Capitalism, Socialism, and the Climate Crisis

The climate crisis calls for a massive and rapid retooling of our economy and society. I argue that we have reasons to doubt that capitalism, even reformed, could meet that challenge. As an alternative solution, authoritarian socialism such as existed in the former Soviet Union or China would be neither attractive nor effective; by contrast, a democratic form of socialism might be both. In a democratic socialist society, we would govern democratically both our enterprises and our economy as a whole. Democratizing the governance of enterprises would help them make better tradeoff decisions and internalize some important externalities. But if they remain at the mercy of capitalist competition in product, labor, and financial markets, many enterprises will be economically unable to retool fast enough, so we also need to pool the country’s economic resources and manage them democratically, collectively, and strategically towards our shared environmental, social, and economic goals. Organizational research on corporate strategic management offers insights into how such an economic system could satisfy four key requirements for a successful fight against climate change—democracy, innovation, efficiency, and motivation.