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    Betting on infinite loss Alex Callinicos pt 1 Archived Message

    Posted by Keith-264 on July 6, 2019, 2:05 pm

    http://isj.org.uk/betting-on-infinite-loss/
    Issue: 163
    Posted on 24th June 2019


    The 17th century Catholic thinker Blaise Pascal suggested that we imagine believing in God as a wager:

    Let us weigh up the gain and loss involved in calling heads that God exists. Let us assess the two cases: if you win you win everything, if you lose you lose nothing. Do not hesitate then; wager that he does exist…here there is an infinity of infinitely happy life to be won, one chance of winning against a finite number of chances of losing, and what you are staking is finite. That leaves no choice; wherever there is infinity, and where there are not infinite chances of losing against that of winning, there is no room for hesitation, you must give everything.1

    Pascal’s argument has been attractive to Marxists unwilling to regard the ­triumph of socialism as a sure thing. In Éric Rohmer’s movie Ma nuit chez Maud one of the characters says that as a Marxist he thinks of socialist revolution the way Pascal thought about God—something uncertain that one should nevertheless act on as if it were real, because if it were real, history would make sense. In both cases, we’re betting on something desirable. But what if the wager is about, not “infinitely happy life”, but infinite loss? Arguably, this is what the new environmental activism symbolised by the school strikes started by Greta Thunberg and by Extinction Rebellion (XR) is about: act politically as if climate catastrophe were impending as the best hope of preventing it.

    The imminence of climate catastrophe has been expressed vividly in a widely downloaded paper by the academic Jem Bendell. He proposes that “we consider the implications of it being too late to avert a global environmental catastrophe in the lifetimes of people alive today.” Bendell argues that we must do this because,

    unfortunately, data collected since [2014] is often consistent with non-linear changes to our environment. Non-linear changes are of central importance to understanding climate change, as they suggest both that impacts will be far more rapid and severe than predictions based on linear projections and that the changes no longer correlate with the rate of anthropogenic [ie human-generated] carbon emissions. In other words—“runaway climate change”.2

    Non-linear processes are characteristic of complex systems where change doesn’t always take the form of gradual increases, but can be self-reinforcing and therefore accelerating.3 The warming of the Arctic is an example. This is a consequence of rising temperatures but, by reducing the amount of ice sheet reflecting back the rays of the sun, it speeds up global warming, so leading to further reductions. But the warming of the polar region could also release methane—a more powerful climate gas than CO2—currently trapped in surface or subsea permafrost. The scariest example Bendell gives is of a 2010 study warning “how the warming of the Arctic could lead to a speed and scale of methane release that would be catastrophic to life on Earth through atmospheric heating of over 5 degrees within just a few years of such a release”.4

    It is, however, not an individual study but the accumulation of evidence from different sources and covering different areas—for example, the destruction of ­biodiversity and the effects of rising temperatures and sea levels on agriculture—that leads Bendell to conclude:

    The evidence before us suggests that we are set for disruptive and uncontrollable levels of climate change, bringing starvation, destruction, migration, disease and war.

    … The words I ended the previous paragraph with may seem, subconsciously at least, to be describing a situation to feel sorry about as we witness scenes on TV or online. But when I say starvation, destruction, migration, disease and war, I mean in your own life. With the power down, soon you wouldn’t have water coming out of your tap. You will depend on your neighbours for food and some warmth. You will become malnourished. You won’t know whether to stay or go. You will fear being violently killed before starving to death.5

    In an excellent response to Bendell’s paper, Jonathan Neale agrees that “social collapse is inevitable, catastrophe probable and extinction possible”. But he gives a much more concrete socio-political content to collapse and catastrophe, which is significantly different from the usual dystopian images familiar from the Mad Max movies or, more recently, Cormac McCarthy’s novel The Road, and the film based on it:

    We have enough experience of horror in modern history to know what the “social collapse” of climate change will look like. Consider the middle of the twentieth century, when sixty million were killed. Probably a small number compared to what we will face, but useful for thinking on…

    Almost none of those horrors were committed by small groups of savages wandering through the ruins. They were committed by States, and by mass political movements.

