Climate-change transition in the age of the billionaire

October 6th, 2021

Awake Goy

It was supposed to be the greatest transition of modern times.

Practically overnight, a dirty, inefficient, and unjust system that encompassed 11 time zones was to undergo an extreme makeover. Billions of dollars were available to speed the process. A new crew of transition experts came up with the blueprint and the public was overwhelmingly on board. Best of all, this great leap forward would serve as a model for all countries desperate to exit a failed status quo.

That’s not what happened.

When the Soviet Union collapsed in 1991 and Russia emerged from its wreckage as the largest successor state, government officials in the newly elected administration of Boris Yeltsin teamed up with a cadre of foreign experts to chart a path into a post-Soviet system of democracy and free markets. The West offered billions of dollars in loans while the Russians generated more funds through the privatization of state assets. With all those resources, Russia could have become an enormous Sweden of the east.

Instead, much of that wealth disappeared into the pockets of newly minted oligarchs. During the 1990s, Russia suffered an economic catastrophe, with the equivalent of $20 to $25 billion leaving the country every year and the gross domestic product (GDP) falling nearly 40% between 1991 and 1998. The Soviet Union once had the second largest economy on earth. Today, thanks only to a reliance on Soviet-era fossil-fuel and arms-export industries, Russia hovers just outside the top 10 in total economic output, ranking below Italy and India, but still manages only 78th place — that is, below Romania — in per-capita GDP.

The failures of the Russian transition can be chalked up to the collapse of empire, decades of economic decay, the vengeful triumphalism of the West, the unchecked venality of local opportunists, or all of the above. It would be a mistake, however, to dismiss such a cautionary tale as a mere historic peculiarity.

If we’re not careful, the Russian past could well become humanity’s future: a transition bungled, a golden opportunity squandered.

After all, the world is now poised to spend trillions of dollars for an even more massive transition, this time from a similarly dirty, inefficient, and unjust economy based on fossil fuels to… what? If the international community somehow learns the lessons of past transitions, someday we will all live in a far more equitable, carbon-neutral world powered by renewable energy.

But don’t bet on it. The world is slowly replacing dirty energy with renewables but without addressing any of the industrial-strength problems of the current system. It should remind us of the way the Russians replaced state planning with free markets, only to end up with the shortcomings of capitalism as well as many of the ills of the previous order. And that’s not even the worst-case scenario. The transition might not happen at all or the decarbonization process could be so endlessly drawn out over decades as to be wholly ineffectual.

The proponents of Green New Deals promise win-win outcomes: solar panels and wind turbines will produce abundant energy cheaply, the climate crisis will abate, workers will leave dirty jobs for cleaner ones, and the Global North will help the Global South leapfrog into a gloriously Green future. In reality, however, transitions of such a scale and urgency have never been win-win. In the case of Russia’s transition from communism, nearly everyone lost out, and the country is still suffering the consequences. Other large-scale transformations of the past — like the agrarian and industrial revolutions — were similarly catastrophic in their own ways.

In the end, perhaps a key part of the problem lies not just in the flawed status quo, but in the mechanism of transition itself.

Pyramids of Sacrifice

Transitions can have harsh, even genocidal consequences. Just ask the Neanderthals.

Oh, sorry, you can’t. They were wiped out 40,000 years ago in the great transition to modern homo sapiens. Those early hominids left behind some bones, a few tools, and a small percentage of DNA in the contemporary human genome. Neanderthals might have died out because of inbreeding or due to climate change. More likely, they were killed off by our ancestors over thousands of years of conflict. Poor Neanderthals: they were among the eggs that had to be broken to make the omelet that’s us.

The fate of the Neanderthals is extreme, but not unique. Whenever humans take a great leap forward, they tend to do so over an enormous pile of bones.

