Capitalism and climate change

The student organisation British Conservation Alliance held an online webinar on 28th April 2020, entitled: “Capitalism and Climate Change — How Markets Can Protect the Environment”. The event was co-hosted by the Vienna-based Austrian Economic Center.

The panel was composed of:

  • Daniel Hannan, former Member of the European Parliament and founding president of the Initiative for Free Trade,
  • Lord Matt Ridley, journalist and author of best selling book The Rational Optimist,
  • Holly Fretwell, researcher at the Property and Environment Research Center (PERC) ;
  • Kai Weiss, researcher at the Austrian Economic Center.

The contributions were followed by a debate with the audience, which you can watch below via the full video recording. Below is a transcript of some meaningful interventions.


[00:00] Chris Barnard. Good afternoon everyone. First of all, thank you to our star-studded panel for being here with us to discuss a very important topic. Thank you to everyone at home tuning in as well. We had over 4,000 views on our last webinar last week, so I’m sure we’ll have even more this time. My name is Chris Barnard, I’m the president and founder of the British Conservation Alliance. The BCA is an organization dedicated to promoting free enterprise and multi-based solutions to environmental problems, and to giving young conservatives and libertarians a voice on these issues. We have the largest environmental campus network in the UK, at thirty universities across all four countries, which you can apply for if you’re a student. We’ve also spoken at conferences in over ten countries in the last six months about these issues. We are co-hosting tonight’s webinar with the Austrian Economic Center, based in Vienna, and their yearly free-market roadshow. We’re also publishing a book together in June, called “Green Market Revolution”, to which several of the panelists today contributed. But we’ll get to that a tiny bit later.

Today’s topic is often presented as an oxymoron. The dominant narrative is that climate change is a direct result of capitalism, and that only the dismantlement of our capitalist system will save us and the planet from chaos. This is why for example the founder of Extinction Rebellion, Stuart Basden, admits freely that the movement was never actually about the planet but about overthrowing capitalism. So despite lifting billions out of poverty in the last six decades, capitalism is seen as the root of all evils, especially environmental evils. This is partly because conservatives and libertarians have failed to provide a unified alternative to this narrative. In many ways, this is what this webinar today is about, to show that we too care about the environment and that we actually believe that market solutions are better solutions.

The way tonight’s going to go is that we’re going to have each speaker give a short introduction of their perspective on the topic before we delve into a more general discussion, including a Q&A from you, the audience. So feel free to submit your questions, but please use the Zoom Q&A box. Or you can submit questions on the Facebook live stream as well. So I’ll introduce our first speaker now.

Daniel Hannan, also known as “the man who brought you Brexit”, and I’m sure the vast majority of you know who he is. He is a former Conservative member of the European Parliament for the Southeast of England, where I live, and he is the founding president of the Initiative for Free Trade, a research foundation based in London. Dan, the floor is yours.

Clue in the name

[02:52] Daniel Hannan. Chris, thank you very much, thank you for putting this together and thank you for framing the discussion so well. In a sense, we’re living through the Extinction Rebellion dream right now. We’re getting exactly what the Greta Thunbergs of the world said they wanted: lower GDP, less consumerism, less trade, grounded airlines, sharp falling carbon emissions. And you know how people are enjoying it, because you’re exactly pointing to the reality, which is that behind a lot of this rhetoric lies the idea that, as some Extinction Rebellion posters put it here, humanity is the virus, Corona is the cure.

It’s the naturalistic fallacy. There’s a line in an old missionary hymn, where every prospect pleases and only man is vile. That’s a lot of what we’re up against. But we need to tackle this idea that there is a tension between economic growth and environmental protection. That is a hundred and eighty degrees the opposite of reality. If you’re an endangered species, you want to live in a rich country. If you want reforestation, you want to have rich people near you, who don’t need firewood, and don’t need primitive forms of agriculture, and so on. You mentioned that we both live in the Southeast of England. I’ve been listening, as a lot of people have during the last months, to the most amazing variety of birdsong. I sat in trance listening to the call of a blackcap this morning. Part of the reason why we have such a variety of birdsong is because we are a rich country. I don’t think I’ve seen a red kite in the wild until I was in my 30s. Now they are more common in this part of the world than magpies. […] Beavers are returning after centuries of extinction. The Thames was declared biologically dead in the 1950s. It is now teeming with life. You can fish for salmon from its banks. And why is that true? For the same reason that you breathe cleaner air and drink cleaner water in London than in Lahore, namely that Britain is a wealthy capitalist country. 