    Society did not disintegrate. It did not come apart. Society intensified. Power concentrated, and split, and those powers had us kill each other. It seems reasonable to assume that climate social collapse will be like that. Only with five times as many dead, if we are lucky, and twenty-five times as many, if we are not.

    Remember this, because when the moment of runaway climate change comes for you, where you live, it will not come in the form of a few wandering hairy bikers. It will come with the tanks on the streets and the military or the fascists taking power.

    Those generals will talk in deep green language. They will speak of degrowth, and the boundaries of planetary ecology. They will tell us we have consumed too much, and been too greedy, and now for the sake of Mother Earth, we must tighten our belts…

    Our new rulers will fan the flames of new racisms. They will explain why we must keep out the hordes of hungry homeless the other side of the wall. Why, regrettably, we have to shoot them or let them drown.6

    In other words, the structures of capitalist power won’t just disintegrate in the face of climate catastrophe, but will seek to maintain themselves by adapting, at a high price for ordinary people. Apart from the examples of mass killings during the Second World War that Neale focuses on, we can learn from the terrible famines that puncture the history of British imperialism—above all, Ireland 1845-9 and Bengal 1943-4. One thing common to these appalling episodes is that suffering was overdetermined by class: the poor perished on an enormous scale, while for the rich—landowners, capitalists, colonial administrators and ­commanders—it was a matter of business as usual. Famines are, notoriously, not natural catastrophes, but a product of social relations, and in particular of the inability of the poor to gain access to resources they need in order to survive. They offer an intimation of what may be our future—or that of our children and grandchildren.7

    Fuelling and profiting from climate change

    The process of capitalist adaptation to climate change is already under way. Capitalism isn’t just fossil fuel corporations content to burn the planet if this is how to deliver profits. We see a much more contradictory process under way. On the one hand, the planet burners are still busy—most obviously in the booming oil and gas fracking industry, which is projected to make the United States a net exporter of energy next year for the first time since 1953.8 The major US banks—probably the most important single cluster of capitalist interests in the contemporary world—are deeply implicated in financing fossil fuel investments.

    A coalition of NGOs headed by the Rainforest Action Network has produced a report showing that, since the December 2015 Paris agreement—which is supposed to cut CO2 emissions sufficiently to keep global temperatures from rising by more than 2°C above pre-industrial levels this century—bank financing of fossil fuels has steadily risen, to $612 billion in 2016, $646 ­billion in 2017, $654 billion in 2018. The “worst banks”, according to the report, are four American ­mammoths—JPMorgan Chase, Wells Fargo, Citi and Bank of America (at number six, Barclays is the top European bank on the list). JPMorgan takes the lead in financing projects aimed at expanding the extraction of fossil fuels—it is number one banker of tar sands oil, Arctic and ultra-deepwater oil and gas, and liquefied natural gas, and is number two banker of fracking, just behind Wells Fargo.9

    The activities of the biggest investment banks are the tip of a much larger iceberg. Carol Olson and Frank Lenzmann argue that the fossil fuel supply chain has become thoroughly financialised, with the shadow banking sector—hedge funds, private equity firms and various kinds of investment fund, much less regulated than conventional banks—very active in speculative trading at the various stages of the process of extracting and distributing oil, gas, coal and uranium:

