Research and Insights

"We are fighting the fight of our lives – and we are losing," declared the UN Secretary-General Antonio Guterres on the occasion of the COP-27 World Climate Conference. Although the world seemed to come to a temporary standstill due to the COVID pandemic, carbon emissions rose again in 2021 and reached a record level in 2022. The Emissions GAP Report warns that current policies will warm the planet by 2.8 °C, and that the climate protection measures already announced are still insufficient. Fires, flood disasters, wars over land and water, as well as refugee flows and species extinction indicate that the planet is undergoing irreversible changes. Faced with this catastrophic development, the question arises as to under what social conditions – the Intergovernmental Panel on Climate Change (IPCC) now also demands – a global sustainability revolution – can be realized.

A report by  Oxfam indicates why well-intentioned climate policies repeatedly fail: twenty of the richest billionaires emit roughly eight thousand times more carbon than those individuals who belong to the billion poorest people. How the problem of climate injustice, hinted at in this ratio, can be addressed politically is the subject of heated debate in the social sciences and economics. Market- and technology-centered policies compete with a new state interventionism, which, in turn, is challenged by demands for a radical democratization of the economy and society. Each of these options must be measured by how it addresses the tension between social and ecological sustainability. The resulting conflicts, I argue, ultimately revolve around decision-making power over products, production processes, and their material composition.

Pincer crisis and societal transformation

The old capitalist centers, as well as the major emerging economies, are in the midst of an epochal upheaval, which can be described as an economic-ecological pincer crisis. The generation of economic growth according to the criteria of gross domestic product (GDP) has until now been the most important means of pacifying social conflicts in capitalism. The pincer crisis arises from the fact that growth, under status quo conditions, acts in ecologically (and thus socially) destructive ways. This status quo involves a close linkage of economic growth, high emissions, resource-intensive production and lifestyles, and a steadily increasing energy consumption based on fossil fuels.

The pincer crisis is thus more than one of the rare "great crises" of capitalism, comparable, for example, to the Great Depression of the 19th century, the world economic crisis of 1929-1932, or the world economic crisis of 1973/74. While terms like "multiple crises" or "poly-crisis" point to the accumulation of crisis hotspots, the diagnosis of a pincer crisis allows a clear hierarchy of the causes of the crisis to be named. It is primarily the ecological-social conflict that is forcing rapid, radical changes. The pincer crisis can only be overcome if our instrumental relationship to non-human nature, which has become entrenched since the neolithic revolution – when humans became sedentary – is corrected.

In principle, there are two paths to addressing this problem: (a) approaches that claim to be able to decouple economic growth from its ecologically destructive consequences, or (b) strategies that aim to free societies from the systemic compulsion for profit-driven market expansion and continuous, rapid economic growth.

The market and technology option

The vast majority of economic and political elites still favor the path of growth. Supporters of the market option argue for artificially making scarce what was once abundant. This is to happen, for example, by assigning a price to CO2 equivalents. The price mechanism is supposed to ensure that technologies and production processes using fossil fuels are driven out of the market by more environmentally friendly alternatives. Emissions trading, and potentially a CO2 tax, becomes the main instruments to combat anthropogenic climate change. The main problem with market-based instruments, however, is that they are socially blind in their effects. Market-based climate policies have, according to economist Lucas Chancel, disproportionately burdened low-income and low-emission groups in recent decades, while the CO2 price signal for high emitters is often too weak to induce necessary changes in consumption and investment patterns among the affluent.

The technology option, therefore, combines market mechanisms with a plea for accelerated technological change. Pioneers are representatives of the new economy such as Elon Musk and Bill Gates. Both stand for an ideology that sees solutions to almost every global problem in entrepreneurial creativity, technical innovations, and the law of supply and demand. The state is still needed, but as a protagonist of technological change. Investment should be made, for example, in CO2-neutral steel, CO2-free hydrogen production, as well as CO2 capture and next-generation nuclear fission.

However, the technology option also has serious flaws. According to such technology-based solutionism, in the future we will drive electric cars, have synthetic fuels, eat plant-based meat, build with emission-free materials, process climate-neutral steel but leave the world largely as it is. This is a bet on the future that will not pay off because the systemic drivers of an economy oriented towards growth, market expansion, and private profit in a world with finite resources continue to exist.

