Venture capital, oil capital and the environment

"Venture Capitalists Ignite Bitter Fight With Push for California Oil Tax" reads the headline of a Wednesday (9/27/06) page one story in the Wall Street Journal (by George Anders and Rebecca Buckman). The story describes a struggle over Proposition 87 in California, which will impose a 6% tax on oil output to pay for research and development of alternative fuels. Big backers of the proposition include Vinod Khosla, a venture capitalist who made his money at Sun Microsystems; Google founder Larry Page;, Wendy Schmidt, wife of Google CEO Eric Schmidt, and John Doerr, "a prominent partner at VC [VC == venture capitalist] firm Kleiner Perkins Caufield & Byers." Oil companies of course are fighting back, with California-based oil giant Chevron taking the lead.

The struggle highlights one kind of split that is opening around environmental, and in particular, climate change, issues. In 2002, Joel Kovel wrote a book whose title, The Enemy of Nature: The End of Capitalism or the End of the World? (Zed Books), sums up one common line of thinking on the Left -- we either destroy capitalism, or it will destroy the world. As the publisher's blurb sums, "Kovel indicts ... capitalism as ecodestructive and unreformable." Capitalism is ecodestructive and unreformable in many senses, but splits like the one reported in the WSJ suggest another tack. And that is that a section of capital, maybe a decisive section, will recognize that capitalism and an environment capable of sustaining human life are not fundamentally incompatible. With a properly managed ecosystem, the expanded reproduction of capitalism can continue. All that is required for profit is the expropriation of surplus labor. Whether that takes place at an oil field or a solar panel factory is irrelevant.

If capitalism can negotiate the shift in the energy regime, in terms of the environment it can continue lumber along by creating a more and more tightly managed ecosystem. By "managed" I mean practices that will become increasingly aggressive over time, made possible by more and more sophisticated monitoring tools (e.g., satellites networks, ocean buoys, even microtransponders on insects -- see Radio frequency identification and tracking of individual ants engaged in colony scale division of labour); more use of genetically engineered organisms; computer-enhanced agri- and aqua- and silvi- and horti- culture (e.g., open ocean fish farms), private nature reserves, etc. Not all of these are "bad", the point mainly is that capitalism, or globalization-as-capitalism-in-the-age-of-electronics will create a new ecosystem, just as every production regime has done in the past, to maximize its continued existence (see The Ecosystem of Globalization for a bit more on this). Paul Burkett's 1999 book Marx and nature: A red and green perspective (New York: St. Martin's Press) is pretty good on the environment and the "limits of capitalism": "We may not like it, but the fact is that capitalism can survive any ecological catastrophe short of the extinction of human life." p. 192)

A chart accompanying the WSJ article mentioned above indicates a dramatic growth in VC investment in green technologies -- over $350 million in the first half of the this year, well beyond the slightly more that $200 million in all of last year. The WSJ article points out that Proposition 87 in California is being championed by sections of capital that have invested in green technology and stand to gain if it succeeds (money from the oil sector is transferred to the green energy sector). Prop 87 has become the arena in which this struggle between sections of capital are fighting out this struggle over the environment -- the natural conditions within which capitalism operates -- but this struggle takes place on capitalist terms. While we all benefit, I suppose, by now choking to death from smog or dying from heat exhaustion or drowning in coastal flooding or frying in UV radiation, the fundamental crisis is not resolved. And by fundamental crisis I mean capitalism's destruction of humanity (does this statement need to be justified?)

[An aside: venture capital has a connection to speculative capital (uses pools of otherwise idle capital, absorbs risk of new research, chance of big payoffs not through direct expropriation of surplus value but via the transfer of value due to either monopoly rents or individual value transforming into social value made possible by "intellectual property" monopolies, volatility of outlook for new firms provides playground for speculative capital, no doubt more connections)]

jd