We have passed the point where people need to shoot animals with guns rather than with cameras. We’ve passed the point where nature is treated as a resource to be exploited. Of course it was Karl Marx who taught that nature was there as an exploitable resource, a doctrine that found brutal realization in the smokestack economies of the Eastern Bloc. Soviet Communism created, according to the UN, the filthiest environmental calamity anywhere on the planet. It turned the Aral Sea into a desert, it turned Lake Baikal into a sewer, it poured so much oil into the Volga that ferry passengers had to be warned not to throw lighted cigarettes overboard.

It’s an extraordinary thing, in a way that we even have to be having this conversation. The best thing that has happened to the environment in my lifetime was the fall of the Berlin Wall. Why? Because property rights are the best friend of environmental protection. It’s this basic old Aristotelian wisdom that if you don’t own anything, if nobody owns anything, then nobody will look after it — the tragedy of the commons. And extending ownership is one of the ways in which you give people a stake in protecting renewable resources.

When I was still a member of the European Parliament, I had a couple of the current panelists at an event in Brussels called the Blue-Green Summit. One of the speakers we had there, who sadly died since, was an Icelandic conservationist called Orri Vigfússon. Orri got very worried because he could see a decline in the number of salmon that were being fished. He then behaved, it seems to me, in a model way. He didn’t go bleating to governments. He didn’t demand legislation. He didn’t demand subsidies. He simply started buying up and not exercising the rights to fish in certain streams and he got a consortium of other enthusiasts to do it with him, until the numbers started to recover. A perfect and neat demonstration of how property rights are the best way to secure a renewable resource. 

The basis of conservatism,  the intellectual foundation of the conservative tradition was Edmund Burke’s understanding of society as organic. That a nation is not just a random set of individuals born to a different random set of individuals. That the children born in a country are heirs to a shared tradition or, as Burke put it, that society is a partnership between the living and the dead, and the people who haven’t yet been born. I can’t think of a more vivid illustration of the importance of that principle, the realization of that principle, than environmental protectionism. So conservatism, which is rooted in love of home and love of homeland, is a naturally environmentalist creed.

As we come out of this crisis, whenever we do, we need to be clear that the priority is to grow, to get our economy back, so that we can again have the luxury of looking after endangered species and endangered landscapes, so that we can bring back biodiversity, reforestation, all the things that happen in rich countries but don’t happen in poor countries. If you like, we’ve tried the Greta Thunberg alternative. We can see that that’s pretty unpleasant to live with. It’s time to give market capitalism its turn. Clue in the name: conservatives make the best conservationists.


Environmental quality as a “normal good”

[13:04] Holly Fretwell. If we look at the world today, it demonstrates that we can close the global economy and reduce air pollutants in many areas. But that is not a long-term environmental solution. I’m going to repeat a little bit here of what Dan just said. We have these huge costs of closing our economy, that’s demonstrated by lost jobs, reduced production of the goods and services that we need and that we desire and this forgone income. And one thing that we know about the environment is that we take better care of it when we are wealthier.

Environmental quality is what we call a normal good, that is, as we increase our wealth and prosperity, we invest more in our environment. We can afford to invest more and we’re interested in that long-term environmental quality. So the bottom line is that government actors don’t have the proper incentives to ensure that we have good conservation and environmental quality, and nor do they have the needed information — information that is signaled through market behavior. It’s often missing from government regulations and government decision-making. In the market for example, we know scarcity exists when resource prices are high. That motivates innovation, it motivates efficiency and it motivates reduced consumption. Government ownership however often precludes that information. When the price of water is artificially low, as it is in many nations, there’s less water conservation, there’s less efficiency in use, and shortages are often the result of that. 

Let me finish here with this thought, that hopefully we can discuss as we move forward. Environmental problems result from insecure property rights. And the role government should play is to help us secure those property rights, so the market can resolve the allocation problems that we have.


The world is getting better

[16:59] Matt Ridley. [In the 20th century,] the rate of growth of population, which is the top line, had been shooting up particularly rapidly.

What happened next? The rate of growth halved. It halved between the early 1960s and today, and the absolute number of people added to the world population started falling in the 1980s. And we are headed for zero population growth sometime by the end of this century. In a sense, that problem solved itself. We won’t even have doubled the world population in the 21st century, whereas we quadrupled it in the 20th century and we coped with that.