It becomes clear that neither the market option nor the technology option is capable of establishing climate justice. Climate justice means, for example, that all parts of the population share in the costs of transformation according to their carbon footprint. Currently, the opposite is the case. As Lucas Chancel shows in a study, the poorer half of the adult population in Europe and North America has reached values that approach or match the Paris climate targets for 2030. The wealthiest one percent, however, emitted 26 percent more in 2019 than 30 years ago, the richest 0.01 percent even 80 percent more. The data shows that production for the luxury consumption of the richest has become the main driver of climate change, the consequences of which are being felt primarily by those income classes that contribute the least to the emissions burden.

Political approaches that ignore this problem of climate injustice are – especially under inflationary conditions – likely to trigger strong resistance to socio-ecological transformation. The rise of a radical right that denies or relativizes climate change is evidence of such political blockages.

The new state interventionism

The state option, on the other hand, is to be evaluated differently. It also leaves room for market mechanisms and relies on technological change. However, it breaks with the notion that the state is a bad entrepreneur. Instead, it is pointed out that the supposedly greatest strength of capitalism, its innovative capacity, is crucially dependent on the interventions and financial resources of a steering state. According to the economist Mariana Mazzucato, none of the great innovative leaps and the research they required would have been possible in the past without state support. She rightly cites the example of the moon landing project, in which an entrepreneurial state could act successfully with long-term strategic planning, enormous research capacity, and the targeted use of financial resources. Accordingly, she advocates for a state that does not limit itself to repairing non-functioning markets but creates, regulates, and links markets to societal values and goals.

To be clear, if there were such a state that would make the 17 Sustainable Development Goals the binding guideline for political missions, that would be a huge step forward compared to the status quo. Because without the state as a shaping factor, socio-ecological transformation doesn’t have the slightest chance.

But the state option also has its pitfalls. In capitalist market economies, the state is an apparatus that "densifies" class and power relations. Under existing conditions, business-friendly state interventions are hardly able to counter rent-seeking strategies, with the help of which large market actors increase their income at the expense of other market participants. In addition, state apparatus and authorities are suffering from an acute lack of imagination in terms of industrial and structural policy due to politically motivated fiscal restraint. Using the state in a targeted manner, as in China and now also in the USA, to develop the economy and, for example, establish a sustainable hydrogen economy with fair trade relations, would not even occur to economic policy-makers here. A state-led radical reorganization of the economy can hardly be achieved with cumbersome authorities that are stuck in routine mode. In addition, private sector interests – and more recently military interests too – limit the state's financial room for maneuver.

However, it is crucial that even Mariana Mazzucato, a far-sighted advocate of progressive state interventionism, ultimately shies away from addressing the issue of ownership and thus the question of decision-making power over products and production processes. Her plea for new public-private partnerships therefore seems strangely toothless; the same applies to her insistence on a modified concept of growth. One cannot shake off the impression that Mazzucato recoils from the radical consequences of her own critique of markets and capitalism.

Thus, a peculiar contradiction can be seen in all of the options mentioned so far: namely, if one adheres to the possibility of decoupling economic growth from its ecologically destructive consequences, then almost everything else must change rapidly, yet the basic rule of capitalist market economies – the compulsion for infinite accumulation and continuous, rapid economic growth – is supposed to remain. In this outlook, financial capitalism becomes "natural capitalism", whereby the same systemic mechanisms that have brought about the possibility of ecocide are now supposed to contribute to its overcoming. It ignores what Lucas Chancel identifies as the main cause of the rising emission burden: investments, not individual consumption patterns.

Democratization strategies

In 2019, over 70 percent of emissions from the wealthiest 1 percent resulted from investments. In parallel with growing inequality and concentration of wealth, the share of investments in the per capita carbon footprint of the elite has continuously increased since the 1990s. Investment-related emissions stem from decisions by capital owners regarding the production process (i.e., emissions occurring during the construction of machinery, factories, etc.). Emissions from government spending result from collective consumption expenditures or investments (government administration, public roads, defense, etc.).

