Terry McGrenera argues that the present crisis provides the opportunity for radical change in economic and environmental policies – but time is running out
THE present global economic woes can be traced back to the abolition of regulations that were put in place during the Great Depression by Franklin D Roosevelt. The Glass-Steagal Act offered protection for ordinary depositors by stopping commercial banks from acting like investment banks. This measure was followed by a number of other steps to police Wall Street. It was all part of Roosevelt’s New Deal in the United States. The President’s purpose, he said with biblical resonance, was to chase the money-lenders from the temple of civilisation and to restore it to its ancient truths. “The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”
In the spring of 2007, a group of politicians, economists, journalists and environmentalists came together to draw up a plan they called the “New Green Deal”. They recognised that the present global economic system is destined to lead to the destruction of the resources on which the wealth of the world relies. For the survival of the planet, the whole ethos of the present capitalist model had to change. It was not so much the economy, stupid; it was the stupid economy.
The template for survival they devised is based on the series of measures that Roosevelt deployed after the Wall Street Crash of 1929, coupled with steps to stabilise the degradation of the environment. They propose a structural transformation of the regulation of national and international systems, as well as major changes to taxation systems. On the environment, they call for a sustained investment programme for conservation and renewable energy.
In July 2008, they published their first report. This sought to set out a solution to what they called the “triple crunch” the global economy is facing as a result of the credit-fuelled financial crisis, accelerating climate change and the coming energy crisis.
The Green New Deal differs from its 1930s predecessor in that it advocates a greater role for investment from private savings, pensions, banks and insurance. The 2008 financial and economic downturn, with the biggest monthly rise in unemployment for 17 years, has not reached the scale of the Great Depression, but it is set to continue as the debt-fuelled demand is curbed in response to the present credit crunch. In order to fill the deflationary gap, the Green New Deal proposes that investment in projects which are labour intensive, generate huge possibilities in terms of environment-friendly jobs and help to solve the triple crunch.
In addition, they believe the Green New Deal can deliver a crucial national plan for a low-energy future. What they propose is a route map for the transition from energy and economic insecurity to energy and environmental security.
In order to publicise their report, some of the contributors have been speaking at meetings over the past few months. One was held at the Green Party’s annual conference at London University. Colin Hines, author of Localisation – a global manifesto, said the present credit crunch is a rerun of what happened in 1929. While the Government maintains Britain is well placed to survive the hard times over the next couple of years, Hines disagrees. “Britain will be clobbered far harder because gutless politicians allowed the financial sector to prosper.” However, the situation does provide an opportunity to present “the absolute and unavoidable political imperatives for dealing with rising unemployment and a slump in economic activity”. In essence, that is what The Green New Deal proposes in a series of measures.
The money for public works would come from closing tax loopholes that cost the economy billions of pounds each year. Pension funds would be invested in plans to create a low-carbon economy. This would include making every building a power station and involve not just “loft laggers” but also training a “carbon army” of workers to provide the human resources for a vast environmental reconstruction programme. It would be part of a wider shift from an economy narrowly focused on financial services and shopping to one that is an engine of environmental transformation.
Other proposals include establishing an oil legacy, paid for by a windfall tax on the profits of energy companies. The revenue raised would help to pay for the effects of climate change and smooth the transition to a low-energy economy. Finance would be returned to its role as servant, not master, of the global economy.
Returning money to public ownership is what Ann Pettifor, author of The Coming of the First Global Debt Crisis, wants to see. Interest rates have to be kept low. This can be achieved if there is control over credit and the creation of money, and restrictions put on the movement of capital.
Flawed monetary policies are turning the credit crunch into a catastrophe. What is needed is a government with the political will to act on behalf of the people and not the discredited financial institutions that caused the credit crisis in the first place.
Also, the world must stop being dependent on fossil fuels. The concept of “peak oil” was dismissed for many years by the International Energy Agency. That changed in 2006 when it was conceded for the first time that there is a problem. In 2007, two chief executives of major oil companies admitted that demand was outstripping supply.
Tony Juniper, former director of Friends of the Earth, doubts that Gordon Brown’s Government is capable of making the changes necessary for the transition to a low-energy economy. In July 2007, the Prime Minister flew to Saudi Arabia to ask its rulers if they could increase oil production. Juniper’s view is: “We have not managed to find the idea that will enable us to adapt to a low-carbon economy. There has been some success in preventing airport expansion and setting renewable targets, as well as raising public awareness, but none of them is anything like sufficient to produce the kind of change that is required.”
What we need is an end to the Government’s contradictory and self-defeating policies towards climate change. There has to be fundamental, structural and institutional action to prevent climate change.
New Economics Foundation director Andrew Simms believes there are just 100 months to stabilise concentrations of greenhouse gases in the atmosphere. As George Monbiot has reminded us, the words “economy” and “ecology” are both derived from the Greek word oikos – a house or dwelling. And Monbiot says: “Our survival depends on the rational management of our home. The financial crisis provides us with an opportunity to rethink our future that is not available during periods of economic success.” The credit crunch provides the opportunity to implement the Green New Deal.
Terry McGrenera is editor of The Green Paper – politics for the planet and its people
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