The following article and interview with PRIME’s director written by Hettie O’Brien, appeared in the New Statesman on 24th September, 2019. Please note the error at the end of the piece: Since the Paris Climate Agreement three years ago, J.P. Morgan Chase have reportedly lent $196 billion, not $1.96 billion to fossil fuel industries, oil, coal and gas. The figure is drawn from the Rainforest Action Network’s 2018 Report, Banking on Climate Change.
Ann Pettifor is a Director of Policy Research in Macroeconomics (PRIME) and a Council Member of the Prgressive Economy Forum
Cross posted from Progressive Economy Forum
Eleven years ago, a group of economists and green thinkers devised a radical plan to transform the economy and protect the environment. Today, their ideas have been embraced by Labour and US Democrats.
Since a group of Labour activists began agitating for the party leadership to adopt a Green New Deal in March this year, the radical environmental policy has come suddenly and fiercely into play. On the final day of the party’s annual conference, delegates overwhelmingly voted for a version of the plan that would commit a Labour government to net zero carbon emissions by 2030.
The Green New Deal connects economic and environmental policy, encompassing a dramatic increase in green energy investment, an end to airport expansion and fracking, and a programme of green jobs creation. These ideas have precedents – most obviously in the form of F.D. Roosevelt’s eponymous state investment programme in the wake of the 1930s Great Depression. But the origins of the UK’s Green New Deal are more recent.
Shortly after the 2008 financial crisis, a group of economists and environmentalists, including the future Green Party leader Caroline Lucas, met regularly at a small Baker Street flat belonging to the economist Ann Pettifor. They argued furiously, sustained by comfort food and wine, and drafted a plan to overhaul the economy and protect the environment. Little did they know that their ideas, which were met with a tepid response at the time, would later become a focus of the current US presidential campaign, or a key plank of the Labour Party policy.
I spoke earlier today with Pettifor about the origins of the Green New Deal, and why it took eleven years for the idea to achieve political prominence. Our conversation has been edited for clarity.
You were one of the godmothers of the Green New Deal as we know it. Why was it ignored when you first proposed the idea in 2008?
It was the nature of the crisis. People didn’t understand what had happened in August 2007, when the whole system froze. The ATMs closed down, and it took until a year and a half later, in October 2008, before people realised there was something wrong. And when I say people I mean economists, government, policy makers and journalists.
The report was eclipsed by the collapse of Lehman Brothers. At the time, everybody thought, “oh, just a bunch of lefties, what wishful thinking”.
It didn’t grip the public’s imagination in the way that Alexandria Ocasio-Cortez has managed. She happened upon the demonstration of the Sunrise Movement in Congress, which triggered the profile of the movement – and raised it dramatically.
This is always a bottom-up thing. You’ve got to build the movement; sometimes it takes eleven years.
What were the ideas behind your original thinking?
Our proposal was a creative, collective process. What made it unique was that we understood that the finance sector, the economy and the ecosystem are tightly interconnected. You can’t deal with one without dealing with the other. You can’t have a capitalist, carbon-belching economy, or delusions of exponential growth, and believe you can achieve ecological targets within that. We argued that finance, economy, and the environment are integrated – and that you need a joined-up policy that deals with all three.
When I studied the history of Roosevelt’s New Deal, I saw how he did the same thing; he met the challenges of unemployment and economic collapse, fixed the dust bowl, and had to subordinate the financial system to the interests of the democratic state.
We spent a year fighting and arguing at my flat, in an old mansion block off Baker Street. The economists had enormous arguments with the environmentalists, who weren’t persuaded by what we were saying, and were very sceptical about our position on the finance and banking sectors. It took the economists a long time to persuade the green members of the group that they had to think like us. And the green members of the group had to educate us, about understanding the scale of the crisis. It was a mutually beneficial relationship – we sulked, and got cross with each other, and had real arguments about how to do all this.
We found that the green movement talk about behavioural change and community change, which is terribly important, but you can’t talk about changing our relationship with nature without also changing the economy. The finance sector issues credit, which fuels consumption and production, and consumption and production fuel emissions. So we argued that there is a line running between credit creation, consumption, production and emissions – and unless you draw that line, and manage the whole of it, you’ll never address the problem.
So what does the Green New Deal have to do with F.D.R’s New Deal?
The really key thing about the New Deal was that it transformed the financial system. Roosevelt decided he was going to act to dismantle the Gold Standard, a global financial system decided by private authority – i.e. with Wall Street and the City of London calling the shots. He said no: he was responding to high levels of unemployment, the ecological crisis of the dust bowl, and he saw that it had to be government calling the shots, not Wall Street.
Roosevelt demanded that the banks hand over their gold. Everyone thought he closed the banks to fix the banks, but it was actually to force them to hand over their gold so he could stop United States’ currency being measured in terms of gold. His position was that the value of the American currency should depend on the health of the American economy. That was a profound move. Of course, historians and economists largely ignore that aspect – it’s a bit of history they’d like to forget.
People have criticised environmental movements like Extinction Rebellion for being a largely middle-class affair. How could something like the Green New Deal get working-class support?
I’m always reminded by people of Ken Livingstone when he introduced the congestion charge – all of his advisers said this would be the political death of him. On the day he introduced the congestion charge he put 300 new buses on the streets of London. That gave people an alternative.
The gilets jaunes in France don’t have an alternative for getting around rural areas. The government hasn’t provided them with an alternative transport system, and then it’s clobbered them with the carbon tax, so rightly they’re objecting. The government has to invest in alternative energy, transport, and land use systems. We can do this in a way that is really very good for working people.
OK, but what are the challenges you can foresee with this type of radical action?
My reservations come back to the question of financing. To achieve zero carbon by 2030, we’d have to close down coal, gas and oil companies, and compensate them, and provide for and support their workers.
I very much doubt that Labour can mobilise this domestically, because the global financial system is still in the driving seat of deciding who gets financing for what. Research from the Rainfores Alliance shows J.P. Morgan Chase has reportedly lent $1.9bn dollars to fossil fuel firms since the Paris climate agreement was reached. The banks are the robber barons of coal, gas and oil.
To return to the key point about the original New Deal, the very first thing Roosevelt did was to subordinate Wall Street to the interests of the country. Labour won’t talk about this very specifically – but it won’t be able to mobilise the finance needed within a very short time without better management of finance. To talk about these ambitious goals, we have to talk about the money system.