There is a growing recognition of the seriousness of global warming.
A number of methods have been suggested, or to some extent are being
used, to curtail the use of fossil fuels, such as the use of solar
power, wind power, better farming practices, more efficient appliances
and energy-efficient housing, mass transit, etc. If
climatic change is to be minimized, these and other methods must be
rapidly developed, properly evaluated to see if they are suitable, and
then used extensively and in a coordinated way.
This would seem to require government economic planning to deal with
particular production methods, the overall structure of the economy,
and people's welfare. But the neo-liberal bourgeoisie
claims that such planning can be replaced by market methods.
Supposedly, a slight restructuring of the marketplace will result in
corporations developing and using environmentally-clean methods simply
as a result of their pursuit of profit.
The carbon tax is one of the ways of restructuring the market that are being proposed. Such a tax, levied on all carbon-based fuels, is supposed to be just about all that is needed to ensure the development and use of proper environmental measures. Given this tax, the capitalists will supposedly clean up the environment with the same enthusiasm that they presently devastate it and cut wages and benefits. Provided carbon-based fuels are sufficiently expensive, they will supposedly be environmentally responsible simply out of their own financial self-interest.
. A number of major capitalist politicians are
interested in or support the idea of a carbon tax.
This includes Al Gore, New York Mayor Bloomberg, and even John Dingell,
the Chairman of the House Committee on Energy and Commerce, who is
notorious for his close ties to the auto capitalists. (1) Some of the theorists among the
free-market fanatics at the conservative American Enterprise Institute
back the carbon tax. (2)
Meanwhile the Green Party advocates a carbon tax in their program, thus giving a leftist coloration to this plan. And the tax has picked up support among scientists. Dr. James Hansen of NASA, a major figure among scientists warning about the danger of global warming, is another of its proponents.
One reason for the growing interest in the carbon tax is that the
deficiencies of carbon emission trading, another supposed market
solution for global warming, are becoming more evident everyday.
Carbon trading, or "cap and trade", as it is also called, is the main
system used in the Kyoto Protocol.
With carbon trading, corporations are allowed a free hand in what
methods they use for production; few things, however
harmful, are directly regulated; and instead an
attempt is made to control the total national amount of greenhouse gas
emissions through a system of permits. Each year the
government of a country sets the total amount of permits to be issued
for carbon emissions (in this system, all harmful greenhouse gas
emissions are measured in terms of carbon equivalents).
So the total of carbon permits is supposed to be a cap on the overall
national emission of greenhouse gases. These permits
are handed out to various companies. If a company's
carbon emissions are higher than the amount of its permits, it can
either reduce its emissions, or buy spare carbon permits from other
companies that have more permits than they need. Or it
can buy "carbon offsets" to cover its excess emission:
this means financing projects that reduce greenhouse gas emissions in
other countries, countries not subject to the Kyoto limits.
Each company can thus decide whether to curtail its greenhouse gas
emissions, or to finance someone else curtailing their emissions,
whichever is financially more advantageous to the firm.
This is supposed to result in total reductions in carbon emissions
being carried out at the least expense.
Carbon trading is thus supposed to provide an easy way to achieve
reductions in greenhouse gases. The government
supposedly doesn't have to worry about how firms lower their carbon
emissions. Supposedly all one has to do is just decide
on the total amount of emissions and, year by year, keep lowering the
cap, or total number of permits. Let the market take
care of the details. What could be easier?
In practice, however, it doesn't work. Most of the
countries with carbon quotas under the Kyoto Protocol are exceeding them.
And that's despite the fact that the goals for reduction of carbon
emissions under Kyoto are rather modest. True, some
countries are meeting their goals, but this mainly happens for special
reasons that have little to do with carbon trading:
for example, Eastern European countries easily met their carbon
emission targets in the days when their economies were contracting due
to free-market "shock therapy" after the collapse of the fake
"communist" state-capitalist regimes. Moreover, carbon
trading has had a number of unexpected side effects, such as helping to
devastate the remaining world's rain forests through an unwise
overextension of the use of biofuels, such as biodiesel made from palm
oil from Indonesia. (3)
By way of contrast, a process of direct regulation was used to fight the danger of chloroflourocarbons (CFCs). Once hailed as miracle-working chemicals, CFCs turned out to be a major threat to the world's ozone layer. The Montreal Protocol to avert this threat started off in a half-hearted way, and had to be revised several times, because the capitalist governments dragged their feet at the behest of the major chemical companies. Still, it relied essentially on direct regulation of the CFCs, and it has been reasonably successful so far. The Kyoto Protocol, which centers on market methods, has been a failure.
The idea that market solutions can replace environmental regulations
is a neo-liberal innovation. It used to be taken for
granted that environmental protection required restricting market forces.
Originally, in the 1960s and 1970s, when mass struggles against the
poisoning of the land, air and water forced the US government to take
the environment more seriously, a series of government regulations and
agencies were set up. This resulted in a partial
cleanup of the land, air, and water, and the correction of some
workplace problems. But there was soon a neo-liberal
and market fundamentalist backlash against the new regulatory agencies
and the ongoing cleanups. The corporate apologists
calling themselves economists claimed that the government shouldn't
directly protect the environment, and it took to calling environmental
regulations "command and control" systems. Instead
they wanted the government to create markets in pollution permits, and
allow companies to trade these permits among themselves.
So long as the total number of permits was capped, these "cap and
trade" programs were supposed to orient marketplace forces to cleaning
up the environment. The bourgeoisie was enthusiastic
about this approach, and environmental regulations were gradually gutted.
"Cap and trade" programs were put in effect for a number of
problems, such as air pollution, acid rain, and leaded gasoline.
This didn't entirely stop environmental cleanups, but it certainly
slowed them down. (4)
It wasn't just Republicans who championed this. The
Clinton administration was excited about this neo-liberal approach, and
pushed it hard. And indeed, it bears the most
responsibility for carbon trading being enshrined in the Kyoto Protocol.
Thus, although the US government has never ratified the Kyoto Protocol,
Bill Clinton, Al Gore, and the American bourgeoisie played a decisive
role in shaping it anyway. Meanwhile the European
bourgeoisie, having been won over to the idea of carbon trading, took
it up with a passion.
Today "cap and trade" programs are still the favored method of the bourgeoisie, and for the last two years Congress has been inching toward a carbon trading system. (5) But some establishment figures look to the carbon tax as a better market method than carbon trading. There is an ongoing debate between carbon traders, who still don't recognize the failure of the Kyoto approach, and carbon taxers. However, both methods being based on the same idea that the marketplace can replace direct government regulation of production, it's not surprising that some bourgeois figures back both cap and trade programs and carbon taxes. Indeed, it is quite possible that both will be implemented to some extent in the US during the next few years.
The Carbon Tax Center has a website which puts forward a systematic
presentation of the various arguments in favor of a carbon tax.