Capitalist ownership as an expansive principle is increasingly reaching the limits of a planet with finite resources and a vulnerable ecosystem. Criticism of this principle shapes the democratization option, under which extremely heterogeneous strategies are gathered. Climate protection is here associated with the democratization of economic decision-making, ecological sustainability, and the transition to a different, post-capitalist type of society. In various ways, the aim is to rebind economic decisions to societal objectives. The separation of production and conscience – inherent in exploitation-driven work processes, as described by the philosopher Günter Anders – is to be reversed by restoring collective responsibility of producers for the what, how, and why of production. According to this perspective, blindness to potential apocalypse arises because the product and its production are morally detached from each other. Whatever workers produce, they require no conscience to do so.

This indifference can only be overcome through a radical transformation of economic models, replacing growth indicators with development and welfare indicators. Specifically, this means shrinking the rentier economy (financial sector), a radical transformation of the industrial export sector in particular, a strengthening of local public services along with direct and expanded welfare.

This transformation creates and requires a significant amount of work. Halving the amount of work and products is not an alternative, but sustainable reduction of working hours is. At its core, it is about transitioning to a resource-efficient, carbon-free production of durable goods and sustainable services. The goal is sustainable quality production, allowing for the production and consumption of fewer but higher-quality goods. Such transitions are inconceivable without a break from production processes designed primarily with markets and consumers in mind. The transition to sustainable quality production can only succeed if the products of such a production method can still be bought and consumed by the lowest income groups, even with higher prices. Ecological austerity, i.e., recommendations for lower classes to abstain, would therefore be counterproductive to such an approach.

On the contrary, forms of ownership that help overcome the "consciencelessness" in production are also subjectively beneficial. Democratization approaches therefore aim to entrust the economy to control and planning by democratic civil societies. New forms of collective self-ownership (cooperatives, employee-owned companies) and a stronger emphasis on the public (commons), coupled with approaches to democratic framework planning, are favored. Political innovations, such as transformation and sustainability councils, also have a role, aiming to create public awareness for achieving sustainability goals and exert continuous pressure on decision-makers.

Strategies and concepts for realizing the democratization option go by different names: democratic post-growth society, common good economy, participatory-democratic, sustainable, or ecological socialism are some common terms. What they all share is that they combine the aim of ecological sustainability with that of overcoming poverty and combating social injustice. The most important starting point is a sufficiently funded social infrastructure that turns health, care, education, training, and mobility into public goods accessible to all. Societies function best with a well-developed social infrastructure available to everyone – not only in their own country but also across Europe and worldwide.

Advocating for a social infrastructure with universally accessible public services is therefore one of the most important projects on the path to sustainable and poverty-free societies. The prospects for such political options may not be particularly promising at present. However, for societies that are increasing the risk of impending ecocide, along with hunger and mass poverty, what the world-system theorist Immanuel Wallerstein has written about systems in decline could apply. According to him, the last phase of decline is particularly open to the factor of free will: recognizing opportunities that arise when seemingly unchangeable systems erode. Advocates of future-oriented democratization strategies must adopt this claim if they want to be successful. Advocating for such an option is worthwhile, "because we are truly free only when we have a say in what we produce and what (due to the products we produce) becomes of the world" (Günther Anders).


Disclaimer: This article is a translated version of the intervention that was originally published in German language as part of the Economists For Future Debate Series in the online magazine Makronom. Hence, some of the linked references are in German. The author would like to think Adrian Wilding for the translations.

About the author:

Klaus Dörre has been a professor of labor, industrial, and economic sociology at Friedrich-Schiller-University Jena since 2005. From 2011-2021, he was one of the directors of the DFG College Post-Growth Societies. Together with Heike Kraußlach, he is responsible for the Thuringian Center for Digital Transformation (ZeTT) and a co-editor of the Berlin Journal of Sociology. His research focuses on capitalism pattern theory, socio-ecological transformation, labor relations, social consequences of digitization, and right-wing populism. His most recent book titled Rethinking Socialism was published by Edward Elgar in April 2024 and can be found here.