    As more regulation of financial trading by banks was introduced after 2008, commodity trading by banks decreased and was taken up by the “shadow banks”. Also used as intermediaries by mega-banks, shadow banks continue to ­accumulate assets in shadow banking deals along the oil and gas value chain. In 2014, 52 private equity funds raised $39 billion for investments in the oil and energy sector, 20 percent higher than the previous year and the highest since 2008… Not willing to lose a competitive advantage, oil and gas companies and utilities have established banking, investment and/or commodity trading subsidiaries. By having enormous capital assets, and by being able to access money with the privileges accorded banks, fossil fuel suppliers have been allowed much more favourable circumstances than other companies. A unit of the French power utility, EDF, purchased Lehman Brother’s [sic] physical trading unit during the financial crisis, and has seen a 60 percent rise in its revenues since 2008… A key advantage for corporate trading units is that they, unlike banks, are not banned from trading with their own money. When units of BP and Royal Dutch Shell registered as “swap dealers” in 2013, they were perceived as being in the same league as the mega-banks in terms of their derivative dealing. Corporate merchants were estimated in 2013 to account for about 40 percent of the US oil and gas-hedging business, up from almost nothing in just a few years. The multi-billion dollar conglomerate owned by Charles and David Koch, “Koch Supply and Trading”, has a unit which claims to have traded the first oil swap over 25 years ago. Now it employs nearly 500 people worldwide, and promotes itself as an alternative to Wall Street. In 2013, Dr Markus Krebber, CFO, described the German utility’s trading unit, RWE Supply & Trading, as being the commercial heart of RWE, more or less as a bank’s treasury function, through which all the commodity flows go.10

    Capitalism thus continues to be heavily invested in the fossil fuels industries, and Donald Trump is acting as a megaphone for these interests. All this supports Andreas Malm’s argument that:

    The stronger global capital has become, the more rampant the growth of CO2 emissions—indeed, one might argue that the decisive capitalist victory in the long twentieth-century struggle with labour was crowned by the post-2000 rush towards catastrophic global warming. Counting from 1870 to 2014, a fourth of all cumulative CO2 omissions were belched out in the last fifteen years of the period.11

    On the other hand, firms are responding to the official, sluggish efforts to move towards a net carbon neutral economy by exploring new opportunities for profit. This is easier for relatively new companies that are less heavily invested in the existing energy complex. This helps to explain the alignment between the US IT giants—the FAANGs (Facebook, Amazon, Apple, Netflix, and Google)—and Barack Obama’s policy of recognising and managing climate change (though IT companies are heavy producers of CO2 emissions through their server banks, as are, of course, Amazon’s delivery vans). At a more parochial level, the bosses of more than 120 British businesses, along with the Confederation of British Industry, wrote to Theresa May supporting the Committee on Climate Change’s recommendation that the government adopt a legally binding target of zero net emissions by 2050.12

    The drive to adapt also affects some of the fossil fuel corporations. The car industry continues to be a massive source of CO2 emissions. The BBC reported at the end of 2018:

    One common factor across rich and poor countries alike has been the continued rise in the consumption of oil in the transport sector. In the EU, the amount of fuel used for flights and road transport has surged by 4 percent. In the US, use of coal actually fell while fossil fuels used in car journeys rose by 1.4 percent.13

    But the car industry is also under enormous pressure to restructure, partly because of the rapid growth of the Chinese market, but more fundamentally because of the efforts to develop electric and driverless cars, spurred on by the diesel emissions scandal. This enormous technological transformation offers openings to new entrants—for example, Tesla, Google and now apparently Apple—into an industry long dominated by a handful of transnational giants. This process of upheaval underlies the closure announcements of car plants in Britain and dramas such as the arrest in Japan of Renault-Nissan boss Carlos Ghosn and Fiat Chrysler’s abortive bid to merge with Renault.

    Capitalism’s adaptation to climate change also has profound geopolitical implications. The warming of the Arctic doesn’t just threaten the future of humankind, and many other species—it opens this ocean to commercial traffic, resource extraction and intensified competition among the capitalist states bordering on it.14 At a meeting of the Arctic Council in May, Trump’s secretary of state Mike Pompeo infuriated the other governments represented there by blocking any reference to climate change in the closing statement and attacking both Russian and Chinese policy in the region.

    More broadly, the intelligence website Stratfor argued in 2018 that

    The rate of consumption for renewable energy is currently growing three times faster than the overall demand for energy. A world in which renewable sources account for, say, one-third of the total energy consumed is now entirely plausible, even likely, within the next two or three decades. The shift is already underway, and it will be no less transformative than the transitions from wood to coal and from coal to oil.

