Earlier this summer, the Marshall Society asked CULA a number of questions on politics and economics, to be compared with the answers of other political societies in their annual magazine. We decided to open this up to the membership: members were asked to submit their own answers to the questions provided, and the best and most representative were selected impartially by committee members and have now been published! We have also decided to upload all submissions here on the CULA blog, to show off the impressive depth and range of opinions among our members. This is the first in a series of six posts.

How should economic policy be shaped by climate concerns?

Runner-up: Sam Rubinstein and Lara Brown

In 1962, Rachel Carson’s pioneering book, Silent Spring, disclosed that pesticides like DDT, predominantly used in Europe, were present in the flesh of Antarctic penguins. Here is a stark reminder that life is intricately interconnected, and that trivial developments on one side of the planet have tremendous consequences on the other. Against this threat, the nation-state, which liberals have traditionally upheld, seems rather puny, reinforcing our attachment to internationalist institutions like the EU and the UN. Likewise, the gravity of this challenge calls into question our commitment to limited government.  We liberals may, however, find solace in the knowledge that private enterprise and human ingenuity can be harnessed to defend our species from extinction.

The crux of liberalism is the protection of the rights of the individual. Climate concerns have encouraged us to think more broadly about ‘rights’ as a concept. Christopher Stone’s suggestion, that legal rights should be bestowed upon ecological systems, has become rather modish in recent years, as legal rights have been granted to, for example, the Ganges and Whanganui rivers.  This extension of ‘rights’ to include inanimate entities is radical, but has antecedents in the liberal tradition. In 1844, Gladstone and Peel—two behemoths of Victorian liberalism—oversaw the Joint Stock Companies Act, empowering ordinary people to incorporate their companies through registration that established their livelihoods as legal persons worthy of rights. The extension of rights beyond the human individual, and now to the environment, constitutes a centuries-old liberal project.

Marxists predict, often quite smugly, that climate change is the ultimate crisis of capitalism. We liberals are more optimistic about capitalism, while accepting that it must evolve. We reject the caricature that capitalism exclusively encourages short-term decision-making. The capitalist economy consists of individuals who overwhelmingly do care about future generations. In an influential study, 10,000 people were asked to compare policy options that would save lives in their own generation, their children’s generation, or their grandchildren’s generation. The majority preferred options that would save an equal number of lives across the three generations. But more people supported options saving a greater number of lives in their grandchildren’s generation than those who favoured their children’s generation, and more favoured their children’s generation to their own generation. Economic agents value future generations; decisions are made with them in mind.

This psychological feature relieves some of the government’s burden. It reassures us that, without dramatic intervention, we are driven by a moral obligation towards future generations. We liberals should, however, recognise that the government must play a considerable role in tackling climate change. The government should invest in clean and nuclear energy. It should regulate the carbon emissions market, ensuring that firms do not exceed their quotient. The private sector should fight on the front-line of our battle against climate change, but it should be gently guided, regulated, and nudged by a government which must commit its efforts not only to its citizens, but to the entire species.

Winning Submission: Freddie Poser

The climate is changing, and we are causing it. That is not up for debate.

It is clear that global, manmade and accelerating climate change is the gravest existential threat humanity has faced since the Cold War, perhaps ever. What is equally clear is that policy responses so far have been woefully inadequate. The extent to which we will need to reshape, reorganise and reprioritise our society is immense and most people, myself included, have not begun to grapple with it. The Liberal Democrats have been at the forefront of evidence-based climate policy for years, but now we need to be more radical and more assertive. Time is running out, but there are still opportunities to limit warming.

Governments will be the key driver in doing this, but they will need to harness the greatest tool we have for organising societies: the market. We shouldn’t leave saving the world to bureaucrats and politicians, but instead let every single economic actor do their bit. The single most important policy to making this happen is a tax on the price of carbon. Ultimately, this needs to be global, but we mustn’t be scared of starting with the UK.

In 2019 the Lib Dems had one of the strongest positions on climate change, with crucial government intervention planned for the energy, transport and financial sectors, to name but a few. We wanted to target ‘net zero’ by 2050, to decarbonise electricity production by 2030, and invest in public transport; but unfortunately, amongst all this, no mention of a carbon tax. We cannot rely on piecemeal government diktat; we must internalise the externality that is CO2 production.

If you talk to those on the far left, they will say we need to dismantle capitalism, that this is what will solve the climate issue. Failing that, they might point to graphs that make claims about the top 100 companies and their carbon emissions. These are just a convenient get-out for leftists in highly developed countries to avoid examining their own lifestyle and impact on the environment. The beauty of the market is that production occurs when there is demand. If you want to buy fast fashion, to eat meat and to drive a car, that’s going to have the same emissions regardless of the economic system. The only way to shift demand, without compromising liberty, is to make high-carbon goods more expensive.

As a society, we need to make tough choices. The climate emergency will only be solved through sustained, global action. The policies we employ need to be radical, not ideological. I don’t wish to whitewash the difficulties. A carbon tax could easily become regressive if not implemented sensitively (proposals for a ‘carbon dividend’ are worth serious investigation) and it is not a wonder-drug solution: government regulation in other areas will be necessary. But the market has delivered the greatest rise in living standards in human history. We should not turn away from it now, but embrace its power for societal change.