Caitlin Moran (1975 – ) defines Schrodinger economics as a situation where some few people (and corporations) are both wealthy and entitled, yet too poor to pay for the materials they profits from. They want to move fast and break things, as long as that which is broken originally belonged to someone else, preferably someone poor.
I mention this as the situation arising as heat aka climate change is expected to end capitalism, possibly in the next ten to twenty-five years. So the few rich people are the capitalists, while the things they break are the lives of everyone else. What follows is a summary of an article Damian Carrington, Environment editor of the Guardian, published on Thursday, 2025-04-03. Quotations by specialists have been eliminated and replaced by more generalized comments.
The climate crisis is on track to destroy capitalism with the vast cost of extreme weather impacts leaving the financial sector unable to operate, because the world is approaching temperatures where insurers will no longer find it profitable to cover many climate risks. Yes, this includes your house. Insurance and other financial services from mortgages to investments may not be viable.
Global carbon emissions are rising with an estimated rise in global temperature between 2.2C and 3.4C above pre-industrial levels. There are claims that damage at 3C will be so great that governments will be unable to provide financial bailouts, and it will be impossible for companies and governments to adapt to many climate impacts.
At the core of the insurance industry is risk management. While many insurance companies have taken the dangers of global heating very seriously, they have failed to communicate their concerns to their clients. So, these clients have done nothing but promote the status quo, which means using fossil and other forms of combustion, rather than switching to zero-emission energy. Thus, companies do not sense urgency, or have any idea of the scale of change required.
As temperature levels increase, insurers will no longer be able to offer coverage for many risks. Premiums will exceed what people or companies can pay. Entire regions are becoming uninsurable, such as home insurance in California, due to the risk of wildfires. Insurance is the foundation of the financial sector, an inability to insure something means other financial services become unavailable. This situation applies to housing, infrastructure, transportation, agriculture and industry. This means that the economic value of entire regions will begin to vanish. Some analysts predict that markets will experience a rapid and brutal repricing, resulting in a climate-induced market failure.
Beyond this there is a civilizational threat posed by climate change. While it may initially affect the global south, challenges in more northerly regions will quickly follow. Heat and water destroy capital. Overheated cities become uninhabitable. Governments will be unable to cover the damage when multiple high-cost events happen in rapid succession, as climate models predict. Australia’s disaster recovery spending has already increased sevenfold between 2017 and 2023.
Civilization cannot adapt to worsening climate impacts: “There is no way to ‘adapt’ to temperatures beyond human tolerance. There is no way for cities built on flood plains to move uphill.
In other words, at 3C, climate damage cannot be insured against, covered by governments, or adapted to. That means 1) no mortgages, 2) no new real estate development, 3) no long-term investment, 4) no financial stability. The financial sector ceases to function. Capitalism ceases to be viable.
The only solution was to cut fossil fuel burning, or capture the emissions, he said, with everything else being a delay or distraction. He said capitalism must solve the crisis, starting with putting its sustainability goals on the same level as financial goals.
Many financial institutions have moved away from climate action after the election of Donald Trump, who has called such action a “green scam”. However, the cost of inaction is higher than the cost of transformation and adaptation. If the transition succeeds people will enjoy a higher quality of life. If I add my own personal addendum, it would be … without capitalism.