NCPA - National Center for Policy Analysis

Capitalist Profit Motive Reduces Pollution

April 26, 2013

Environmentalists have always contended that greed and profits result in the depletion of non-renewable resources, habitats and species. Yet, as wealth has grown, the environment has gotten cleaner and emissions have fallen. This is because greed and the quest for profitably drives increased efficiency, says Pierre Desrochers, an associate professor of geography at the University of Toronto.

  • The reduced emissions and concentrations of some pollutants follows the environmental Kuznets curve (EKC), which predicts higher pollution levels at lower incomes which peak and then fall as income exceeds a threshold level.
  • The EKC-like results that the United States has witnessed are attributed to higher standards of living that allow increased consumption of environmentally-conscious amenities and a shift to less pollution producing economic activities.

These possible explanations do not truly account for the reason why pollution has decreased. In reality, firms seek increasingly efficient uses of material resources because it affects their bottom line. The transformation of industrial waste into lucrative byproducts is one trend that has ensured that pollution decreases while reliance on environmental resources is minimized.

  • Examples of this transformation include synthetic dyes manufactured from coal tar, which is produced from the manufacture of gas from coal, and plastics developed from once highly problematic petroleum residuals.
  • This view of the profit motive is counter to the dominant view held by sustainable development theorists and environmental activists who claim that economic expansion always brings increasing emissions.
  • Instead, the profit motive is now "green," as manufacturers seek out ways to supplement their revenue streams in the competitive market.

Even Karl Marx recognized that waste plays an important role in almost every industry because it reduces the cost of raw materials. Despite the empirical evidence proving the theoretical explanation of why emissions have fallen as economic expansion has increased, environmentalists will still lambaste the capitalist search for profits.

Source: Pierre Desrochers, "Greed Is Green: How the Profit Motive Helps the Environment," The American, April 19, 2013.


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