Capitalism Leads To Higher Eco-Standards, Not Socialism

As one argument would have it, capitalism is responsible for the destruction of the environment because capitalism is based on growth. And yes, capitalism has led to tremendous economic growth.

But without this growth, an ever-expanding world population would not have been able to provide even the most basic necessities.

After all, in 1800, there were just one billion people on the planet; today there are more than seven billion.

Economic Growth Helps To Combat Hunger And Poverty

It is all the more astonishing that, despite this rapid population growth, the world has not been overcome by rampant poverty.

Looking back to 1800, most people in the world were extremely poor—average incomes were the same as they are in the poorest countries in Africa today and more than 90% of the global population was living in extreme poverty.

The development of capitalism and economic growth reduced the proportion of extremely poor people in the world to less than 10%—despite the sevenfold increase in the global population during this same period.

So growth is not a bad thing in and of itself. In fact, growth has led to a reduction in hunger and poverty.

Life expectancy at birth has increased more than twice as much in the last century as in the previous 200,000 years. The probability of a child born today reaching retirement age is higher than the probability of previous generations ever celebrating their fifth birthdays.

In 1900, the average life expectancy worldwide was 31 years; today it stands at 71 years. Of the roughly 8,000 generations of Homo sapiens since our species emerged approximately 200,000 years ago, only the last four have experienced massive declines in mortality rates.

In the last 140 years, there have been 106 major famines, each of which has cost more than 100,000 lives.

The death toll has been particularly high in socialist countries such as the Soviet Union, China, Cambodia, Ethiopia, and North Korea, killing tens of millions of people through the forced transfer of private means of production to public economies and the weaponization of hunger.

On its own, the biggest socialist experiment in history, Mao’s Great Leap Forward in the late 1950s, killed more than 45 million Chinese.

The number of deaths due to major famines fell to 1.4 million per year in the 1990s—not least as a result of the collapse of socialist systems worldwide and China increasingly embracing capitalism.

In the first two decades of the 21st century, approximately 600,000 people perished of hunger. That is equivalent to roughly 2% of the death toll from the early 20th century—despite the fact that the global population is four times larger today than it was back then.

The Price Of Growth—Destruction Of The Environment?

But isn’t there a price for this growth: environment devastation? Of course, nobody would deny that industrialization causes environmental problems.

But the assertion that growth automatically leads to ever-accelerating environmental degradation is simply false.

Yale University’s Environmental Performance Index (EPI) uses 16 indicators to rank countries on environmental health, air quality, water, biodiversity, natural resources, and pollution.

These indicators have been selected to reflect both the current baseline and the dynamics of national ecosystems. One of the Index’s most striking findings is that there is a strong correlation between a state’s wealth and its environmental performance.

Most developed capitalist countries achieve high environmental standards. Those countries with the worst EPI scores, such as Ethiopia, Mali, Mauritania, Chad, and Niger, are all poor.

They have both low investment capacity for infrastructure, including water and sanitation, and tend to have weak environmental regulatory authorities.

Contrary to prevailing perceptions, industrial development and technological advances have contributed significantly to relieving the burden on the environment.

Both Indur Goklany in his book The Improving State of the World and Steven Pinker in chapter ten (“The Environment”) of his book Enlightenment Now demonstrate that we are not only living longer, healthier lives in unprecedented prosperity, but we are also doing so on a comparatively clean planet.

Researchers have confirmed that economic freedom—in other words, more capitalism—leads to higher, not lower, environmental quality.

Every year, the Heritage Foundation compiles its Index of Economic Freedom, which analyzes individual levels of economic freedom, and thus capitalism, in countries around the world.

The Heritage Foundation’s researchers also measure the correlation between each country’s environmental performance and its economic freedom.

The results couldn’t be clearer: the world’s most economically free countries achieve the highest environmental performance rankings with an average score of 76.1, followed by the countries that are “mostly free,” which scored an average of 69.5.

In stark contrast, the economically “repressed” and “mostly unfree” countries all score less than 50 for environmental performance.

Is Government The Best Solution To Environmental Problems?

Anti-capitalists frequently claim that a central government is the best solution to environmental problems. And there is no doubt that state regulations to safeguard the environment are important.

But state regulations, cited by anti-capitalists as a panacea for environmental issues, often achieve the opposite of what they were intended to do.

Hardly any other country in the world touts its green credentials as much as Germany. According to even the most conservative estimates, Germany’s so-called “energy transition” is set to cost a total of almost €500 billion by 2025.

But the results of this massive investment is sobering, as an analysis by McKinsey reveals:

“Germany is set to miss several key energy transition targets for the year 2020, and the country’s high power supply security is at risk unless new generation capacity and grid infrastructure are built in time for the coal and nuclear exit and electrification of transportation networks is accelerated.”

For decades, environmentalists in Germany focused on shutting down nuclear power plants. However, the phasing out of nuclear power has left Germany in a poor position in terms of CO2 emissions compared to other countries.

It is not without good reason that Germany’s energy policy has been described as the dumbest in the world.

The latest generation of nuclear power plants is much safer than their predecessors. Despite what environmentalists might claim, impartial calculations have confirmed that it is impossible to meet the world’s energy needs from solar and wind power alone.

Enlightened environmentalists are therefore now calling for nuclear power to be rightfully included in the fight against climate change. And yet, this is precisely what is being prevented in Germany by politicians—not capitalism.

This example, just one of many, shows that government environmental policy is often ineffective. In some instances, it even achieves the opposite of what it was originally intended to, i.e. it exacerbates existing environmental problems.

It is also wrong to think that capitalism necessarily leads to ever greater waste of limited natural resources. Just take the smartphone, for example, one of the most environmentally friendly of capitalism’s many achievements.

With just one small device, a whole plethora of devices that used to consume resources in the past, such as the telephone, camera, calculator, navigation system, dictation machine, alarm clock, flashlight, and many others, have been replaced.

Smartphones also help to reduce the consumption of paper as many people choose not to take notes on paper and, for example, use their iPhone instead of a calendar to enter appointments.

Those who call for “system change” instead of “climate change” do not usually say which system they would prefer. All they are really sure of is that any new system should not be based on free-market economics and that the state should play a decisive role.

The simple fact is that socialism has failed in every country every time it has been tried—and socialism has damaged the environment more than any capitalist system.

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