Although markets are uniquely powerful mechanisms for conveying information and altering behavior, they are ultimately social systems that rest on incomplete and ever-shifting foundations. That makes them an unreliable guide for navigating a problem as large and complex as climate change.
Katharina Pistor | Project Syndicate | March 16, 2021
How can one make wise decisions about a perpetually unknowable future? This question is as old as humankind, but it has become existential in light of climate change. Although there is sufficient evidence that anthropogenic climate change is already here, we cannot possibly know all the ways that it will ramify in the coming decades. All we know is that we must either reduce our environmental footprint or risk another global crisis on the scale of the “little ice age” in the seventeenth century, when climatic changes led to widespread disease, rebellion, war, and mass starvation, cutting short the lives of two-thirds of the global population.
The British economist John Maynard Keynes famously argued that investors are driven ultimately by “animal spirits.” In the face of uncertainty, people act on gut feelings, not “a weighted average of quantitative benefits multiplied by quantitative probabilities,” and it is these instinct-driven bets that may (or may not) pay off after the dust settles. And yet policymakers would have us trust animal spirits to help us overcome the uncertainty associated with climate change.
Humanity has long sought to reduce uncertainty by making the natural world more legible, and thus subject to its control. For centuries, natural scientists have mapped the world, created taxonomies of plants and animals, and (more recently) sequenced the genomes of many species in the hope of discovering treatments against all imaginable maladies.
Originally published by Project Syndicate. Read the full article here.