It sees that "very large and rapid reductions in the United States' and
other nations' carbon emissions are essential to reverse runaway
climate change and avert resulting weather events", but it holds that
higher prices for fossil fuels will suffice to achieve these reductions.
It believes that a carbon tax can ensure that the price of fossil
fuels rises in a "gradual" and "predictable" manner.
This is to be the "central mechanism for reducing carbon emissions".
These prices are supposed to discourage the use of fossil fuels, not
just in cars but also in manufacturing processes or elsewhere.
The idea is that the main planning involved will be the setting of the
level of the carbon tax.
The Carbon Tax Center doesn't worry about how to overcome the
antagonism of corporate interests to environmental concerns;
it is confident that business will react properly to "market
correctives". It does accept some regulatory action,
mainly various of the government programs currently used, such as
energy efficiency standards. But it doesn't see that
overall economic planning will be needed; it doesn't
worry about whether vast changes will be needed in the economic
infrastructure to deal with climate change as well as economic
degradation, and whether this requires planning; and
it doesn't pay any serious attention to what will be required to insure
the welfare of the masses under these conditions. For
it, the main issue is just to have proper energy pricing.
This will supposedly ensure that everyone -- individuals, corporations,
and the government -- will make the right decisions on everything from
investment to land use, simply from financial calculation and
self-interest. They write that "taxing fuels according
to their carbon content will infuse these incentives [to reduce carbon
emissions] at every chain of decision and action -- from individuals'
choice and uses of vehicles, appliances, and housing, to businesses'
choices of new product design, capital investment and facilities
location, and governments' choices in regulatory policy, land use and
Thus, although their carbon tax is something that the government will have to impose, it will be within the realm of that type of government measure that is compatible with the neo-liberal backlash against regulations.
Naturally, higher fuel prices, whether from shortages, corporate
profiteering, or a carbon tax, will inhibit the use of fossil fuels.
So carbon taxes will reduce fossil fuel usage to some extent.
So at first sight this looks promising.
However, the question isn't whether the carbon tax will achieve some reduction in fossil fuel use, but whether it will achieve a sufficient reduction in carbon emissions. This it won't do. The attempt to use the carbon tax as the "central mechanism" for fighting global warming will prove to be another fiasco. Let's look at the some of the reasons why:
True, some of these problems might be dealt with, at least
partially, by adding on special programs or regulations as a supplement
to the carbon tax. But each such addition will
eliminate the apparent simplicity of the carbon tax and make it more
like the complex obscurity of carbon trading. And
there are just too many holes to plug.
Thus overall, the carbon tax attempts to replace the need for
overall planning with a pricing mechanism, but succeeds only in
preventing reasonable planning.
The problem isn't simply that the carbon tax is a tax.
Taxes of various sorts have always been used by governments as part of
their regulation of the economy. Taxes might be used
to penalize companies that don't comply with environmental planning, or
to finance government programs. But there are
different types of taxes. The carbon tax isn't
designed as a part of a larger plan, but as a way to avoid overall
planning and economic regulation. Moreover, it is
essentially a modified consumption tax disguised as a "polluters' pay"
measure. The carbon tax would put the burden on the
working class rather than on the large corporations and the
capitalists, who are responsible for the bulk of the ongoing
environmental devastation and who have the lion's share of the world's
Let's look at these issues in more detail.
High prices for carbon
emissions are supposed to make people replace harmful products or
activities with alternatives that have a smaller carbon content.
This can only happen, however, if these alternatives exist.
For example, high gasoline prices can't result in people using mass
transit systems that don't exist, or riding them to locations they
don't reach, or at times when they do not run. There
will be somewhat more use of existing systems, but even if the
governments try to improve mass transit, the general insufficiency of
these systems will take time to remedy. If it is left
to business-as-usual and financial calculation, it will take an
especially long time, as we are entering a period of economic
difficulties in which governments will be cutting back on such programs
rather than pouring funds into new ones.
Similarly, high energy prices point out the need for houses which
are designed to minimize the need for heating and cooling.
Such houses can be built, and are standard in some countries.
(8) But few, if any, American
houses are built that way, and people can't move into houses that don't
exist. So on the whole, we are going to be stuck with
the existing housing stock for quite some time. Now,
some useful improvements can be made in existing houses, but beyond a
certain point, retrofitting homes is likely to be an expensive
proposition; so it would probably take a major
government program for retrofitting to be carried out on a significant
If one relies on high energy prices, then the working class will be subject to tremendous hardships for years while waiting for environmentally-friendly and feasible alternatives. As a result, many sacrifices will be forced upon the working people, and these sacrifices will be out of all proportion to any supposed environmental good that results. The high energy prices won't be a way of nudging people to buy the right product, but of destroying their livelihoods and making their lives desperate. If you can't afford gas to get to your job, you lose your job. If you can't afford to heat your house, your family goes cold. If you can't afford food, you starve. You give up any savings you may have, you give up your health plan, and you are forced to do what it takes -- whether it evades environmental regulations or not -- to feed your family.
The large recent jumps in gas prices have brought major hardship for
many workers. They also threaten to drive a number of
owner-operators and small enterprises out of business, such as small
truckers, fishermen, and small farmers. The more
gradual increase in price envisioned under the carbon tax would
manifest the same type of squeeze, but more gradually.
But these aren't the people who determine whether fuel-efficient
alternatives exist. This depends mainly on the major
corporations who dominate the economy.
And many of these corporations wouldn't be affected that much by the
gradual increases envisioned under a carbon tax. Some
-- such as electric and gas utilities and many manufacturers -- will
simply pass on the added cost of their products to the consumers;
some, such as banks and financiers of all types, are only affected
indirectly by the cost of fuel; and others will, no
doubt, get subsidies on the grounds that their existence is supposedly
essential to the country.
The present rapid and steep increases in oil prices, corresponding
to several decades of the carbon tax coming at one time, have, however,
put heavy pressure on certain corporations. They are
faced with making fast adjustments, and as well with the general
economic slowdown which high energy prices contribute to.
A number of big corporations have been in trouble for some time, and
high energy prices may help push some over the edge to bankruptcy.
But how will endangered corporations react to the economic slowdown
and high energy prices? Well, for years the auto companies, the
airlines, and other corporations have carried out a fierce program of
wage cuts, speed-up, benefit cuts, subcontracting, and workrule
streamlining. There have also been mergers,
take-overs, and monopolization. The hard-hit
corporations will use high energy prices as a rationale to step up this
process. They may also economize on energy, eliminate
some extravagances, and streamline some of their operations, although
even here they may do things like force workers to take risks and ruin
their eyes in half-lit workplaces. They want quick
results on their balance-sheet, and they will step up the pressure on
their workers. They will also search for any source of
cheap energy, whether it is environmentally sound or not, and they will
pressure the government to make loopholes for them in environmental
Thus the carbon tax won't push the large corporations into becoming the motors of environmentalism. Overall, corporations will economize more on energy in the operation of their industry, but the capitalist owners will continue to drag their feet on environmental measures. Heavy price increases, such as those at present, may panic them, because they threaten particular corporations as well as endangering the economy. But the corporations will respond to protect their individual interests, rather than backing the major changes needed to protect the environment.
