to choose clay, on the grounds that it does not produce an atmospheric externality.

In other words, what we want to be doing with greenhouse gas emissions is not banning them, but discouraging them, perhaps even strongly discouraging them. The appropriate policy response is therefore to put a price on them, or to increase the price that we have. This is such a basic point that it is somewhat embarrassing to be having to make it. Ultimately, however, the only way I can make sense of Klein’s position is to assume that she doesn’t appreciate this point. (For those who have a serious interest in the question of when we should “ban” and when we should “price” pollution, I would recommend as a point of departure an article by John Braithwaite called “The Limits of Economism in Controlling Harmful Corporate Conduct” — this is what I normally assign to my students when discussing the question.)

Okay, I’ve gone on for too long. But it is a very long book! So just two points to wrap up.

First of all, like Klein, I believe that the climate crisis is a very serious crisis, one that will force many things to change. It has made “free market fundamentalism” less tenable than it ever was. But it has also made “anti-market fundamentalism” less tenable. In particular, it has forced many people on the left to get over their extreme aversion to the use of the price mechanism as a way of changing corporate behaviour. If the only argument against the use of the price mechanism is a moral one – so that even though it might solve the problem, it wouldn’t do so in a way that satisfies our standards of moral purity – then that’s a pretty weak objection to solving it that way. The problem of climate change is sufficiently serious that I think most people would just like to see it solved, even if that means tolerating an arrangement under which some big corporations wind up doing the right thing for the wrong reasons.

Second and finally, this book is all about “linkage,” about convincing people involved in various struggles that they are all fighting for one and the same cause. There’s nothing wrong with that per se. And in many cases, there’s nothing wrong with putting forward a long list of demands, rather than a short list. But when you start arguing against policies that are both effective and obtainable, in the name of policies that are of dubious worth and are practically unobtainable, then you are actually doing the cause that you claim to support an enormous disservice. My objection to Klein’s work, going all the way back to No Logo, is that she gets people all pumped up and mobilized, only to send them off in the wrong direction. Nothing in this book changes my view that she needs to spend much more time worrying about the possibility that she is tilting at windmills.