4 Sep 2008
The Green New Deal developed by the New Economics Foundation is the current big thing in some circles, it will be pushed strongly at this weekend's Green Party conference.
I can imagine the dream of some is that the Green Party elects three MPs at the next General Election and that the New Deal can be put on the table as part of a coalition deal, a deal that would create a National Goverment to combat the crisis of climate change and recession.
Essentially it echoes the New Deal of the 1930s which Roosevelt introduced to tackle the depression when millions were unemploymed. £bns will be poured into a programme of renewable energy, creating new jobs and lifting Britain out of recession.
Proposal’s set out in the Group’s report include:
* Executing a bold new vision for a low-carbon energy system that will include making ‘every building a power station’.
* Creating and training a ‘carbon army’ of workers to provide the human resources for a vast environmental reconstruction programme.
* Establishing an Oil Legacy Fund, paid for by a windfall tax on the profits of oil and gas companies as part of a wide-ranging package of financial innovations and incentives to assemble the tens of billions of pounds that need to be spent. These would also include Local Authority green bonds, green gilts and green family savings bonds. The monies raised would help deal with the effects of climate change and smooth the transition to a low-carbon economy.
* Ensuring more realistic fossil fuel prices that include the cost to the environment, and that are high enough to tackle climate change by creating economic incentives to drive efficiency and bring alternative fuels to market. This will provide funding for the Green New Deal and safety nets to those vulnerable to higher prices via rapidly rising carbon taxes and revenue from carbon trading.
* Minimising corporate tax evasion by clamping down on tax havens and corporate financial reporting. A range of measures including deducting tax at source for all income paid to financial institutions in tax havens would provide much-needed sources of public finance at a time when economic contraction is reducing conventional tax receipts.
* Re-regulating the domestic financial system. Inspired by reforms implemented in the 1930s, this would imply cutting interest rates across the board– including the reduction of the Bank of England’s interest rate - and changes in debt-management policy to enable reductions in interest rates across all government borrowing. This is designed to help those borrowing to build a new energy and transport infrastructure. In parallel, to prevent inflation, we want to see much tighter regulation of the wider financial environment.
* Breaking up the discredited financial institutions that have needed so much public money to prop them up in the latest credit crunch. Large banking and finance groups should be forcibly demerged. Retail banking should be split from both corporate finance (merchant banking) and from securities dealing. The demerged units should then be split into smaller banks. Mega banks make mega mistakes that affect us all. Instead of institutions that are ‘too big to fail’, we need institutions that are small enough to fail without creating problems for depositors and the wider public.
I have a number of slight doubts about it. I think while a lot of the practical policies are good, the bigger picture remains, infinite economic growth on a finite planet is unsustainable. The Green New Deal is in essence Keynesian and the underlying aim of Keynesianism is to pump in cash when the economy ceases to grow to keep it growing.
Ultimately we have the logic of heroin addiction, crisis occurs if the addict cannot get hold of his or her smack. The economy needs more growth if it is not to move into crisis. In reality we need to go through cold turkey and move to an economy which is not based on ever increasing economic growth.
This is the big issue, to some extent perhaps to a great extent the Green New Deal provides for transition but there are profounder issues at stake.
My approach would be to look at ways of increasing prosperity with less consumption, from permaculture to zero waste to making goods to last longer to various forms of social sharing, we can grow richer with less GDP. This is an area of debate, I would argue an area of debate vital to the survival of decent human existence which is missing from the Green New Deal.
There are plenty of critics who argue that Keynesianism failed in the 1970s and will fail again, my view is much of this failure was due to oil shock. Massive oil prices in the 1970s push up both inflation (Keynesians deal with inflation by increasing borrowing) and unemployment (Keynesians deal with unemployment by cutting borrowing).
So may be a solution to high oil prices can square the Keynesian policy failure...however I suspect it is not quite this simple.
Another problem is the politics. How can this be translated into action? Well my starting point is to say that there is one country which is already under taking the Green New Deal. Not in this Keynesian form but with an aspiration and framework which is rather more radical. In Venezuela cash from oil is being turned into renewable energy plans, organic agriculture, etc. So a bit of reference to this and practical solidarity would be useful. I think some green plans can be a bit abstract.
National government, well may be, but I suspect that the risk is that Green Party MPs in Britain might find it difficult to go into coalition with any of likely partners.
Camerons conservatives are moving right ward I suspect, there is no suggestion of a Green Party deal with the Tories. New Labour well, can you imagine, keeping the Tories out to retain New Labour, I don't think so. The German Green/SDP coalition was based in my opinion on some very dubious movement of the Greens to a party that tolerated war and neo-liberal cuts. However the SPD were certainly redder and greener than New Labour.
Even the Liberal Democrats seem to be moving in a less green direction, they are certainly more market liberals and more concerned with tax cuts than in the past. The radical green liberal fringe is I suspect far far weaker than at any time in the last thirty years.
The big hegemonic task if one is not in 'power' must be to push positive demands but also to raise a more fundamental critique of growth, the market and the domination of the planet by short term greed.
My new deal is a new deal for the indigenous, my new deal is about ending enclosure, my new deal is to proclaim that the rainforests and fragile habitats are being eroded by oil production, gold mines, coal fields and mega roads. A very big part of the solution is power to the indigenous.
So I think my most profound doubt about the New Deal is that there is no mention of the indigenous, yet as we have seen in Peru just a few days ago, the indigenous in their demand to retain control of their land is the really big story for all serious Greens.
Workers plans and green strikes need to be in as well. A real discussion of property rights and commons is absolutely crucial.
NEF do some good work but I am more sold on the Corner House who seem to have a much more sophisticated critique of capitalism, they also get involved in some very hands on political action (look at how they have fought in the BAE scandal) and there starting point politically is always the grassroots community.
I think some people are scared when you talk about grassroots solutions that treat both the state and the market with scepticism...but the Corner House shows that such solutions have real power.
The indigenous want to keep the oil in the soil and the indigenous ethic of 'good living' in Peru and across Latin America opens up discussion of economic alternatives that truly are sustainable. Those who care about Pachamama are worth listening to.
Keynes had his moments but famously argued that he we had to go on treating 'foul as fair' maintaining an economic system based on capitalism and greed....we can no longer going on doing this.
Posted by Derek Wall at 11:14 am