The tax is promoted in grand terms as a way of "making the polluters
pay". But it won't be the oil companies or mining
companies or electric utilities or wasteful manufacturers who will
really pay this tax: as we have mentioned, they will
pass on the cost to the consumer. The carbon tax is
not a corporate profits tax, nor a penalty payment on big oil or big
coal, but will act more like a sales tax, which is generally paid by
the customer. For most large corporations, it will
have the same effect as anything that increases the price of the
resources they use. And what is happening today with
respect to high energy prices? Some corporations may collapse in the
coming economic difficulties, but when the dust settles, the remaining
corporations will be passing the higher costs along to the consumer.
If the present increase in energy prices were due to a carbon tax, as
well as to market oil prices, the result would be the same.
Thus the carbon tax is basically a consumption tax, which falls most
heavily on working people.
Many advocates of the carbon tax -- the Green Party, Dr.
Hansen, the Carbon Tax Center, etc. -- recognize that
the carbon tax, by itself, is inherently a regressive tax.
For example, the Carbon Tax Center says that "The top 20% of U.
S. households spend just 2. 3% of
their after-tax income on gasoline; the percentage for
the lowest 'quintile,' 9. 1%, is four
times as high. Clearly, imposing a gasoline tax or, by
implication, a carbon tax, without tax-shifting or rebating,
would have a disproportionate percentage impact on lower-income families."(9)
Nevertheless the Carbon Tax Center claims that it is "a myth" that
the carbon tax would be regressive. They write that
"Any flat tax is regressive, but the regressivity of the carbon tax
could and should be minimized or eliminated by allocating the tax
revenues to benefit the less affluent."(10) Thus they argue that because they can
imagine different ways in which tax rebates or other
schemes might compensate for the regressive nature of the carbon tax,
therefore it isn't really regressive. They seek to
stop people from worrying too much about the way in which the carbon
tax actually will be implemented.
For example, the Carbon Tax Center argues that the carbon tax, once
collected, should be returned to the population.
(Let's leave aside for later in this article the issue of whether it
makes sense to collect a tax only to refund it.) They
propose that it should be refunded in equal portions to everyone.
They then argue that, since rich people spend more money in absolute
terms on energy, even though working people spend a greater proportion
of their income on energy, that the rebates will actually redistribute
income in a progressive fashion. Poorer people who
spend less, and therefore pay less carbon tax, will get the same refund
as richer people who spend more.
But they don't ask if it's likely that at a time when social
services are being cut and cut again, when "welfare as we know it" has
been eliminated, when schools are deteriorating year by year, the
government will engage in massive income redistribution.
They don't consider at all what the workers have to do to protect
themselves from how the capitalists will implement the carbon tax.
Nor do they discuss the likelihood that much of the rebates and
cushioning of the carbon tax that will take place will go to powerful
corporations, despite the fact that they can pass the tax on.
Instead the Carbon Tax Center just tries to do a good advertising job
for the carbon tax.
On the other hand, they themselves don't seem too convinced that
this income distribution will take place. So they
suggest that the regressive nature of the carbon tax could also be
eliminated by a system of "tax-shifting". This means
that the government, instead of directly rebating the carbon tax, will
cut other taxes to the same extent as it gets revenue from the carbon
tax. They say that since these other taxes are so bad,
such as "state sales taxes and federal social security check-offs", it
will be progressive to shift to the carbon tax. But
the carbon tax itself is a modified sales tax or value-added tax.
It is quite possible that the government will use tax-shifting, but
this may well be to implement the neo-liberal scheme for changing over
as far as possible to sales and value-added taxes. (11)
There are other suggestions as well. The Green
Party argues that the carbon tax's "regressive nature would be offset
by funding public transportation, weatherization;
housing and education."(12) Such programs would be important;
indeed, sooner or later the environmental crisis is going to force
major programs. But a worthwhile program might still
be financed by a regressive tax, a tax which puts the burden on the
people least able to pay. And financing these programs
through the carbon tax means using a regressive method of taxation.
Moreover, the Carbon Tax Center wants it both ways: that the carbon tax makes the polluters pay, and that the tax will be refunded to the people. They do a rhetorical dance to cover over this contradiction. But if the tax is really making the polluters pay, why is it being refunded? And if the advocates of the carbon tax recognize that it's the people being taxed, doesn't that mean that they regard the people as the polluters? Does this standpoint leave the capitalists, who run the economy, off the hook? And won't it irritate the working masses, who must be the real bastion of any effective struggle against global warming?
By raising the price of fossil fuel, the carbon tax is supposed to
encourage protection of the environment. But, like all
market mechanisms, it's an indirect process. While the
carbon tax may be intended to be helpful, the market reacts to
everything with its own logic. Thus the results of the
carbon tax may not always be what is intended.
For example, if fossil fuels are taxed highly, one might hope that
the result would be better efficiency in their use, and their
replacement by something better. But one result might
be a frantic search for trees to chop down. It will be
impossible to prevent tree-poaching. Indeed, wood is
not a fossil fuel, and it might be exempt from a carbon tax.
It is theoretically a renewable fuel--within limits.
But a major increase in the use of wood would simply accelerate the
ongoing environmental catastrophe and doom the forests.
This is not hypothetical, either. We can see this
type of disaster taking place today with respect to biofuels.
In theory, biofuels might serve as a renewable resource.
In practice, some biofuels, such as American corn ethanol, use up a lot
of fossil fuel in their production. Such biofuels
might be priced out of the market by a carbon tax -- and good riddance.
(But you don't need the carbon tax for this: it could
be accomplished more directly by abolishing subsidies for corn ethanol.)
But some biofuels, such as Brazilian sugar ethanol or biodiesel made
from palm oil, have a high "energy gain" -- they don't use much fossil
fuel in their production. Their use would be
encouraged by a carbon tax, just as their use has been encouraged by
the carbon trading programs set up under the Kyoto Protocol.
The result has been an ongoing catastrophe of immense proportions.
The expansion of the Brazilian cultivation of sugar cane for ethanol is
playing a role in accelerating the destruction of the Brazilian cerrado
(grasslands) and the Amazon rain forest. It's not the
only factor hurting the Amazon; there's also logging,
the expansion of soybean cultivation (in part, for the production of
biodiesel), and other aspects of the rapid capitalist development of
Brazil. But the vast expansion of the production of
sugar ethanol is one factor bringing us closer to the possible total
collapse of the Amazon forest, which would be one of the great
environmental tragedies of the 21st century.
Similarly, the draining of peat forests in East Asia in order to
cultivate palm trees and create palm oil plantations is not only
leading to the destruction of these rain forests, but is directly
releasing huge amounts of carbon dioxide into the atmosphere.
The problem isn't that biofuels are completely bad.
