Exploring the theoretical link between profitability and luxury emissions

Stefano Di Bucchianico and Federica Cappelli

No PKWP2114, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: Given that the richest 10% of the world population is responsible for more than half of global greenhouse gas emissions between 1990 and 2015, understanding the sources of excessive consumption of wealthier households and the ways to reduce them becomes especially important. Indeed, subsistence emissions are the emissions generated to satisfy basic needs, while luxury emissions are those generated to satisfy non-basic needs and that can, thus, be avoided or reduced. We make use of the ‘integrated wage-commodity sector’ model to study this issue. By using this model, we are able to connect the double role of luxury goods. On the one hand, they are the main reason why profits exist (together with surplus production of other wage-goods), given that profitability stems from surplus production delivered by workers. On the other hand, they are the major constituent of wasteful luxury consumption and, hence, major drivers of CO2 emissions. Three different scenarios (‘green growth’, ‘reformist’, and ‘just transition’) are depicted and connected to the possible policy actions to be undertaken to address social and environmental predicaments. The just transition scenario seems to be the only viable option to respect both social and environmental boundaries.

Keywords: rate of profit; luxury goods; GHG emissions; decent living standard; climate change (search for similar items in EconPapers)
JEL-codes: B24 Q52 Q57 (search for similar items in EconPapers)
Pages: 26
Date: 2021-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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