Political-economic factors relate to the linkages between politics and economics. Although economics has evolved into a distinct discipline and sphere of decision-making, economic institutions, policies, and decisions are shaped and influenced by political factors, while also shaping and influencing politics. The development of economics as a separate discipline and decision-making sphere was a political project driven by Britain’s expanding industry and its need for bigger markets free from government restrictions. To understand political and economic developments, it is necessary to examine the interaction between political and economic factors, both in their day-to-day manifestations (such as resource exploitation, investment decisions, production processes, and unemployment levels, among many others) and at a systemic level. For instance, economic institutions like the “free market“are created and maintained by political institutions, including governments and a legal system, while the role of states is circumscribed by systemic (capitalist) economic requirements or imperatives, such as economic growth.
Political-economic factors are arguably the most fundamental in explaining the obstacles to more meaningful and effective environmental performance and integration. Yet, compared with the political-institutional and socio-cultural factors mentioned above, they have received relatively little attention within comparative environmental policy. One possible reason for this is ideological: the political economy perspective is commonly associated with Marxist thinking, and many academics, especially in the United States, shun this school of thought, often appearing to be allergic to the “C word” (capitalism). Ironically, however, with the rise of neoliberalism, governments have provided ample support for the crude Marxist argument that governments are just committees serving capitalist interests. As a result, in recent years, the importance of political-economic factors has been receiving greater attention, and even Marxism is undergoing a revival.[1]
Arguably, the central theme or question on which much of the debate has focused is whether capitalism is fundamentally (in)compatible with (long-term) environmental protection and environmental integration. Until recently, the prevailing view among those who addressed this question, including the protagonists of Ecological Modernisation, was that capitalism can be greened and that the economic growth imperative can be met by ‘green economic growth’. However, there have been long-standing critics of this view, and a growing number of analysts have become sceptical about such ideas, not least because of the weak evidence supporting this view over the last four or five decades. The answer to this question largely depends on one’s definition of capitalism and whether a significantly changed and/or heavily regulated capitalist system still can or should be called capitalist. Relevant in this context is whether particular varieties of capitalism are less incompatible with environmental protection. I discuss capitalism and its main features on a separate page, and its fundamental incompatibility with meaningful, long-term environmental integration on the Greening Capitalism page.
The global dimension of this issue, and political-economic factors more generally, are widely recognised. We need to understand a country’s environmental performance against the background of its position in the global political-economic system, a point of view that has long been emphasised by the advocates of a world system’s approach.[2] That capitalism is a global or globalised system, notably linked to financial capital and Transnational Corporations (TNCs), is hardly contested. However, there is still considerable debate, related to a lack of clarity and insufficient research, about the extent to which global capitalism is a truly unified system ruled by a transnational class, or a system dominated by the United States (“empire”), or a system of multiple but interlocked and interdependent centres. But, in general terms, the scope for a state to pursue its own course of action in domestic and foreign economic, social, and environmental policies, and its own approach to environmental integration, is conditioned by its (relative) position in the global political-economic order.
Although, after the collapse of the Soviet Union in 1989, capitalist liberal democracy has been widely regarded as the only (or best) option when it comes to political-economic regimes (“There is no alternative”), we should not discard the possibility that the hegemonic status of this regime can (or will) come to an end. Other political-economic regimes are, in principle, possible, as shown by the fact that, until the 1980s, many countries had adopted authoritarian-socialist regimes. Although most of these have ended, it is debatable whether socialism as an alternative economic system can be revived and combined with a democratic form of government (in democratic-socialist regimes). Some would argue that capitalism’s unsustainability and crisis-prone nature will likely lead to its demise. At the same time, liberal democracy has come under criticism and threat due to its shortcomings and failings, not least in addressing the environmental challenge. So, raising the question “What will replace capitalist liberal democracy?” is not as outlandish as it may seem. Although, thus far, alternative political-economic regimes of various kinds have failed to deal effectively with the environmental challenge (Socialism and the Environment; Social Democracy, China after Mao), one cannot exclude the possibility that Democratic Socialism will emerge as a viable and environmentally effective option.
See also: Political-Economic systems; Industrial Production, and Technocracy.
References
[1] Eagleton, Terry (2011), Why Marx Was Right. New Haven: Yale University Press; Ghosh, Jayati (2017), 150 Years of ‘Das Kapital’: How Relevant Is Marx Today?, Aljazeera (Accessed: 28 October 2020); BBC (2008), Marx Popular Amid Credit Crunch (Accessed: 28 October 2020).
[2] Hornborg, Alf (2007), “Conceptualizing Socioecological Systems”, in A. Hornborg and C. L. Crumley (eds.), The World System and the Earth System: Global Socioenvironmental Change and Sustainability since the Neolithic. Walnut Creek, CA: Left Coast Press, 1-11; Wallerstein, Immanuel (1974), The Modern World-System. New York: Academic Books; Wallerstein, I. (1996), “National Development and the World System at the End of the Cold War”, in A. Inkeles and M. Sasaki (eds.), Comparing Nations and Cultures. Readings in a Cross-Disciplinary Perspective. New Jersey: Prentice Hall, 484-497.