Take the agrarian revolution, which spelled the end for hunter-gatherers, except for those who survived in isolated areas like the Amazon rainforest. On the plus side, humanity received the gift of civilization in the form of politics, trade, and literacy. On the negative side, as anthropologist Jared Diamond argued in a famous 1999 Discover article, the Neolithic transformation spawned disease, malnutrition, and gross economic inequality. It was, Diamond concluded, “the worst mistake in the history of the human race.”

Ten thousand years later, humanity might have committed the worst mistake in the history of the planet. Sure, the industrial revolution of the nineteenth century eventually led to extended lifespans, food enough to feed the world, and TikTok. But the application of modern science and engineering to economic affairs also set in motion a ruinous despoliation of the planet. More ominously, as everyone who has gazed at the “hockey-stick” graph of carbon emissions knows, the industrial revolution marked the first time that humans, perhaps irrevocably, began changing this planet’s climate by burning fossil fuels at an ever more staggering rate.

The new religion of economic growth at any cost also exacted a human toll. Children were put to work in the “dark satanic mills” of the early factories; a new proletariat was consigned to lives nasty, brutish, and short; and millions died as colonialism cut a huge swath of destruction through the global south. The oligarchs of the time, enriched by plunder and exploitation, created a Gilded Age of astounding economic inequality that, despite the best efforts of trade unions and social democrats, has made a striking reappearance in our own Age of Billionaires.

Though critical of the cruelties of capitalism, communists turned out to worship the same god of economic growth. Leaders from Vladimir Lenin onward firmly believed that state-led modernization and coercive tactics would enable new communist states to out–produce any capitalist country. Yet, in telescoping decades of industrial modernization into a few short years, their efforts to surpass the West magnified the horrors visited upon local populations. The collectivization of agriculture in the Soviet Union in the 1930s led to around 10 million deaths, while the similar Great Leap Forward in China that began in 1958 cost the lives of as many as 45 million people. As the bodies piled up, the communist 1% — a new class of Party officials and their cronies — orchestrated their own personal leap forward.

For sociologist Peter Berger, communism and capitalism both adopted a “sacrificial” conception of development in which myths of “progress” and “growth” claimed their share of victims, much as Aztec priests had once used ritual murder to propitiate the gods and save their civilization. In his book Pyramids of Sacrifice, Berger writes that the “elite almost invariably legitimates its privileged position in terms of alleged benefits it is bestowing or getting ready to bestow upon ‘the people.’” More often than not, however, these promised benefits accrue to the elite, not the masses.

Which brings us again to the “great transitions” of the 1990s, in which countries that had gone down the road to communism doubled back to take the turn-off for capitalism. The losses for Russia in the 1990s were nothing like the horrors of collectivization. Still, aside from a small number of people who made out like bandits, virtually all other Russians took a step backward as the costs of transition fell disproportionately on pensioners, blue-collar workers, and farmers. As a result, in the early 1990s, one-third of Russians dropped below the poverty line. Due to a combination of alcoholism and unemployment, the life expectancy of Russian men suffered an extraordinary decline from 63 years in 1990 to 58 years in 2000. Disillusionment with liberalization helped to boost popular support for Vladimir Putin, a politician who has skillfully capitalized on those thwarted hopes. His approval ratings still remain relatively high so many years later, even though only 27% of Russians believe that their economic situation today is better than during Soviet times.

The rest of the former Soviet bloc suffered similar, though less severe, dislocations. In Poland, the first country to experiment with the “shock therapy” of an overnight transition to capitalism, the winners came to be known as Poland A, a younger, more well-educated, predominantly urban elite that successfully surfed the waves of change. Poland B — the older, less educated, more rural “losers” of that transition — would eventually exact their revenge at the ballot box by supporting the decidedly anti-liberal Law and Justice Party, which has ruled the country since 2015. Throughout the region, an Eastern Europe B has helped bring similar right-wing populists to power in the Czech Republic, Hungary, Serbia, and Slovenia.

