It remains maddeningly difficult to convince people of the innate self-destructiveness of ‘free market’ or ‘neoliberal’ culture, which makes it the main engine of our unsustainable behaviour.

Not only does this dynamic overwhelm the efforts of ‘market-led environmentalism’, it increasingly turns such efforts into reinforcements of the problem! This is counter-intuitive but systemically clear.

Neoliberalism is self-destructive as a social form because of its central paradox:

1. Belief in the superiority of markets over non-market institutions cultivates an antipathy to government ‘intervention’…

2. … yet claims that markets are superior allocative institutions depend on markets being ‘complete’…

3. …and it is only government, as an extra-market institution, that can force the internalization of negative externalities to move markets towards the completeness that is the basis for their claim of superiority!

More succinctly: the paradox is that when negative externalities like climate change arise, markets need government intervention to be made efficient!

And because ‘negative externality’ means ‘a real cost that markets ignore’, the process of making markets more ‘complete’ necessarily involves government making a cost real in some form or other (tax, ban etc.)

But a ‘free market’ culture that has run for any length of time will have produced norms and formal powers that allow market participants to resist corrective action by governments. Hence, negative externalities will accumulate, and the ‘free market’ culture will gradually become a runaway ‘doom loop’, taking society and ecology with it. The market’s current propulsion of planet-warming AI epitomises this perfectly.

Neoliberalism is incoherent as a cultural form on its own terms.

The ESG Paradox

The neoliberal paradox repeats at sub-scale in the form of the ‘ESG paradox’

The belief of the ‘ESG’ or ‘win-win’ movement is that markets might deliver solutions without the need to price or limit e.g. GHG emissions., i.e. the belief that markets might self-regulate without any need for external ‘regulation’. Sometimes this can work, but it is plainly not for climate change. GHG emissions reached a new high in 2023.

The problem with persisting with failing ‘market-led sustainability’ efforts is that underneath the details of such efforts, the greater part of what they do is reinforce the already strong cultural bias against government interventions that might harm corporate profits. In helping defend the background norm that governments should not act in ways that impair corporate profit, the ESG community does a large measure of the fossil fuel industry’s work for them.

The dynamic is the ‘Shifting the Burden’ systems archetype. Unfortunately, the label is not intuitive, but the diagram tries to explain. A key insight is that solutions are not always additive. In layered complex systems, deeper change often requires giving up the easier change tried first. This is the key challenge of adaptation.

The ‘Shifting the Burden’ archetype is one of 8-10 patterns that repeat throughout natural and social systems.

Here, a problem, ‘climate crisis’, has two possible solutions: ‘market-led sustainability’ and ‘costly government regulation’.

Both solutions have potential – B1 and B2 loops; (‘the more of the problem, the more we apply the solution, the less of the problem’) – but the former is the ‘easier’ solution, the latter more difficult but ‘deeper’ or more fundamental.

The key feature of the archetype is the right-hand loop that describes a recurring dynamic of systems in which pursuit of the easy solution inhibits or even prevents implementation of the fundamental solution.

Specifically, the pursuit of market-based solutions reinforces the existing cultural bias in favour of markets and against costly government intervention, which makes the implementation of regulations hard, if not impossible. (Read: ‘the more we pursue market-led sustainability, the more we reinforce the pro-market/anti-government culture, the less we can implement government regulations.’)

Solutions are not always additive. Implementing a deeper solution may require giving up the easier solution attempted first. This is a basic dynamic of adaptation.  

A telling point about the fit of this pattern for our current predicament is that it also describes addiction problems.