They should be able to play a small but positive role in reducing
carbon emissions. But this would require biofuel
production to be subordinated to a system of overall economic and
environmental planning. When biofuels are developed
via a system of market incentives, such as provided by carbon trading,
the result is that they are produced and used to excess, creating the
possibility of disastrous problems. The carbon tax,
just as carbon trading, would provide a market incentive for excessive
production of certain biofuels.
It may seem strange that I charge the carbon tax with not being
transparent, when its advocates cite its transparency as one of its
sterling features, a feature that supposedly sets it apart from carbon
trading. And its certainly true that the "cap and
trade" schemes of dealing with pollution and carbon emissions are
shrouded in obscurity. The advocates of "cap and
trade" systems often resort simply to boasting how many carbon
certificates or pollution certificates were traded.
But what measures were taken as a result of this trading? What
concretely was done to help the environment? That's another story.
But the carbon tax is subject to the same obscurity.
When its advocates say that it's transparent, they presumably mean that
the rate of the tax, so much tax for so much carbon content, will be
known to all. But that's all ordinary people will get
What measures will be taken as a result of this tax? Will
corporations change their manufacturing measures? Will it be easier to
find energy-efficient products or even to know how efficient they are?
It will be just as hard to find these things out under the carbon tax
as under carbon trading.
A major source of the opaqueness of carbon trading is that it
resulted in a lot of special subsidies to individual industries,
negotiated in backroom deals, and other shady exceptions.
But the carbon tax will result in this too. Will the
governments really allow key industries to collapse because of the
carbon tax, or will they give them exemptions? Or, more likely, won't
they use the excuse of preventing key industries from collapsing to
give lucrative subsidies and special deals to the most influential
capitalists? Of course they will. The difference
between carbon trading and the carbon tax on this issue is simply
between a system that hasn't yet been implemented on a wide scale, the
carbon tax, and so the scandals are a matter of the future, and a
system that has been around awhile.
Moreover, the very operation of the carbon tax system, even if there
weren't exceptions and special subsidies, will by no means be as simple
as the Carbon Tax Center envisions. For example, if
you buy a product, will you know how much of its price is due to the
carbon tax? No, not at all. By its very nature, the
carbon tax on manufactured goods will not be assessed at the final
point of sale, like the federal gasoline tax, but at various points
along the way. (14)
Where it is assessed also depends on whether the goods are produced in
the US or imported, and ultimately also on what carbon tax has been
assessed along the way on the various raw materials used in the
product, on the machines used in producing the product, etc.
Even a carbon tax on gasoline isn't supposed to be assessed at the
final point of sale. The carbon tax may seem to be a
simple idea in theory, but in operation there are a thousand little
nagging problems that will arise. More on this later on.
The only way to ensure transparency in reducing carbon emissions
would be to implement a system of overall economic regulation and
planning. Moreover, this would have to be a new type
of system, a system which doesn't guarantee the "trade secrets" of
industry nor put a veil over the real workings of government
administrative and regulatory bodies, but that brings their operations
out into the open. This has to be fought for directly.
It goes against both market measures and traditional government planning.
Such transparency is only conceivable as part of a system where the
working class is brought directly into the process of environmental
protection. We need a system whereby workers at the
workplace verify that the corporations really carry out their
environmental commitments, and don't cheat. We need a
system whereby the government planning agencies have to come out from
under their veil of secrecy and private deals. We need
a system whereby environmental data is collected and analyzed and
released to the public, for both verification and discussion.
Only a fraction of this can be achieved under capitalism, because it
goes against the whole system of private ownership, a system which
fosters secrecy, which depends on disorganizing and suppressing the
working class in order to keep it docile for exploitation, and which
looks out for profit, not for the people's or the earth's well-being.
Moreover, the bourgeoisie will repeatedly seek to take away whatever
concessions it gives on these issues. But we have to
fight to achieve as much of this as possible if we are to achieve some
success in the struggle against global warming.
The working class has to be regarded not simply as a
recipient of charity, who deserves a few rebates on their taxes, but as
the class basis of a consistent fight for a better environment.
Either transparency means that the masses play a role in planning,
directing, and verifying the environmental measures, or it is just
another nice-sounding slogan to cover over the unpleasant reality of
the obscurity and corruption of market-based systems.
For the carbon tax to work, it must reach a level high enough to
drastically reduce carbon emissions. Yet long before
this, it will have to be adjusted to prevent economic problems.
The Carbon Tax Center denies that this is a problem.
They downplay the economic impact of the tax, saying it really won't be
that heavy, and "equates to 5-10% increases in energy prices per annum
(with the percentages shrinking at the 'base' rises and as non-fossil
energy assumes a larger share)."(15)
Well, let's see what this works out to. They say it
could start at a level that is equivalent to only about 10 cents a
gallon of gasoline, except that it would also apply to all other
burning of fossil fuel. They say that this tax would
"bring in roughly $55 billion a year in revenue. This
equates to around $180 per U.S.
resident, or $720 for a family of four."(16) But, whoops, that's just for
the first year. Each year the carbon tax would
increase by the equivalent of another 10 cents a gallon of gas.
So the second year the tax would be the equivalent of 20 cents a
gallon, raising $110 billion. The third year -- $165
billion, and so on up to almost half a trillion dollars a year by the
tenth year, when it would reach -- on the average -- $7,200 per family
of four. (17)
And that's just the start. How high would the tax have go to? Just as a rough rule of thumb, let's compare to what's happening in Europe. The EU (European Union) is also faced with making drastic cuts on gasoline usage and other burning of fossil fuels, even though it has long taxed gas so heavily that it costs far more than it does in the US. Presently the combination of taxes and high oil prices have led to gasoline prices for transport reaching $8 and even $9 a gallon (measured in US dollars). This history of high gas prices has definitely had an effect on European car design and energy usage, but despite that, Europe still uses far too much fossil fuel.
So, as a very rough-and-ready estimate, one might
guess that a carbon tax would have to raise US gas prices to at least
$8 a gallon, and even that might not suffice. This
means that, assuming the economy maintains its present size, the tax
would amount to $2. 2 trillion in revenue, or 15% of
the present GDP. Surely a tax on this level would have
heavy economic consequences. Even in Europe, high gas
prices have finally resulted in severe economic pain;
truckers in the UK and Spain, fishermen in France, and others
threatened by financial ruin have carried out demonstrations against
the high price of gas. What to do about these prices
has become an urgent European issue.
So it's unlikely that the tax can simply ramp up to the required
heights without causing major contortions in the economy.
But the Carbon Tax Center argues that, so long as the price increases
are gradual and predictable,
it doesn't matter how high energy prices are, there's no problem.
It argues that "What causes economic havoc isn't high energy prices or
even rising prices, but price volatility."(18) So they claim.
Even if this were true, they ignore two things.
First of all, price
fluctuations for oil and other fuels will continue even if the carbon
tax is gradual. The price of energy isn't just the tax.