One of the side implications of this was that we were going to starve to death because of the population explosion. Another of these pessimists, Paul Ehrlich, wrote in 1969 : « In the 1970s hundreds of millions will starve to death in spite of any crash programs embarked upon now. » He said there really was no hope, we couldn’t help but starve to death.

But the story is that famine went extinct. Famine is now an incredibly rare form of death. It only happens in a few communist countries like North Korea occasionally or some terrorist countries like Somalia. Otherwise, it just doesn’t kill anyone, whereas it used to be a routine thing every year that there would be a famine somewhere in the world.

Meanwhile, we’re feeding seven and a half billion people today from less land than we fed three billion people from in the 1960s. And that’s because the amount of land we need to produce a given quantity of food, averaged over all crops according to their contribution to human diets, is 68 percent lower than it was in 1961. That’s because of mechanization, genetics, fertilizer, pesticides, all the improvements in agriculture. So the footprint of agriculture has shrunk. It hasn’t gone up. It shrunk, even though the population has gone up. And that is spared land for nature. It would have shrunk even more if we hadn’t decided to turn 5% of the world’s grain crop into fuel for motorcars, in a vain attempt to think that this might have some impact on the climate — but I will not get dwell on that.

Malaria is a good example of a pessimism that did persist for quite a lot longer. By the end of the 1990s, it was true that malaria was getting worse in the world. It was killing more people every year, and particularly in Africa, which is the blue section of this chart. This was partly because of drug resistance. But it was also possibly to do with climate change, scientists thought. And if you read the Intergovernmental Panel on Climate Change reports up to the 1990s, they particularly emphasized the problem that malaria was likely to cause in the 21st century. It was going to spread to more countries, it was going to kill more people, it was going to go to higher altitudes, and so on.

In fact, what happened after 2003? The malaria mortality in the world began to decline steeply. What happened in 2003? The Gates Foundation did something that all the aid programs from governments had failed to do. They picked up on a technology that had been available since the mid 1980s: the insecticide treated bed nets, which turns out to work even if it’s got holes in it, and they disseminated this all across Africa, with spectacular effects on malaria. It’s responsible for about 70 percent of that decline that you see, that one simple cheap technology.


As Dan mentioned, there are some interesting trends in wildlife. Why are lions getting scarcer, wolves getting more common and tigers roughly now holding their own numbers in the world? And the answer is very simple. Lions live in poor countries, wolves live in rich countries and tigers live in middle-income countries. And this is true of wildlife, wherever you look, that in rich countries wildlife is coming back in many cases, not in every species of course, but it’s in poor countries that wildlife is under stress because people go out into the forest to kill wildlife for food, or they chopped down trees which are habitats for wildlife in order to burn for their own fuel.

When I was young, there were 5,000 humpback whales left in the world, and even fewer than that of blue whales and other species. I never expected to see a humpback whale. I knew they were gonna go extinct at some point in my lifetime. I was very depressed, worried about that.  I didn’t know where you could go to see them. They were so scarce. There are now 80,000 humpback whales in the world and I’ve seen them off Iceland, I’ve seen them off Hawaii. They’re almost routine now, to go whale watching. In all  parts of the oceans you can now see gatherings of up to 200 humpback whales together at one time. This picture was taken off Southwest Africa I believe. An extraordinary change in the fortunes of wildlife.

Wildlife species are still going extinct every year and every one is an absolute tragedy. Most of it is caused by invasive species released onto islands but it is still an absolute tragedy. But the number of species going extinct every decade is now going down and has been for a number of decades. It peaked actually quite a long time ago. This is partly because of the efforts of conservationists. I’m not here to deny that, and a lot of them have been funded by government. But a lot has also been funded by private initiatives as well.

“De-extinction” and environmental optimism

To end, I was asked by Kai to talk about environmental optimism. So I would just like to say that for any young person out there who is as depressed by the litany of pessimism that they hear every day about the environment from the likes of Extinction Rebellion and other parts of the green movement. It’s worth just thinking about what might be possible in your lifetime if you’re a young person.

I hosted a meeting four years ago to discuss the possibility of de-extinguishing a bird called the great auk, which used to live in the North Atlantic. It was the last European breeding species of bird to go extinct. It went extinct about 1850 and there are four steps we need to do to de-extinguish this species.

