Exploring the Theoretical Link between Profitability and Luxury Emissions

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. Grounding on the distinction between subsistence and luxury emissions, we make use of the ‘integrated wage-commodity sector’ model to study where to intervene in reducing non-essential emissions. 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 CO 2 emissions. Three different scenarios (‘greener production’, ‘reformist’, and ‘just transition’) are depicted and connected to the possible policy actions to be undertaken to address jointly social and environmental issues. The just transition scenario seems to be the only viable option to respect both social and environmental boundaries