This year, for example, there is no carbon tax and the ordinary gas
taxes have stayed the same, but gasoline prices have zoomed anyway.
But moreover, if the main way to achieve reductions in carbon emissions is through the carbon tax, then how reasonable is it to wait ten years before it even reaches the level of $1 a gallon?
But so what? The Carbon Tax Center argues that if the carbon tax isn't spent by the government, but somehow returned to the country, then it won't affect business in general. On one hand they want a carbon tax to motivate people to reduce fossil fuel emissions: essentially this means adopting a policy of pain -- reduce your fuel usage or face strong financial pressure. As they say, "carbon taxes will need to be very high to create the required price incentives."(19) But on the other hand, they claim that the carbon tax really won't have any affect on the economy, provided that the revenues from the carbon tax are given back to the people in one way or another ("revenue neutrality").
Well, if the carbon tax really were refunded or
rebated in one way or another, then, on the average, people could
afford to pay it, but then also it would lose much of its deterrent
This is one of the basic contradictions of the carbon tax.
And the more the advocates of the carbon tax try to evade this
contradiction, the more other-worldly their plans become.
matter, the tax and cost of energy aside, if fossil fuel usage really
is cut to a mere fraction of what it is today, as must happen if we are
to effectively fight global warming, this will have major economic
consequences by itself. For example, the oil industry
will be cut to a fraction of itself. There will be
major changes in transport. Millions upon millions of
people will face changing their jobs, and almost everyone will see
changes in how they move around the country. It
doesn't matter how the reduction in fossil fuel usage is obtained,
whether from a carbon tax or some other means, these or other changes
will take place. Can it really be expected that if
only these changes are gradual enough, everything will take care of
itself, and there won't be need for overall economic planning to allow
people to get through these changes unscathed? Yet that's what the
Carbon Tax Center implicitly assumes in all its scenarios of the future.
The carbon tax plan also assumes that reducing carbon emissions is
the only major environmental task facing us. But this
isn't even true with respect to avoiding global warming.
Reducing carbon emissions is an urgent and pressing task, but it is not
the only one. Aside for global warming, we face a
multitude of problems such as protecting the world's forests and
wetlands, ensuring biodiversity, protecting the oceans and ensuring the
survival of fish and other sea life, cutting down the rampant pollution
that has resulted from neo-liberal globalization, and dealing with the
exhaustion of aquifers and other fresh water sources.
All these problems are made worse by the climatic changes that have
already begun, but none of these problems can be solved simply by
reducing carbon emissions. Nor do we have the luxury
of waiting until global warming is solved to deal with these issues.
Can one imagine that these problems will be solved by separate forest taxes, fish taxes, water taxes, food taxes, and so on? The entire environmental regulatory apparatus can be changed into one big financial accounting office, in which taxes are assessed and refunded, and these problems will just get worse. There is only one environment, and all these environmental problems are simply aspects of a single problem. There has to be a coordinated economic plan.
For all these reasons, the carbon tax won't be any better than carbon trading. But that still leaves one question. Why would such a tax be called a market method? It's fairly widely recognized that carbon trading, which involves the setting up of artificial markets in carbon emissions permits, is a market method. By way of contrast, taxes are government measures, no?
But market methods often involve some government action.
The World Trade Organization, for instance, works through agreements
negotiated between various governments. These free
trade treaties are as complex as any others; an
extensive bureaucracy is built up to enforce them, complete with secret
trade tribunals; and the most powerful countries
impose their interpretations on the rest of the world.
This is government action, but it's government action in favor of
allowing the powerful multinational corporations free run to exploit
Right from the beginning of capitalism, the marketplace has always
been related to political institutions. This was why
economics was originally called "political economy";
it was concerned with judging and prescribing the policies to be
followed by governments. And to this day, capitalists
may demand the maximum freedom from government interference to buy and
sell what they choose, but they want contracts enforced, worker
resistance suppressed, and the maintenance of "law and order".
When market measures fail, the neo-liberal and marketplace fanatics
note that the government was involved in the market measures, and then
declare that it wasn't really the market that failed.
For example, energy deregulation was promoted as a way to provide cheap
and abundant power by eliminating the state regulatory boards that
estimated and provided for future power needs, but instead it threw the
states on the mercy of the energy markets. The
utilities that marketed power to people were to become, not generators
of electricity, but middlemen who bought power from elsewhere.
When this system began to fail spectacularly, as in the California
energy crisis of 2000-2001 as well as in subsequent sharp price
increases in state after state, most bourgeois politicians, Democrats
and Republicans, still clung to deregulation. The
neo-liberals propagated the myth that deregulation hadn't failed, oh
no, there supposedly just hadn't been enough deregulation.
In reality, to judge whether something is a market method takes more
than asking if there is any government role to it. In
carbon trading, the government sets up a market in carbon permits:
it issues the carbon permits for the purpose of creating a new market.
Although this is an artificial market, in that the government has to
create it, it is still a market. And when decisions
concerning environmental measures are left to this market, that is a
market method of environmentalism. It was consciously
developed as an alternative to direct government environmental
And so is the carbon tax, when it is taken as the
main way to enforce reductions in carbon emissions.
This is why it has support from some quite conservative economists at
the free-market Heritage Foundation. This is why it is
backed by people such as Al Gore, who advocate "using market capitalism
as an ally". And its relation to market fundamentalism
can also be seen in a number of the arguments made in its favor, such
as those concerning true cost pricing, revenue neutrality, the supposed
simplicity of the tax, and the use of purely financial calculations to
judge environmental issues. Let's take a brief look at
One of the fundamental ideas underlying the carbon tax, that makes
it plausible to many of its supporters, is that things should be priced
at their true social cost. The price of products
usually doesn't include anything to cover the environmental damage
caused by their production or by their use. This is
supposed to be the cause of our environmental problems.
If fossil fuels were priced at their true cost, then -- so the idea
goes -- the market itself would ensure a proper reduction in the use of
fossil fuels. The role of the carbon tax is,
therefore, to increase the price of fossil fuels until they reach their
Many of the people who hold this view believe that it strikes hard
at neo-liberalism. Yet at heart, the idea of the true
cost harmonizes nicely with today's dominant market fundamentalism.
They are both based on the idea that markets can be made to work, and
differ only on how to assist the market.
The idea that the real value of a thing is its price is something
that springs from our everyday experience with buying and selling at
the market. This experience makes financial value
appear as the real worth of a product. And if one pays
too much for something, one is cheated; similarly if
one sells for too low a price. These experiences make
it appear that the deviation of prices from real values is the source
of all one's troubles.
But environmental values can't be reduced to a single number, a
price, whether a true social price or the usual market price.
Prices mix everything together in a single dollar figure.
