The Banking Executive, Issue 155, November 2021

poll indicates that nearly two-thirds of people across 50 countries regard climate change as an emergency. The question, then, is what climate action should entail. How will it af- fect incomes, jobs, and living condi- tions? Most citizens simply don’t know, because they are being offered very contrasting perspectives on the future. On one hand, techno-optimists are confident that new, green innova- tions can go a long way toward solv- ing the problem. Their vision of the future is simple: we will be driving electric cars instead of petrol cars, traveling on high-speed trains instead of taking planes, and inhabiting car- bon-neutral houses. The rich may have to give up holidaying on other continents, but everyone else’s lifestyle will essentially be preserved. Growth skeptics, on the other hand, depict the transition to carbon neu- trality as a fundamental change that will end decades of consumer-driven economic expansion. We will enter a new “post-growth,” or even “de- growth,” era. Quality will be substi- tuted for quantity, and social interaction for material consumption. Both camps share the goal of curtail- ing emissions. But while techno-op- timists trust green capitalism to drive an economic transformation, skep- tics suggest that growth is a destruc- tive addiction, curable only by reining in wasteful private conduct. The fight against climate change, in their view, is a fight against capital- ism itself. Economists tend to side with the techno-optimists. Back in 2009, MIT’s Daron Acemoglu, the Collège de France’s Philippe Aghion, and their co-authors observed that tech- nical progress had been massively biased toward brown (carbon-inten- sive) technologies. They pointed out that government subsidies, regula- tions, and carbon pricing would di- rect innovation toward cleaner technologies, making green growth increasingly efficient. These predic- tions have been vindicated by the collapse of the cost of renewable en- ergy. Adair Turner, the chair of the Energy Transitions Commission, notes that for many developing countries, green energy is quickly be- coming cheaper than fossil-fuel en- ergy. The same applies to electric batteries. The reason is that capitalism has begun to turn green, with an increas- ing number of companies investing in being part of a cleaner future. Tesla is now valued seven times higher than General Motors, despite having sold 14 times fewer cars in 2020. Still, brown capitalism lingers, fighting for survival. As when agrar- ian and manufacturing interests fought each other in the nineteenth century, today’s defining battle is not between climate activists and capi- talism, but rather between two strands of capitalism. That is good news. But two caveats are in order. First, even if technology comes to the consumer society’s res- cue, people will need to change their lifestyles. Because many energy-in- Climate vs. Capitalism? ISSUE 155 NOVEMBER 2021 the BANKING EXECUTIVE 25