Believers in a market economy are dismayed by radical voices arguing that capitalism is incompatible with effective climate action. But unless capitalism’s defenders start supporting more ambitious targets and policies to achieve net-zero carbon emissions by mid-century, they should not be surprised if an increasing number of people agree.

This year, the evidence that global warming is occurring, and that the consequences for humanity could be severe and potentially catastrophic, has become more compelling than ever. Record global temperatures in June and July. Unprecedented heatwaves in Australia and India, with temperatures above 50°C. Huge forest fires across northern Russia. All of these things tell us that we are running out of time to cut greenhouse-gas emissions and contain global warming to at least manageable levels.

The response has been growing demand for radical action. In the United States, proponents of the Green New Deal argue that America should be a zero-carbon economy by 2030. In the United Kingdom, activists of the “Extinction Rebellion” movement demand the same by 2025, and have severely disrupted London transport through very effective forms of civil disobedience. And the argument that avoiding catastrophic climate change requires rejecting capitalism is gaining ground.

Against this growing tide of radicalism, companies, business groups, and other establishment institutions urge caution and more measured action. Achieving zero emissions as early as 2030, they argue, would be immensely costly and require changes in living standards which most people will not accept. Illegal actions that disrupt others’ lives, it is said, will undermine popular support for necessary measures. A more affordable and gradual path of emissions reduction would be better and still prevent catastrophe, and market instruments operating within the capitalist system could be powerful levers of change.

These counterarguments are robust. The costs of achieving a zero-carbon economy will increase dramatically if we try to get there in ten years, not 30. Most forms of capital equipment naturally need replacement within 30 years, so switching to new technologies over that timeframe would cost relatively little, whereas switching over ten years would require companies to write off large quantities of existing assets.

Technological progress – whether in solar photovoltaic panels, batteries, biofuels, or aircraft design – will make it much cheaper to cut emissions in 15 years than today. And the profit motive is spurring venture capitalists to make huge investments in the new technologies required to deliver a zero-carbon economy.

Meanwhile, decentralized market mechanisms such as carbon pricing are essential to drive change in key industrial sectors, given the multiplicity of possible routes to decarbonization. Socialist planning will not be as effective: Venezuela is an environmental as well as a social disaster. And there is a real danger that excessively rapid action could alienate popular support. After all, the gilets jaunes (yellow vest) movement in France was provoked by tax increases designed to make diesel cars uneconomic, but were imposed at a time when electric vehicles are not yet cheap enough and lack the range to be a viable alternative for less well-off people living outside major cities.

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