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Markets Work: Capitalism and Innovation Heal the Earth
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Markets Work: Capitalism and Innovation Heal the Earth

Editor’s Note: This article is part of a week-long series illustrating how the free market works, from around the globe to our day to day lives. 

When it comes to opposing factions, it seems as though no two factions could be more averse to each other than environmentalists and capitalists. We are taught to believe that those who care about economic growth cannot possibly care about environmental protection and vice versa.

While this rhetoric is a good way to polarize those with opposing priorities, the truth is that they can co-exist. In fact, not only can capitalism and environmentalism co-exist, but only with free market capitalism can the environment ever hope to be clean.

Even though critics of capitalism accuse the system of placing profits above people or the environment, the reality sets a different tone. The market demand for clean and renewable energy is growing every day. Companies and businesses are finding it profitable to keep the environment that their costumers live in clean. There is also an opportunity for those who care about the cause to take action like never before and to do so within the market.

Technology and innovation are evolving at such a rate that dirty fuels and pollution will soon become a thing of the past.

Elon Musk is the perfect example of this concept. Musk has created an entire empire based on clean and affordable energy; not because of government decree or regulation, but from private incentives to innovate and compete, which drives product quality up.

Because Musk is allowed to profit and gain from the demand of the marketplace, his companies are on the cutting edge of innovation changing the world and the environment. Musk recently announced that he could produce roof solar panels at a cheaper rate than even conventional roofs. He is using Tesla Motors to revolutionize the automobile and clean energy industries. While Tesla cars are currently not as quite as profitable as I’m sure he would like, these innovations are setting the essential groundwork for years to come.

On a smaller scale, new industries are finding innovative ways to help fight pollution and restore clean water to the planet. The only reason any company is even able to do this is capitalism.

Competition is a powerful force, and people often forget that the market is what we make it. Going to government is not just a lazy way of trying to achieve sustainability, but it is also ineffective and does more harm than good.

The market, so long as it is free and without crony assistance from the government, always hold businesses accountable. Sure, in a genuinely free market, a business might pollute, but the decision to pollute in excess will eventually prove counter to business interests. First, a company’s pollution would significantly affect the water that their employees drink or the air that they breathe, which would raise employment costs. Second, and more importantly, the company would also be polluting the water or air of their customers, who will be far less likely to continue doing business with the company after they have damaged the ecosystem of the community.

Pollution would leave the company vulnerable to outside competition that recognizes these environmental concerns as well as the economic concerns. The business that pollutes the air and waters of the community it serves will quickly lose customers and suffer significant losses because the community, and not the government, will punish the business.

Not only should we explore innovation with the market to protect the environment, but we must also act to curtail the world’s largest polluter: the U.S. Government.

While environmentalist protest and rally against large corporations who pollute the air and water, the government remains the world’s largest overall polluter. Calls for government reform are silent. Not only are they the largest overall, but the federal government is also the fourth largest contributor to greenhouse gas pollution alone. Of course, we also cannot forget about the terrible EPA mine spill polluting the Colorado River in 2015.

If environmentalists want to be serious about reducing pollution, they must focus on cutting the size of government.

We should all strive for sustainability. Therefore, we should not view capitalism at odds with a clean Earth. Only through capitalism can we have a realistic expectation of a cleaner Earth. Government intervention only hinders economic progress and does little to protecting the environment. The path to a clean and sustainable planet cannot and should not go through the government but through competition and innovation.

The government cannot mandate economic growth. The only thing it can and should do is get out of the way and remove all restrictions that slow innovation.

Fossil fuels are already on their way out, and clean energy is the way of the future. But that fact does not, by itself make clean energy affordable. Only with the creative destruction that the market provides can we have a clean and sustainable future that coincides with our economic growth and prosperity. Capitalism leading the way to heal the planet is just one excellent example of how well markets work.

1 comment

  • calebfranz

    […] Markets Work: Capitalism and Innovation Heal the Earth […]

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