    Stratfor argues the shift to renewable energy will produce losers—major oil producers such as Saudi Arabia and Russia. But there will also be winners:

    Germany and the United States, for instance, are well-positioned to take advantage of the rise of renewables, thanks to their leadership in the field—and the sheer size of the US market. But China is even better off.

    In the past decade, China has raced ahead to become the world’s unrivalled leader in the manufacture of clean energy products, including solar cells and ­batteries—of which it makes more than half of the global supply. It is also the world’s biggest miner and supplier of rare earth materials, biggest deployer of renewable energy capacity and biggest market for electric vehicles. The country has acquired substantial lithium and cobalt mines abroad to power its push toward renewable energy, while also investing in electric utilities around the world, including in Europe, Africa and South America.15

    More recently the Financial Times reported:

    In the space of a few years Chinese companies have become some of the world’s largest producers of lithium, a lightweight metal that is a key raw material for batteries. They have bought up mines from Australia to South America and are building plants in China to make lithium chemicals and batteries.

    The latest example of China’s ability to channel prodigious amounts of capital to fast growing industries, the country produced over 60 percent of the world’s lithium in April, compared with less than 1 percent from the US, according to Benchmark Mineral Intelligence.

    China’s dominance in the electric car supply chain has triggered growing concerns in a trade-war obsessed Washington and Brussels, with both fearing that they could be squeezed out of the next generation of industry. At the beginning of May two US senators, Lisa Murkowski and Joe Manchin, proposed a bipartisan bill designed to boost US production of critical minerals such as lithium. And the European Investment Bank has pledged €350 million to back Swedish battery start-up Northvolt, which aims to build a battery factory in Sweden and source raw ­minerals such as lithium from Europe.16

    A central dimension of what is best described as the geo-economic struggle between the US and China on which Trump has embarked is Washington’s effort to block Beijing’s plans to upgrade its industries from low-wage manufacturing final assembly to hi-tech, including the new products crucial to a capitalism adapting to climate change.17 The example of batteries suggests that Trump is trying to shut the stable door after the horse has bolted. But the broader point is that capital restructuring in response to climate change is deeply interwoven with this struggle—despite the fact that Trump himself is a climate denier.

    We see the same picture in the case of US defence policy. In 2014 the Department of Defense produced a Climate Change Adaption Road Map that treated climate change as a “threat multiplier”:

    The changing climate will affect operating environments and may aggravate existing or trigger new risks to US interests. For example, sea level rise may impact the execution of amphibious landings; changing temperatures and lengthened seasons could impact operation timing windows; and increased frequency of extreme weather could impact overflight possibility as well as intelligence, surveillance and reconnaissance capability. The opening of formerly-frozen Arctic sea lanes will increase the need for the Department to monitor events, safeguard freedom of navigation, and ensure stability in this resource-rich area. Maintaining stability within and among other nations is an important means of avoiding full-scale military conflicts. The impacts of climate change may cause instability in other countries by impairing access to food and water, damaging infrastructure, spreading disease, uprooting and displacing large numbers of people, compelling mass migration, interrupting commercial activity, or restricting electricity availability. These developments could undermine already-fragile governments that are unable to respond effectively or challenge currently stable governments, as well as increasing competition and tension between countries vying for limited resources. These gaps in governance can create an avenue for extremist ideologies and conditions that foster terrorism.18

    That was under Obama, of course. After taking office Trump issued an Executive Order rescinding his predecessor’s climate policies. But the Pentagon has pragmatically continued, for example, to prepare for the extreme weather events climate change makes more frequent.19 It would be crazy if it did not factor climate change into its planning on a much broader scale.