  1. The first is to sequence its genome. It turned out we’ve done that. Tom Gilbert turned up at the meeting from Copenhagen to say, “I’ve just finished doing it. We’ve got the species.” He’s done it from the guts of a specimen that was in the Copenhagen Museum.
  2. The second thing we have to do is to edit an existing genome till it looks like a great old genome. And for that we’d go to the nearest living species, which is called the razorbill. There are about a million base-pairs difference. So we need a gene editing tool that can make a million changes. We’re not there yet, we can probably make about twenty changes at the moment in one go. But I wouldn’t put it past us. We now have gene editing tools that can be that precise, I wouldn’t put it past us to be able to do that within a few years, maybe a decade or two.
  3. The third step would be to somehow coax a cell with this genome into it and turn it into an organism. And there came to our meeting somebody called Mike McGrew who had just done this brilliant experiment of putting chicken cells into a duck embryo, so that what he grew was a perfectly normal duck, but it produced chicken babies. In theory, you could have a goose that gave great auk sperm to another goose that gave great auk eggs, and you would then have the first great auk.
  4. The fourth step would be to reintroduce this creature into the wild and see it reoccupy its niche. And people say: “But if it went extinct, the niche is not going to be there anymore.” That’s nonsense. The reason it went extinct is because we turned it into stuffing and pillowcases. That’s why we wiped it out.

So let’s be optimistic about the future, there are all sorts of things we can achieve if we harness economic growth and people’s ingenuity.


Green dream unveiled

[41:08] Daniel Hannan. This idea of technology solving would make greens deeply unhappy. Holly mentioned the artificial leaf. It’s at a very early stage. It is not yet commercially viable. But the idea of a chemical process that can take carbon out of the air, carbon dioxide out of the atmosphere and turn it into energy, you would think it is the “green dream”. But of course it wouldn’t be. You’d have all the Paul Ehrlich’s of today, all the graduates: “Oh no, but this is terrible, it’s advancing capitalism, it’s giving it a new lease of life.” And fundamentally one of the things that I’ve really learned in the last month watching the debate about how we respond to the epidemic is, there seems to be among a huge number of people, not just on the far left, a basic misunderstanding of what the economy is, and what business is.

Very often you hear people saying: “How can you be putting the economy before human lives, how can you want to reopen shops, and schools, and so on, when that’s putting profit before people?” That’s an extraordinary view of the economy because it envisages the economy as this kind of numinous disembodied entity that somehow exists separately from human endeavor, whereas of course, as we know, the economy actually is the name we give to the transactions that people make freely one with another in order to maximize their wealth, and health, and happiness. And yet it’s a perennially popular slug: “You’re putting profits before people.” Although profits can’t exist without people. And just as profits have lifted people out of poverty, just as profits translated into real life means schoolbooks and vaccines and better health care and better nutrition and so on, so it means better environmental outcomes. And I suspect that that is precisely the thing that the Greenies are so upset about.

Matt Ridley. I think it’s absolutely right that you find this again and again. If  you come up with what they call a technical fix, the environmentalists get very upset. “That wasn’t what we meant by solving the problem. We meant you have to go back and be monks in the Middle Ages with only one meal of water and bread a day,.That’s what we mean by a solution. And this is most clear in the case of nuclear power. Both nuclear fission and the prospect of nuclear fusion, which is getting somewhat closer although it’s always been quite close and never gets close enough, both those technologies are viscerally opposed by the very people who are most concerned about carbon dioxide in the air. And yet those are the only two technologies that can deliver carbon free power on sufficient scale. You simply cannot run a modern economy on wind or solar because there just isn’t enough space for putting up the panels or the windmills. And there aren’t enough resources. You need a huge amount of coal, and steel, and rare earths and all these other things that are mined, in order to make windmills and solar panels. This point was very well made in a new documentary by Michael Moore, which is extremely critical of the green renewable energy industry, saying it’s just as industrial as the fossil fuel industry. In fact it’s dependent on it. They’re trying to get this documentary banned at the moment because it’s very uncomfortable, through all their people who’ve invested in renewable energy. But actually of course they are making the point that they’d rather have us have no energy at all. This shows that the only technologies that are going to work are going to be the ones that are hugely concentrated, that use relatively few resources. A coke cans worth of fish and fuel per person per lifetime, that’s what nuclear power can do for you, with a tiny footprint. And yet they oppose this technology, and I find that very peculiar.