Much speculation surrounded the ideological shift that the economic policy of the new Colombian government might undertake. Some mentioned socialism and communism. However, after a year of the new administration, it’s clear today that the guidelines being pursued in Colombia can be defined more as green capitalism, driven by a new coalition with progressive tendencies. While this isn’t a radical shift that caused concern among some, it still revolves around a model based on wealth creation. Thus, the question that arises and the debate that the business and economic community should be engaging in is how profitable and viable sustainable green capitalism can truly be (with more emphasis on the sustainable aspect than on capitalism itself).
This new approach, revolving around energy transition, pollution reduction, and North-South social justice, has become the flagship of the Gustavo Petro government, receiving praise and applause on various global platforms, including Davos, the heart of the capitalist world. Nevertheless, there are also those who regard it skeptically, labeling it as naive or populist. There’s no doubt that the world needs change, even if it generates understandable fears for many. Both multilateral organizations and science endorse the call for an economic and trade policy shift to alleviate the plight of the impoverished and to reverse the accelerated climate change that is becoming increasingly evident.
The Opportunity to Industrialize the Global South
The primary engine for wealth and change on a global scale may seem contradictory, but it isn’t. The necessity to industrialize the Global South using cutting-edge technology and knowledge, where the largest concentration of vulnerable populations resides, could bring multiple benefits to the global business community, planetary sustainability, and the significant migratory flows that are causing unrest in wealthier regions.
On one hand, investments required to industrialize vast regions of Africa and Latin America using advanced technology indispensably need participation from the more industrialized countries. These countries would need to contribute through financing and executing high-impact projects, fostering a circular economy that would benefit both zones in the short and long term. For instance, the case of green hydrogen promoted jointly by the governments of Colombia and Germany will necessitate substantial injections of capital, partially originating from Germany, to invest in technology provided by German companies. This will enable Colombia to establish plants capable of producing millions of tons to supply the German market in the not-so-distant future.
Similar cases can emerge in other industries such as lithium, solar and wind energy, sustainable local-scale agricultural production, technological production decentralization to enhance regional competitiveness, reduction of lengthy global trade flows caused by globalization, reinforcement of online markets and intelligent distribution, among others. These fields of economic industrialization will require trillions of dollars, which will be channeled to companies and workers both in developing and industrialized countries.
Energy and Trade Transition as Drivers of Innovation
Capitalist systems often drive innovation. When there’s a profit incentive to develop clean technologies or sustainable practices, companies are more likely to invest in these areas. As the Colombian president has noted, one of the United States’ greatest needs is to renew its energy matrix, and the solution could lie in the potential energy sources in Latin America. However, this energy transition is not merely a technical adjustment but a profound transformation requiring a fundamental shift in the conception of value and priorities that underpin the wealth sustaining humanity and the economy.
Sustainability vs. Greenwashing: The Role of Institutions
The significant risk in corporate responsibility lies in the honesty of corporate practices. It’s imperative to prevent the commodification of sustainability by large corporations for the purpose of issuing falsely just and ecological statements. Therefore, as Joseph Stiglitz suggests, the only way to ensure coherence in new global trade and production policies requires strong involvement from local, regional, and multilateral governments. The Colombian government is already taking steps in this direction and has garnered support from various governments and multilateral organizations. Initiatives such as debt-for-climate-action swaps or the establishment of a supranational entity in South America to protect the Amazon from deforestation and illegal mining have been proposed.
Think Global, Act Local
Globalization has shown that humanity can cultivate pears in Argentina, pack those same pears in Thailand, and sell them in Canada. This might seem absurd today, but two decades ago, it showcased the sophistication of supply chains that we’ve developed as a civilization. Therefore, it’s time for large corporations and developed countries to start decentralizing expensive and distant supply chains, creating productive capacity in poorer regions of the world that have traditionally imported everything from industrialized nations. Even more crucial is redesigning agricultural and food supply chains to restore food security to regions in the global south that have seen their agricultural sectors decimated due to the inability to compete with subsidized agriculture in North America and Europe.
The Paradigm Shift
The pivotal question to ask is mainly symbolic: what is the intrinsic value of our efforts, and what guides our actions? Until now, exponential growth and the accumulation of capital have been the sole measures of success. However, we’ve reached a point where inequality, global ecosystem disruption, and political instability are impossible to ignore. All of this is a result of the unbridled accumulation race of the last three centuries, leading corporations and even individuals to be wealthier than some countries in Africa or Latin America. We’re not trying to deceive anyone; this change, though symbolic, is the most difficult and complex. Market fundamentalists, global multi-crisis deniers, and traditional capital accumulation enthusiasts may argue it’s unfeasible. However, humanity can’t remain in discourses that criticize without proposing alternatives. The value of businesses must shift towards new technologies, generating high-impact social value, and especially sustainable practices at human, social, and environmental levels.
In Conclusion
Looking at the discourses of the IMF, governments, and multilateral organizations like the UN and EU, there’s almost unanimous awareness of the need for change redirecting the global economy and trade towards a new approach to creating and, most importantly, distributing wealth to reduce inequality and the impact on the planet’s nature and climate equilibrium. There’s no doubt about this anymore; beyond political speeches, science vehemently confirms it. Humanity possesses the capital and creative capacity. Investments in new technologies and major projects must happen, with increasing urgency. These resources must be channeled through companies and entities, as capital isn’t a self-determined entity but responds only to the interests and objectives defined by humans. In the face of these factors and needs, green capitalism is not only viable but imperative. Though risks and challenges are inherent to this transformation, the need for change is undeniable. Colombia, with its privileged position, has the opportunity to lead in the transition towards sustainable green capitalism that prioritizes both social justice and sustainability equally. The debate is no longer about the viability of green capitalism but rather about how to implement it effectively and equitably.