    Another way of putting it would be to say that climate change is becoming normalised, integrated into the everyday functioning of the processes of competitive accumulation that drive capitalism. Does this mean that the catastrophe foreshadowed by Bendell will be avoided? Absolutely not. In the first place, it is very unlikely that an economic system organised around the blind struggle among what Karl Marx called “many capitals” can make the drastic change in economic priorities quickly and profoundly enough to head off chaotic climate change. The costs entailed seem too high to a system inherently geared to the short term and still struggling to overcome the effects of a huge crisis; there is also the fear that capitals based in a state that does take on these costs will be disadvantaged compared to their rivals elsewhere. And fossil fuel interests remain, as we have seen, very heavily entrenched at the very core of the capitalist system.20

    A good example is provided by chancellor of the exchequer Philip Hammond, who lobbied unsuccessfully against adoption of the net zero carbon target by 2050 (which is 25 years too late according to XR). The Financial Times reports that he wrote to May warning that:

    “The total cost of transitioning to a zero-carbon economy is likely to be well in excess of a trillion pounds”… Although the 2050 target is backed by some business leaders, Mr Hammond argued that industry would face “significant costs” from shifting to low-carbon processes. He pointed out that unless competitor countries adopted the same policy, the shift could render “key industries”—such as the steel industry—economically uncompetitive or dependent on permanent government support.21

    Secondly, the natural processes unleashed by the CO2 emissions generated under industrial capitalism may have gone too far for any human intervention to stop them. This is where the feedback loops discussed above are so important, since they could drive climate change towards levels where human life in anything resembling the forms it has taken these past centuries may become unsustainable. The natural world—of which human societies are part but which vastly exceeds them—will have its own say in the outcome.22

    It is in the nature of the non-linear processes that could turn climate change into planetary catastrophe and social collapse that we will only know for sure they are happening when it is far too late to do anything about it. This is where Pascal’s wager comes in. The prospect of infinite loss might simply leave one in a state of despairing apathy. Bendell, a professor of “sustainability leadership” who makes presentations at institutions such as the European Commission, focuses primarily on psychological processes promoting a positive response to accepting “collapse as inevitable, catastrophe as probable and ­extinction as possible”, what he calls “deep adaptation”.23

    A revolutionary wager

    The new climate activism makes a different move, in which the imminence of catastrophe becomes a motive for collective action, which is often understood as revolution. The veteran activist George Monbiot has expressed this very well:

    As I’ve grown older, I’ve come to recognise two things. First, that it is the system, rather than any variant of the system, that drives us inexorably towards disaster. Second, that you do not have to produce a definitive alternative to say that capitalism is failing… Our choice comes down to this. Do we stop life to allow capitalism to continue, or stop capitalism to allow life to continue?24

    XR expresses this shift in more concrete political terms. It presents the facts and the trends of what it rightly describes as a “climate emergency”, and on that basis calls for mass civil disobedience in order to force governments to adopt a target of net zero emissions by 2025. For XR’s founders this approach is justified by a sociological theory that asserts that peaceful mass protests, if they develop on a sufficiently large scale, will build up economic pressure on the state either to negotiate or to engage in repression. Indeed, repression is seen as itself a sign of defeat: XR actively seeks mass arrests as a central tactic for putting governments under pressure. Back in March, Roger Hallam, the main exponent of this theory, argued that “it’s game over for the system in the next two years”, and that “the key choice is whether there’s going to be fascism or something vaguely progressive” to replace neoliberalism.25

    It’s easy enough to pick holes in this kind of perspective. It underestimates the entrenched structures of class power in capitalist society and the concentrated violence of the states that serve to maintain them. Hallam claims to be relying on the experience of movements in the Global South. But at stake in these has mainly been the survival of a specific government, and not of the entire social and political system. Witness what has happened in Egypt since June 2013 and is happening in Sudan now (as Anne Alexander shows elsewhere in this issue) to see how the system reacts when it itself is threatened. And what is at stake now in the face of climate catastrophe is system change of the most profound sort. Ctd....

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    • Betting on infinite loss Alex Callinicos pt 1 - Keith-264 July 6, 2019, 2:05 pm