It was an extremely bleak picture. But conventional economic thinking doesn’t think much of it — and isn’t even equipped to think about it. The traditional economic model of climate change, known as the “integrated assessment model,” is built around the basic idea that in some sense everything is reversible, or at least some money can be paid to compensate for the damage.
This is combined with a dogmatic belief in the power of technological progress. The process of invention and technological change will eventually lead to better ways to ensure economic growth.
You can see this most clearly in the IPCC’s main forecasting model for net-zero emissions, which includes a very efficient “negative emissions technology” that would magically remove carbon from the atmosphere — no such technology exists yet.
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In this worldview — in that of mainstream economics — tackling climate change is simply a question of tradeoffs: How much cost and growth do we have to sacrifice today given our projections of climate change damage tomorrow?
But if the tipping point does exist — and it appears to be — and the ecological damage is irreversible, then the foundations of this form of economic thinking are destroyed. “Trade-offs” are impossible when something has been irreversibly lost — you can’t make trade-offs with extinct species or collapsing ecosystems. They are gone.
You don’t need to think about essentially marginal changes to the system, you need to think about major, fundamental shifts in the way the economy is organized – not just to minimize future harm, but to create a world future ecology of real cost and pain Risks of system breakdown and ecological instability are managed fairly, protecting people as much as possible.
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Right now, we are doing the first thing, signing multiple agreements to reduce global greenhouse gas emissions, but we have just scratched the surface of the second thing. In mainstream discussions of the economic crisis, a real and serious crisis of adaptation is not mentioned.
Just to take the UK as an example, the Bank of England continued to raise interest rates in the face of ecologically shocking inflation, pushing the costs onto ordinary people instead of confronting the real problems and new economic and ecological realities.
The British Labor Party is another example of this problem. Labour’s original ecological investment plan was for a world of low interest rates and low inflation – if they want to get serious about climate change now they need to talk about redistribution and adaptation. We need massive investment and substantial tax reform to insulate our economy from the worst effects of ecosystem collapse, or at least partially insulate it from it.
But that doesn’t seem to be the case for Labor, backed by notorious fiscal rules, which are steadily ditching every promise made so far, big and small. these new realities.
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The institutions we leave behind were crafted in a world where climate change was not an immediate and pressing global problem. It’s a threat to the future, and its presence is only felt on the fringes—harsh for small island nations, but something that can largely be ignored for developed nations.
Now, ecological collapse has arrived, and it’s getting worse. Existing strategies built around state investment and technology-led decarbonization are already under pressure.
This is a new world. If our institutions don’t catch up soon, the rest of us will suffer a perpetual doom cycle of high inflation and high interest rates, leading to a broader ecological collapse.
If Labor does not act, Prime Minister Keir Starmer may find that, if this is where we are headed, he may find that he has more than environmentalists to worry about.
the author
Dr James Midway is an economist and former political consultant.This article is his transcript high dose podcast.