Disenchantment with such liberal transitions notwithstanding, those countries benefited from something that wasn’t available to Russia: the European Union (EU). A continuous flow of capital, and the provision of technical assistance on governance and the rule of law eventually enabled Eastern European countries to outperform their Russian neighbor. A large gap still separates much of Eastern Europe from the wealthier West, but the average Russian can only dream of the life of a second-class EU citizen.

Both of these experiences of transition offer valuable lessons for what may come next.

The Green New Deal

If you take the statements of the world’s governments at face value, almost everyone is now treating climate change very seriously and nations globally are feeling the heat to declare carbon-neutrality by 2050 (or sooner). In August, articles about the latest report from the Intergovernmental Panel on Climate Change (IPCC), emphasizing that global warming is “widespread, rapid, and intensifying,” were accompanied by terrifying photos of its real-world effects: the wildfires in California and Siberia, the disastrous flooding in Germany and China, the record-setting temperatures in Canada and Sicily, and that’s just to start down a list of climate disasters. Your head — or indeed, your entire body — would have had to be in the sand to ignore the emergency sirens going off all around you.

Nonetheless, despite such obvious warning signs of so much worse to come, the world has not, in fact, accelerated its pace of decarbonization. The next major climate-change conference is scheduled for Glasgow at the beginning of November, but the globe’s leading economies are all still falling painfully short of the commitments they made in Paris nearly six years ago. More horrifying yet, the IPCC reports that, even if countries were meeting those commitments, they would, by 2030, result in a mere 1% reduction in carbon emissions from 2010 levels. To avoid the worst-case scenarios of an overcooked planet, those emissions would have to be cut by nearly 50% within the next nine years. Only a couple of countries are preparing for such a dramatic transformation.

The time for modest reforms is long past. A radical cut in carbon emissions can’t be accomplished simply by banning drinking straws, ramping up production of electric cars, or even planting a billion trees. To meet the climate-change challenge will require a transformation comparable to the agrarian or industrial revolutions. But if those earlier system changes are guideposts, the losers of this next great leap forward will be legion.

Various “just transition” proposals are designed, at least on paper, to avoid such an enormous human toll. For a start, a “fair-share” approach would require the transfer of trillions of dollars to help the Global South keep fossil fuels in the ground while shifting to renewable energy. A similar approach within nations would provide the “losers of transition”– from coal miners to those on fixed incomes — with targeted assistance to “go green.”

Alas, such an approach runs counter to current practices. In response to the Covid-19 pandemic, for instance, the international community did not implement a “fair share” approach. The wealthiest countries largely cornered the market on vaccines, and poorer countries have had to rely on a trickle of handouts. Moreover, despite the unprecedented opportunity provided by the Covid crisis to begin to act on the next coming disaster, climate change, governments have generally failed to allocate recovery funds to finance any kind of major economic transformation. In the $1.9 trillion American Rescue Plan of 2021, for example, a mere $50 million went to environmental-justice grants, while $8 billion went to airports. Similarly, fully one-tenth of the $1 trillion infrastructure bill now making its way (or not) through Congress is devoted to improvements to roads and bridges, which will only reinforce America’s love affair with cars, SUVs, and trucks.

And where is the necessary shift of resources to the Global South to help with its transition? Back in 2009, rich countries had already promised to mobilize $100 billion for such climate financing by 2020. They’re still $20 billion short and the assistance has come mostly in the form of loans, not grants, only deepening the dependence and indebtedness of the Global South.

Worse yet, richer countries have been at least modestly reducing their own carbon footprints at the expense of poorer countries by relocating polluting industries to the Global South or substituting carbon-intensive imports for domestic production of the same. Although China continues to boost its share of domestic renewable sources of energy, it’s been financing 70% of all coal-fired power plants built globally (though its leader, Xi Jinping, recently pledged to end this practice). The European Union is actually phasing out coal power — which China is emphatically not doing — even as it continues to rely on high-carbon imports from coal-using countries like Russia, Turkey, Morocco, and Egypt.

