System failure - China Dialogue
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System failure

The Gulf of Mexico oil disaster is a symptom of a sickly political economy, argues Tang Hao. Without wholesale reform of global structures, he says, the environment will always suffer.

BP’s catastrophic oil spill in the Gulf of Mexico has unleashed a chorus of criticism. Some people say it was humanity’s desire for riches that forced open the earth’s crust and brought about disaster. But we cannot change human nature and overcome the urge for profit. The only real way to solve environmental problems is to improve political systems and our mode of economic development. (Likewise, we cannot do away with the human desire for power, but democratic systems have gradually helped to solve what were once vicious political struggles.)

To find the true cause of the pollution, we should look to the basis of the international political economy: that current global economic growth is oil-powered. This has led to economic problems, such as shortage of supply, as well as endless problems with environmental pollution (an oil spill triggered by last week’s pipeline explosions in China’s north-eastern port city of Dalian, is one of the latest examples). And with such a grave systemic issue, even if businesses, governments and NGOs act exactly as they should, environmental disasters will still occur.

Globalisation has seen ever more capital and technology concentrated in the hands of multinational companies. But this has not been matched by an increase in corporate social responsibility. Multinationals have neither the inclination to use technology responsibly, nor the ability to control how that technology develops. Meanwhile, multinationals can easily move their production around the world – avoiding the democratic oversight of any one country.

Operating in an economic structure where ability and responsibility are out of balance, businesses cannot resist the profits to be made by ignoring environmental protection. BP’s slogan is “Beyond Petroleum”, and it strives to create a green corporate image. But it could not prevent itself misusing its power, wealth and technology. This accident was caused by an extraction strategy aimed at turning a quick profit. The gulf between BP’s corporate advertising and the results of its actions shows that the standard procedure – of profiting from environmental damage, then using a small portion of those profits to improve your image – is defunct. Responsibility needs to be exercised while making money, not afterwards.

If multinationals are unable to exercise environmental responsibility, what about national regulations? In this case, US president Barack Obama’s administration chose to allow BP to handle the oil leak. The government lacked the capacity and the funds to stem such a spill: you can’t send the coastguard a kilometre beneath the sea to close a ruptured well.

Moreover, when it comes to the environment, states are not necessarily any more trustworthy than corporations. After the spill began, media reports revealed that members of both the upper and lower houses of US Congress – and particularly members of the Senate Committee on Energy and Natural Resources – had received large political donations from BP. Over the last two decades, BP has made donations to presidential candidates, including Obama, totalling US$3.5 million (23.7 million yuan). And of the 64 federal judges in the five states surrounding the Gulf of Mexico, 37 have links to the oil and gas industry. Close, long-term and institutionalised cooperation between government departments and big business ensures that BP can always enjoy political protection. A system that relies on the power-hungry to solve the problems caused by the money-hungry hardly gives cause for optimism.   

Since the Cold War, political and economic expansion have become intimately linked. This is the main reason why globalisation has been so vigorously promoted by the world’s major powers. US might and multinational expansion have inevitably merged – even if BP is not an American firm, it has many shared interests with the US government. And so the current economic and political framework cannot allow a multinational such as BP to go bankrupt; that would help no one. Obama’s administration cannot do anything to BP, as it needs the company to plug the leak and pay compensation. If BP collapses, there is no party directly responsible for the worsening pollution. The British prime minister, David Cameron, publicly defended BP, not only because of the huge stake in the company held by British pension funds, but because the company’s rise or fall impacts directly on the UK economy and the fate of the Eurozone.

Besides corporate responsibility and government intervention, some put their environmental hopes in the public. But in the current mode of development, the public are more likely to be part of the problem than the solution. In developed nations, consumers’ pursuit of cheap oil drives companies to take risks in extraction and, in the United States, government attempts to regulate the oil sector have struggled to find popular support. In developing nations, the public do not think first about the long-term harm caused by environmental destruction – they are more concerned with the immediate economic benefits. So although the public are, in the long term, the victims – and some have organised a boycott of BP filling stations, for instance – they are still themselves a cause of environmental woes.

The political economy has become unbalanced. Multinationals have no internal motive to protect the environment; government and business are closely linked; the public’s interests mean they indirectly harm environmental protection efforts; and there is a lack of independent oversight – measures that wreck the environment far outstrip those efforts to restore and improve it. And the situation is getting worse: oil firms are moving their wells from the land to offshore and deep ocean locations – a frenzied exploitation driven by declining oil reserves. Resolving the situation requires a systematic response from the international community, not the kneejerk reaction of the United States. This could include: creating a higher technological barrier to entry for oil firms and tighter international environmental standards; strengthening the ability of international organisations to manage the environment and solve issues at a transnational level; and, since clean energy is unlikely to succeed in the market on its own, introducing government policies to limit the use of fossil fuels and subsidise cleaner energy sources.

The Gulf of Mexico oil spill is an ecological disaster caused by humanity’s pursuit of profit – but it will not be the last. Reforming our inadequate international political-economic system and strengthening the supervision of transnational actors will not be easy. But it must be done to solve our environmental problems – and should become the focus of the international environmental movement.

Tang Hao is an associate professor and a columnist. He is currently Fulbright scholar-in-residence at Randolph-Macon College in the United States.

Homepage picture from DigitalGlobe shows an enhanced satellite image of the US oil spill.