A real product takes so much of this and that to produce;
and so much labor to produce; results in so much waste
that must be disposed off; and may serve this or that
purpose. The only way to seriously measure these
things is to keep track of each one separately: how
much steel was used, how much energy; how much water;
now much labor; how much land must be set aside;
how much greenhouse gases are created? how much toxic waste? And so
forth. Once you mix all these things together into a
single dollar figure, it can no longer give a true picture of any one
of them. The resulting figure is mainly useful for
buying and selling, and for seeing what profits each individual
Thus it is a futile task to try to make a single number reflect the
"true social cost". If a tax makes the final cost
reflect one aspect of production better, it will distort the measure of
some other aspect. (21)
In reality, prices reflect only something's role in the marketplace,
not any other type of "value". For example, it is a
common experience that a cheaper product may be better and more suited
to one's purpose than a more expensive one, so marketplace value is not
the same as commonsense value. And when production is
carried out according to the marketplace, with prices as the highest
arbiter, it eventually leads to environmental devastation.
This is because marketplace production is production that is carried
out, to a greater or lesser extent, without an overall plan.
Even when it produces something that might be of value, like biofuels,
it manages to make a mess of it. Capitalists produce
what serves their individual interests; and they
produce it in the way that serves their interest; and
the interests of society as a whole aren't their concern.
No matter how one modifies prices, the corporations and businesses are
concerned only with their profits. The "invisible
hand" of Adam Smith thus still rules; it still doesn't
care about the environment; and it will still end up
ravaging the environment.
To put it briefly, environmental planning does
require that one take into account the true costs of producing things,
but these costs cannot be reduced to a price, even a "true price".
Another feature of the carbon tax is that most of its advocates
insist on "revenue neutrality". This means that all
the tax collected by the government must be returned to the population.
It's not that each individual would get back what they had paid.
That would be impossible. How could one even know how
much carbon tax was included in the price of bread, movies, houses and
so forth that one bought? So each individual might get back more or
less than what they had actually paid, and given the chauvinism and
racism of the bourgeoisie, undocumented workers might receive nothing
back at all. But overall, all the money must be
returned, whether through rebates or tax-shifting.
It's not only the Carbon Tax Center that insists on
this. Even the Green Party calls for "Revenue
neutrality in tax changes: we are not proposing a
bigger overall role for government . .
. "(22) This is
a loyalty oath to the bourgeoisie, a slogan to reassure them of
neo-liberal orthodoxy. And it is a betrayal of the
environment. At a time when government agencies
dealing with environmental issues and social welfare have been cut to
the bone, and even schools are deteriorating shamefully year after
year, the advocates of the carbon tax are afraid of more government
The irony is that "small government" always means that, while social
programs will be cut, other parts of the apparatus will grow.
In fact, the carbon tax itself wouldn't be that easy for the government
The advocates of the carbon tax claim it's very simple, just a matter of setting the rate of taxation of carbon emissions. In fact, in practice there will be one problem after another.
To see whether it's likely that the carbon tax will work, the Carbon
Tax Center creates a "model" of the economy, that is to say, it refers
to financial spreadsheets. They supposedly show how
far the carbon tax will reduce carbon emissions from different economic
sectors, how far it will affect the economy, how much revenue it will
Yet how can these things be calculated without knowing what new
methods of power generation, and of industrial production generally,
will be put into operation; the effect of the
presently-occurring climate changes on the economy and the needs these
changes generate, such as for finding new sources of water;
the attitude of different classes to the on-going environmental plans;
But the spreadsheets don't deal with these things. For that matter, how it is possible that the physical reality of climate change can only be estimated within broad limits, but the spreadsheets are supposed to give precise figures for the financial consequences of every environmental policy?
Well, it turns that this is because these financial models and their
spreadsheets don't consider what material changes will take place in
the economy at all. Underneath their outward
complexity, they are based on financial assumptions of the crudest and
most simplistic nature. For example, a crucial
assumption is that such and such an increase in the price of fossil
fuels always results in the same percentage decrease in the use of
fossil fuels. This is the so-called "elasticity" of
fossil fuel usage with respect to fossil fuel price.
Supposedly the elasticity doesn't vary as circumstances change, but
remains the same year after year. Thus one can
supposedly ignore what changes are taking place in technology, or even
economic and political developments, since whatever takes place, the
elasticity will stay the same. All one has to do is
guess this magic figure, perhaps by observing what happens during price
increases in one particular year.
So these financial models predict the future with a few financial
indices: elasticities, inherent rates of growth, and
the size of the carbon tax. In this way, they pretend
to give a realistic judgement of the effect of different government
policies. But they are entirely based on the absurd
assumption that the basic numerical indices are constant over the years.
Well, let's look more closely at the elasticity of fuel use.
Consider what happens to miles driven when gasoline prices go up.
If a family is doing fairly well, at first they may continue to drive
as before, and take economies elsewhere. Thus, at this
point, the family's elasticity of gasoline usage is zero.
With an additional price increase, the family may cut back on optional
driving, resulting in a nice-looking figure for elasticity.
But eventually, all the easy cutbacks are made, and the main driving is
for essentials, such as getting to work or school. At
this point, it is essential to the family to keep buying gasoline no
matter what other economies have to be made, so the elasticity goes
back to zero. Indeed, it is conceivable that, for some
families, at a certain point the miles driven will actually increase
when the price of gas goes up. For example, if the
price is so high that the family can no longer afford its past
purchases of gasoline, its members may have to seek additional jobs,
which they may have to drive to. So much for the
constant elasticity. (24)
Indeed, the miles driven by the family may depend even more sharply
on other things than prices, such as whether there is a really good
public transit system or where jobs and schools are located.
And experience already shows that a rise in price may have several
different effects on public transit systems. For
example, this year some places in the US have increased the frequency
of buses and trains, while other areas, going into financial crisis,
have actually cut back on public transit.
Perhaps it may be argued that these different possibilities average
out when one considers, not one family, but the entire population of a
region. And indeed, it might be possible to obtain the
average elasticity, at a certain moment in time, for a certain
geographical area, at least provided gas prices don't change too much.
But this average elasticity would generally vary from area to area, and
year to year.
Thus these financial models of the carbon tax are just market
lunacy: the delusion that the entire world behaves like
interest-bearing investments, with the rate of interest replaced by the
Economists are used to interest-bearing bonds and other financial
instruments paying a certain return; you don't have to
know what type of company has issued it to calculate that return; and
they apply the same thinking to carbon emissions.
Moreover, it's not just the Carbon Tax Center that predicts the future in this peculiar way. It's how neo-liberals in general make pronouncements about the costs and benefits of environmental measures. It's done by neo-liberal economists like Prof. William Nordhaus, whose recent book A Question of Balance: Weighing the Options on Global Warming Policies confidently balances the costs and benefits of taking measures to avert global warming. It's even done by the Intergovernmental Panel on Climate Change, when it departs from its careful consideration of the science of global warming and looks into what is to be done about it. These calculations are based on ignoring the material factors and extrapolating financial indices on the basis that the future will simply be like the past. The spreadsheets may allow one to try different numbers for the rate of the carbon tax, the various types of elasticities, and the inherent rate of economic growth; but they assume these can be extrapolated for years, decades, or even a century or more. So no matter how complex the model, it's actually financial fantasy.