To combat such a shift of carbon emissions from north to south — and protect its own less carbon-intensive industries — the European Union has proposed a Carbon Border Adjustment Mechanism, which penalizes imports of cement, fertilizer, steel, and the like based on the amount of carbon emitted in their production. Hitting Russia the hardest, this tariff would indeed push that country toward a “greener” manufacturing process for its Europe-bound products. However, countries in the Global South that don’t have the resources to upgrade their export industries would be left out in the cold.

This lack of resources in the Global South is compounded by debt. The poorest nations are devoting nearly $3 billion a month to servicing their debts, diverting resources that could otherwise go into a transformation of energy and industrial infrastructure. Bridging this divide would require large-scale debt forgiveness; equitable debt-for-climate swaps; or, more ambitiously, an Organization for Emergency Environmental Cooperation that would marshal trillions of dollars in public financing to pay for the entire world to transition to clean energy.

Here, the experience of Eastern Europe is relevant. The European Union’s transfer of resources, training, and technology from west to east helped cushion the transition that so devastated Russia. Although not enough to prevent the rise of Eastern Europe B, the EU’s modest generosity at least gestured toward the kind of solidarity economics that the Global North needs to adopt in any future climate negotiations with the Global South. If there is to be belt-tightening to shrink the global carbon footprint, those who can most afford to lose the weight should step forward.

Such schemes address the all-important question of equity. But there’s an elephant in the room that’s so far gone unmentioned. And that beast is only getting bigger.

A Rising Tide

All the major transformations of the past were predicated on rapid economic growth, whether the increasing food production of the agrarian revolution or the incorporation of the Soviet Union into the industrialized world through its Five-Year Plans. Most versions of the Green New Deal adhere to the same growth paradigm, with electric cars filling the roads and more sustainably produced widgets circulating through the global economy.

Even as richer countries promise to shrink their carbon footprints, however, they still imagine that they can maintain their overall way of life and export that lifestyle to the rest of the world. But this high-energy lifestyle of computers, air conditioners, and electric SUVs depends on the Global South. By one estimate, the Global North enjoys a $2.2 trillion annual benefit in the form of underpriced labor and commodities from there, an extraction that rivals the magnitude of the colonial era. Moreover, the cobalt and lithium necessary for batteries for electric cars, the gallium and tellurium in solar panels, the rare-earth elements needed for wind turbines are predominantly mined in the Global South and their extraction is likely to come at a huge environmental cost.

The high-growth assumptions of the current system reappear under the rubric of “Green growth,” promulgated by old-style industrialists in new Green clothing. During the transition from communism in the 1990s, “red capitalists” were well-placed in the old system to profit under the new dispensation. Today, a class of “green capitalists” have similarly emerged to enjoy huge profits from the early days of a putatively post-carbon economy — Elon Musk in the world of electric cars, billionaires like Robin Zeng and Huang Shilin with lithium-ion batteries, and Aloys Wobben when it comes to wind turbines. Huge sums of money are now available for the sketchiest of projects, from “blue hydrogen” to the sea-bed mining of rare-earth minerals.

Big profits minus serious regulatory oversight equals the possibility of big-time malfeasance. Fraud was rampant in European wind farms in the 1990s, while renewable energy companies in the Global North have been implicated in bribery schemes in the Global South. The additional bonanza of Green funds through recovery, infrastructure, or transition programs — like the one-time financial resources made available by Russian privatization — could easily disappear into dubious private ventures, bureaucratic black holes, or the swamplands of corruption.

A rising tide, it was once said, would lift all boats: economic growth would lead to general prosperity. But a “rising tide” now has a different meaning in a climate-changing world. The planet can no longer support that kind of growth, whatever its color.

The next transformation must be different from its precursors when it comes to both economic expansion and social equity. We can’t simply grow our way out of this predicament, nor should we sacrifice millions of human beings in the process. Despite the enormous economic and political gaps that separate people around the world, we have to somehow join hands across vast differences to leapfrog over the fossil-fuel economy. United we transform or united we fall.