This is happening right now and if you want in on the action you have to know the game is being played.
A couple posts from October 2021 set the stage:
- In Case You Missed It: "NYSE’s new investment vehicle—‘natural asset companies’—will tap into ESG fever"
- Using spatial finance for sustainable development
Which were followed by "What's The Ocean Worth: Putting A Price On Natural Assets"
And here's John Bellamy Foster, Editor of Monthly Review magazine and Professor at the University of Oregon being interviewed on this very topic.
From Monthly Review, July 12:
The capitalist solution to ‘save’ the planet: make it an asset class & sell it
John Bellamy Foster explains the ‘solution’ master-minded by global finance to resolve the imminent environmental crisis: create a multi-quadrillion dollars’ worth of assets on the back of everything nature does and expropriate it from the global commons to make a profit. Worse still: it is already happening.
LYNN FRIES: Hello and welcome. I’m Lynn Fries producer of Global Political Economy or GPEnewsdocs. Today’s guest is John Bellamy Foster.
He’ll be talking about the financialization of the earth as a new ecological regime. A regime where the rapid financialization of natureis promoting a Great Expropriation of the global commons and the dispossession of humanity on a scale that exceeds all previous human history. And which is accelerating the destruction of planetary ecosystems and of the earth as a safe home for humanity. All in the name of saving nature by turning it into a market.
Our guest’s Monthly Review articles: The Defense of Nature: Resisting the Financialization of the Earth and Nature as a Mode of Accumulation: Capitalism and the Financialization of the Earth detail this argument.
Joining us from Oregon, John Bellamy Foster is Professor of Sociology at the University of Oregon and Editor of Monthly Review. He has written widely on political economy and is a major scholar on environmental issues. He is author of numerous books including Marx’s Ecology: Materialism and Nature, The Great Financial Crisis: Causes and Consequences, The Ecological Rift: Capitalism’s War on the Earth. A forthcoming book, Capitalism in the Anthropocene: Ecological Ruin or Ecological Revolution, is coming soon from Monthly Review Press. Welcome, John.
JOHN BELLAMY FOSTER: Glad to be here.
FRIES: We will be talking about your thoughts on how the financialization of nature is capitalism’s most catastrophic regime to date, a new ecological regime. And I take it; you think this was at the heart of what came out of the 2021 UN Climate Change Conference negotiations in Glasgow.
FOSTER: Yeah. Ironically, during COP 26 in Glasgow everybody was watching that to sort of see, well, would governments and the powers that be take action to protect the earth. And the main thing that came out of Glasgow was actually these plans for the financial takeover of the earth, in the name of saving nature. The entire conservation sector globally has now bought into these policies of financialization.
This was really the main product of the Glasgow meetings all being done by capital with support of governments. But there is no public discussion anywhere of this. There is no country where this has been subjected to democratic processes or even conversations. There’s no dialogue on this.
Capital is just proceeding to buy up ecosystems services. To create structured financial vehicles where they’ll be able to control natural capital to accumulate on the basis of it. And to run natural services on this basis with the idea of accumulating wealth.
FRIES: Connect the dots from capital’s need for a new asset class around 2009, around the peak of the Great Financial Crisis, to the current trajectory of the financialization of nature as a new ecological regime.
FOSTER: The world went through a global financial crisis in 2007 to 2010. One of the problems in terms of financial instability, obviously, is that there are not enough underlying assets to support the financial expansion of the system, which is going on at extreme levels. So we’re piling up debt in relation to the world economy. But the debt doesn’t really have sufficient material foundations, revenue streams underlying it.
So capital is searching for new revenue streams. And after the 2007 to 2010 financial crisis, they started looking increasingly at ecosystem services (what we could call nature and nature’s services) as a basis, as a material basis for financialization.
So there’s this very rapid ongoing financialization of nature that is now occurring. Where natural services, ecosystem services, are being turned into forms of exchange value that can be the basis of financialization. All in the name of saving the global environment.
There was a big change that occurred in the fall of 2021, between September and November in the context of the UN climate negotiations, where three new initiatives were introduced or brought to the forefront.
One is the Glasgow Financial Alliance for Net Zero, which brings together all the big financial corporations. All the big banks and hedge funds and so on all came together combining let’s say $130 trillion in assets. These are all basically the Western banks and hedge funds. And they claimed that they were going to organize, to financialize nature in order to produce a net zero carbon economy globally.
The month before, the New York Stock Exchange together with the Intrinsic Exchange Group introduced a new asset class on the New York Stock Exchange called Natural Capital Assets. That really had to do with this process of creating structured financial vehicles to create revenue streams from ecosystem services. That could then be financialized and debt built upon them and so on. All in the name of again, saving nature.