The market methods of environmentalism show that the bourgeoisie,
for all its new talk about environmental concern, still puts its
pocketbook before the environment. Neither the carbon
tax nor carbon trading can avert the threat of global warming.
They both are based on the idea of avoiding overall planning.
But the environmental crisis shows major decisions can't be left to
the corporations, on pain of the earth becoming unlivable.
There needs to be overall planning if the amount of carbon emissions is
going to be cut. Moreover, there needs to be planning
concerning land use, the preservation of fresh water supplies, the
health of the oceans, rebuilding the infrastructure, provision for
environmental refugees, and a variety of other pressing concerns.
This planning can't be reduced to giving financial incentives to
companies to do better. Market forces have devastated
the environment; they seek profit, not the good of all.
Thus governmental planning and regulation is going to be needed.
It must be based on direct consideration of the material needs of
humanity, and of the material threats facing the environment.
But today's governments are capitalist governments.
Their planning has always been for the sake of capitalist profits,
while every step of environmental progress comes up against one or the
other private ownership interest. Thus, as long as
capitalism exists, we will only be able to achieve mass participation
and effective planning by way of exception. This means
that the environment will always be at risk while capitalism exists.
But it also means that the struggle to preserve a livable environment
and deal with the effects of global warming will be part of the class
struggle. It will help organize the working class, and
encourage the rise of a new revolutionary movement for socialism.
Thus the fate of the environmental planning is bound up with how far the masses can be drawn into it, both in insisting on effective measures and in enforcing them against capitalist interests. Such planning must integrate measures for the environment with protection for the livelihood of the masses in the face of the coming environmental and economic changes. The carbon tax is designed to avoid such planning, and it will suffer the same fiasco as carbon trading. <>
(1) Rep. Dingell has put aside his proposal for a carbon tax for the time being, citing high gas prices and the economic turndown. (Return to text)
(2) See "Climate Change: Caps vs. Taxes" by Kenneth P. Green, Steven F. Hayward, and Kevin A. Hassett, June 1, 2007, available at www.aei.org/publications/filter.all,pubID.26286/pub-detail.asp. (Text)
(3) For a more extended discussion of carbon trading and the failure of the Kyoto Protocol, see "The coming of the environmental crisis, the failure of the free market, and the fear of a carbon dictatorship" in the January 2007 issue of Communist Voice (available at www.communistvoice.org/39cKyoto.html). For a discussion of the biofuel disaster, see the sections on Kyoto and biofuels in "Al Gore's Nobel Peace Prize and the fiascos of corporate environmentalism" in the Feb. 20, 2008 issue of Communist Voice (available at www.communistvoice.org/41cAlGore.html). (Text)
(4) With respect to acid rain and leaded gasoline, see, for example, Gar Lipow's article "Emissions trading: A mixed record, with plenty of failures/Regulations work better" at gristmill.grist.org/story/2007/2/18/205116/813. (Text)
(5) See "Industries Allied to Cap Carbon Differ on the Details" by Jay Mouawad in the New York Times, June 2, 2008. (Text)
(6) See www.carbontax.org. (Text)
(7) See "Why a carbon tax?" at www.carbontax.org/introduction/. (Text)
(8) Indeed, in some countries it is illegal to build any other type of house. According to the British journalist George Monbiot, "Houses which met the building codes in Norway and Sweden use around one quarter of the energy of houses meeting the standards in England and Wales. In fact, the building regulations in Sweden were tougher in 1978 than they are in Britain today. In Germany the air tightness standard -- which determines how leaky a house is allowed to be -- is three times as stringent as the standard in Britain. " (Monbiot, HEAT: How to stop the planet from burning, Ch. 4, p. 66) (Text)
(9) See "Pricing carbon efficiently and equitably: Myths: Myth #1. New Taxes on carbon emissions or energy will hurt the poor and middle class" at www.carbontax.org/myths/. Emphasis added on "four times as high"; emphasis as in the original on "without tax-shifting or rebating". (Text)
(10) "FAQs:12. Would taxing carbon be regressive?" at www.carbontax.org/faq/. (Text)
(11) One might well be uneasy at the Carbon Tax Center's reference to eliminating the Social Security tax. At a time when the neo-liberals want to eliminate Social Security entirely, it's somewhat doubtful that the present Social Security tax would be replaced by a more progressive system of funding. (Text)
(12) Green Party Platform Summary, 2004, Section IV. Economic Sustainability. E. True Cost Pricing and Tax Fairness, p. 42. (Text)
(13) See the discussion of biofuels in "Al Gore's Nobel Prize and the fiascos of corporate environmentalism", Communist Voice, February 2008 (www. communistvoice.org/41cAlGore.html). (Text)
(14) The Carbon Tax Center
suggests "to tax fuels as far upstream as practicable, i.e.,
at the point where possession of the carbon-bearing fuel passes from
the 'producer' (e.g. , coal mine;
oil wellhead or tanker; gas wellhead) to the immediate
next entity in the supply chain (e.g.,
coal shipper or utility; oil refiner or importer;
natural gas pipeline). Presumably, each such transfer
will be codified in a contract, or at least a bill of lading,
specifying the attributes of the fuel." (www.carbontax.org/issues/implementing-carbon-taxes/)
The cost of this tax is then passed on to the next company involved in
the supply chain and the manufacturing chain and the retail chain.
And the Carbon Tax Center has good reason for suggesting this method of
operation. it would create a multitude of difficulties
for the carbon tax to be levied in any other way.
But the result is that the final consumer doesn't see how much tax has been levied, as naturally this consumer doesn't see the contracts or bills of lading which have the tax; nor, for most products, does the consumer know the amounts of fossil fuel used up during the various stages of producing, supplying, and retailing the product that has been purchased. Thus the consumer has no way to find out how much of the price paid goes to the carbon tax, or to verify any claims that the corporations may want to make about how much carbon tax they paid. (Text)
(15) "Myths: Myth #4. Heavy fuel taxes will wreck the economy." (www.carbontax.org/myths/) (Text)
(16) "FAQs: Frequently Asked Questions and Answers about Carbon Taxes and the Carbon Tax Center: 14. How much revenue would carbon taxes generate?" at www.carbontax.org/faq/. (Text)
(17) Actually, fossil fuel usage would presumably decline as the tax increases, so that the total size of the tax on that fuel would be less. But here I am just trying to give a ballpark estimate. Nothing else is really possible, as the effects of the tax would be quite varied. (Text)
(18) See "Myths:Myth#4> heavy fuel taxes will wreck the economy. " at www.carbontax.org/myths." (Text)
(19) "FAQs: 17: "How high should carbon taxes go? How fast should they climb?" (Text)
(20) The plan isn't that each individual gets back from the government what they have paid. This would be hard to accomplish for a number of reasons. But the idea is that the entire revenue from the carbon tax is rebated to the population as a whole according to some formula, such as an equal division. The result is that some individuals would get back more than they paid, and others less. But on the average, the tax is rebated. This means that the amount of tax you get back isn't directly dependent on how much tax you paid. Thus, the advocates of the carbon tax conclude, there will be an incentive to make money off the deal by using less gasoline and buying less goods; the result would be you pay less carbon tax (because you consume less), and yet you get a big rebate. You thus make money from the carbon tax. Indeed, this would apparently redistribute money to the poorer section of the population, that consumes less. It might not work out so neatly in practice, however. For example, in the present political atmosphere, it's unlikely that refunds would be made to the millions of undocumented workers. And it's financially difficult for people living on the edge to wait patiently for their refund. (Text)
(21) Some people think that the
dollar (or other financial figure) can't reflect the true social cost
of a product, but it can be measured in labor-hours.
