Transcending Neoliberalism: How the Free-Market Myth Has Prevented Climate Action

November 5, 2019

We’ve known about climate change for an entire generation, yet decades of research about the climate crisis and the threat it poses have largely fallen silent in Washington. Recently, this has begun to change. Led by youth activists and environmental justice groups, environmental politics are swiftly shifting. Rather than offering tweaks to the existing system, people are fighting for fundamental changes to achieve deep decarbonization, but we must first understand the root causes of this predicament.

Climate activists increasingly point to the role of ideology in creating our climate crisis. They have argued that we must transcend neoliberalism, and perhaps even capitalism, to address climate change.

In Transcending Neoliberalism: How the Free-Market Myth Has Prevented Climate Action, Mark Paul and Anders Fremstad of Colorado State University present a coherent account of how neoliberalism has contributed to inaction. To do so, they explore three tenets of neoliberal ideology that have stymied action to address the climate crisis:

  1. Decentralize democracy: A feature of the neoliberal order in the US has been the systematic decentralization of government. Neoliberals have promoted federalism to address “government failure” and subject the state to market forces, exacerbating the race to the bottom in climate policy.
  2. Defund public investment: Neoliberals dismantled the Keynesian consensus that the state has a major role to play in providing public goods, stabilizing the macroeconomy, and solving coordination problems. In the neoliberal order, government investments are rejected as expensive and wasteful, crowding out productive private investments.
  3. Deregulate the economy: Neoliberalism has launched a concentrated attack on government’s ability to regulate the economy. Ignoring the ability of regulations to positively shape markets, neoliberals dismiss government intervention as “red tape” that merely increases the cost of doing business.

Deep decarbonization will require that policymakers shed this neoliberal straitjacket and use the federal government to pursue large public investments and binding climate regulations. Much remains uncertain, including the optimal mix of market-based policies that place a price on carbon and state-based policies that regulate private industry and invest in the green economy, while ensuring a just transition for all workers and communities. However, as the excitement builds around a Green New Deal, it is clear that confronting climate change will require us to confront the ideological system that helped create it.