And finally in the climate negotiations itself, they basically agreed on a plan for a world carbon trading mechanism that had been introduced in 2015 Paris Agreement but all the details hadn’t been worked out. So this established at least the basis for a global carbon trading mechanism, which would again, financialize nature.
This has resulted in a huge expansion just in the last few months of attempts to financialize the earth. To turn ecosystem services, really basic ecosystem services like photosynthesis and the production of oxygen in the environment and things like that into monetary asset exchange value that capital can own. Or at least maybe nation states will own and capital will essentially manage and this can turn into financial assets.
Essentially, corporations would own what nature does, not just owning land. The governments would still probably own the land but capital would own the services that nature provides. And would manage it for enormous amounts of money. This is big accumulation as the Intrinsic Exchange Group (IEG) said, in their view: if discounted over the century, ecosystem services are worth four quadrillion (or $4,000 trillion) dollars all for the taking.
FRIES: And we should also note these initiatives target the Global South. As you say basically because financial gains from the expropriation of the earth in the name of management of natural capital and offsets are the greatest in the Global South.
Your articles detail ways this targeting is done. For example, the 2021 Glasgow Alliance for Net Zero initiative declared up front that carbon-mitigation financing to be made available for developing countries comes with strings attached. So financing will depend on a developing country willingness to fully open their economies to global capital.
In the case of the agreed plan for carbon trading and in the designs to promote a world market in offsets, the $100 billion developed countries promised to direct to the Global South is subject to debt leverage by multinational monopoly-finance capital
So John, just to clarify what we are talking about here with the financialization of nature and accumulation of nature are you saying that, in general, this involves the creation of financial claims so titles over natural assets and ecosystems, environmental services of various kinds that can then be traded and leveraged? Is that basically what you mean by the financialization and accumulation of nature?
FOSTER: Finance is really based on the promotion of debt. And from one perspective, money itself is a debt. But finance is based on the promotion of debt. And that means liens on the future revenue streams from underlying assets. What the debts represent or what the creditors get is revenue streams into the future.
So essentially, it means you’re selling whatever nature provides or revenue streams well into the future. In a lot of these proposals, it’s selling off what nature would produce or the revenue that it would generate if it’s reduced to exchange value over the next century or two.
And it is very dangerous. If you look back to 2007- 2010, the Great Financial Crisis, the whole financial system was really in danger of collapsing. And the structural changes that occurred at that time, and this is related to economic stagnation, are really still there.
The financialization, the growth of the debt economy, is in many ways at a much more extreme level then it was in 2007. And we’re looking at other financial crises that could occur, another conceivable Great Financial Crisis. This is because we create these debt bubbles, which expand the economy, but eventually the bubble bursts. The consequences are there.
Our economies are growing slowly but we are also expanding the debt bubble at the same time. So we’re in this sort of stagnation/financialization trap.
Well then if you try to financialize the whole of nature and try to run ecosystem services under capitalist principles regulated by structured investment vehicles, you’re basically bringing nature into this financial bubble.
But it’s absurd. Because the laws of nature (and we can talk about the laws of nature as the scientific world does meaning the biogeochemical processes of the Earth System) do not operate like capitalist markets. And actually attempts to monetize nature and treat it as a financial asset, as an economic asset, a stream of income in which we can impose debts and this will create revenue according to the innate power of capital and at the same time save nature, it’s really a fairy tale.
I mean, it’s worse than a fairy tale. It’s a complete fetish of capital and nature.
John Maynard Keynes once said that we’re in trouble when the underlying productive economy becomes a bubble on the financial system. But we’re now creating a situation where the earth itself is going to be turned into a bubble on the financial system which itself is a speculative enterprise.
There’s a famous statement by a 19th century chartist, Dunning, in his book on the trade unions that Marx quotes in Volume One of Capital. Where Dunning says: that capital we’ll do such and such for a 12% rate of return. And it’ll do even more; it will transgress laws for say a 50% rate of return. But for a 300% rate of return, it will lie and destroy and it’s willing to sell off humanity and the earth itself. And he points to the slave trade.
And I think that’s what we’re in the situation of. The returns are so great that capital is really mesmerized by this notion that ecosystem services discounted and projected over this whole century are worth four quadrillion dollars [$4000 trillion]. And then they can go in and have a piece of this. The fact that this is so destructive is ignored....
....MUCH MORE
If your goal is to make yourself a trillionaire it's best to be playing in a quadrillion-dollar sandbox.