In a series of three articles I argue against this, holding that the
labor-hour is not the natural unit of socialist calculation.
I seek to demonstrate that no single numerical unit of measurement,
whether dollars or labor-hours or anything else, can serve as a natural
or true unit of economic calculation. Any such unit
would, just as monetary prices do, mix together in a single figure
different properties of a thing. Therefore it cannot
serve as a natural or true system of economic calculation.
It might, at first, seem impossible to carry out economic
calculation at all without assigning products a value consisting of a
single number, but in fact other methods of calculation have already
been devised and used to a certain extent. During
times of stress in war-time, even Western capitalist countries have
resorted to a certain amount of material planning, although their
purpose was to keep up the war production needed for mass slaughter.
And these methods were also used to guide the post-World War II
recovery in Western Europe. Of course, capitalist
countries minimize their use of such methods, as they minimize the use
of planning in general. When they do plan, they use
planning as a way to maintain capitalist profits and supremacy, not in
the interests of the entire population. And in the
examples I cited, they also didn't bother to keep track of
environmental issues. But the method of material
planning can be easily extended to deal with some environmental issues,
while financial planning necessarily obscures the environmental impact
of a product.
With regard to material planning, see especially the section "One, two, three, many natural units (the method of material balances)" in "Labor money and socialist planning (part one)", Communist Voice, Nov. 2000, at www.communistvoice.org/25cLaborHour", and the section "The environment and things of zero labor content" in part two of the series, in Communist Voice, May 2001, at www.communistvoice.org/26cLaborHour2.html. (Text)
(22) "Summary of the Platform for the Green Party of the United States: From the Party Platform Adopted at the National Nominating Convention, Milwaukee, Wisconsin, June 2004", Ch. IV. "Economic Sustainability", Section E. "True Cost Pricing and Tax Fairness", p. 42. This occurs in the paragraph that also discuss the carbon tax. (Text)
(23) "Introduction: What's a Carbon Tax?" at www.carbontax.org/introduction/. (Text)
(24) There are a number of
other factors, besides those I have considered above for the sake of
illustration, that will affect the number of miles driven by a family.
But taking account of them wouldn't help one show that there is a
constant elasticity; instead, it would just underline
how much the reliance on a figure for elasticity hides what goes on in
the real world. For example, there is the possibility
of carpooling. No doubt high gas prices will encourage
people to look into carpooling. But there's a limit to
how much carpooling can be done, and it would hardly be realistic to
assume that if an increase of $1/gallon in gas prices would result in x
amount of carpooling, then an increase of $2/gallon would result in 2x
of carpooling, and so on.
Generally speaking, in the world of mechanical things, so long as
one is dealing with small changes, it often -- but not always --
happens that quantitative change does take place in a linear way.
That is to say, if something calls forth some result, twice as much of
the same thing will cause twice the result. Things are
rarely so simple with phenomena involving people, and yet this is what
is implicitly assumed when one makes use of a constant elasticity.
In any case, even in the natural world, with substantial changes, such
linearity breaks down. The more so in the world of
people. So it's not surprising that predictions of
human events based on linearity are notorious for going ludicrously
wrong. Among other things, with small changes, one can
often assume that everything else -- besides a single factor such as
the price of a product -- remains the same. But with
large changes, everything else rarely stays the same, and a number of
unexpected feedbacks (or, to put it another way, dialectical
relationships) are likely to strongly affect the outcome.
Now, to deal with global warming, one needs, not small changes in carbon emissions, but dramatic reductions; and the financial spreadsheets are being applied, not to short periods of time, but to decades. The result is simply mindless extrapolation. It would be laughed out of court in serious natural science, and it shouldn't be accepted in environmental planning. (Text)
(25) This is another form of
what Marx calls "the fetishism of commodities". (See Capital,
vol. I, Ch. 1, Sec 4 "The fetishism
of commodities and the secret thereof". ) What happens
is that the financial worth of something takes on a life of its own;
moreover, it overshadows the material qualities of a product.
As this delusion holds one in snare, it isn't the weight, shape,
design, or composition of a thing which is important, but how much it
costs, its price, that's what it's really worth. The
value or financial measure of a thing seems to be the real, material,
solid, reliable aspect of a product, the thing which is the motor which
can even generate more value from itself, or which can by itself
accomplish any wonder including reducing carbon emissions, while the
material properties of a thing fade away into insignificance and
irrelevance, as does also any consideration of how these products are
used or produced by actual people.
To those under the spell of this way of thinking, price and value
aren't social conventions, albeit not arbitrary ones but ones
determined with complete predictability by the predominance of buying
and selling and exchange in capitalist life. No, price
and value are supposed to be the inherent properties of objects.
In this fantastic, upside-down world, which is the world of the
marketplace and the stock market, "the productions of the human brain
[value, price--ed.] appear as independent beings
endowed with life", while workers, material objects, and the
environment appear as lifeless shadows. Thus, in
current financial modeling and bourgeois economics, financial indices
such as "elasticity" take on a life of their own, separate from any
consideration about what types of production or machinery or
environmental planning are required to produce things with less carbon
But the environmental crisis will force us to think in terms of the
material qualities of objects, on pain of extreme hardship or even
extinction. The atmosphere doesn't give a damn about
the price or value of fossil fuels; it reacts to the
physical properties of various gases and the total amount of greenhouse
gases in the air. Our survival can't be ensured by
even the largest quantities of financial value registered in the
computers of banks and stock markets; it depends on
whether we can maintain a pleasant environment and continue to produce
sufficient food, housing, clothing, machinery, etc.
True, so long as capitalism exists, one can't produce food, housing, or
clothing without money; but without actual, physical
food, housing, clothing etc. , all the money in the
world means nothing. It is the material goods, and our
knowledge and ability to manipulate the world and produce the goods we
need, which are primary; it is financial value which
is only a transient social convention. The primary
needs of humanity will sooner or later revolt against the financial
shell which currently holds us in thrall. And then
there will be an end to capitalist domination and, eventually, to the
marketplace itself. (Text)
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