Even before the coronavirus crisis, financial insecurity, economic polarisation and environmental degradation had become hallmarks of our hyperglobalised era. These trends are closely interconnected and mutually reinforcing, in ways that can give rise to vicious economic cycles, deep social insecurity and ecological collapse.
The pervasive rise of anxiety has coincided with a sharp erosion of political trust as income gaps have widened around the world, and the policy agenda has bent to the interests of the wealthy. Even after the deep social and economic damage of the 2008 global financial crisis (GFC), the rules of the economic game that led to that crisis have remained largely intact, leading to increasing resentment, which has often used by the powerful to stoke division.
This breakdown in trust has occurred at the very moment that bold collective action is required to deal with the challenge of a global pandemic. Our sense of shared responsibility and mutual solidarity is being tested by the coronavirus outbreak, which has already taken a heavy human toll, imposed a sudden stop on large swathes of economic activity, and triggered a deepening financial crisis.
A Global Response
Beyond the immediate likelihood of a global recession, we face a series of structural challenges that not only predate the current crisis but also contributed to the GFC and have gone largely unanswered since then. Four stand out: the falling income share of labour; the erosion of public spending; the weakening of productive investment; and the unsustainable increases in carbon dioxide in the atmosphere. If these trends continue to worsen at their current rates, the world of 2030 will be economically unstable, highly unequal and many parts of it will be uninhabitable.
In light of these trends, it is critical for governments across the world to confront the “tragedy of the horizon” – whereby the impact of future challenges is underestimated or ignored in the pursuit of immediate goals. States must tackle income inequality, increase public investment, and build fairer societies within their domestic economies. But they must also coordinate across borders to develop global solutions to global problems.
The Global Green New Deal is a set of policy interventions that will allow policymakers to achieve each of these aims, whilst also decarbonising the global economy. The threat of global warming requires immediate action to reduce greenhouse gas emissions and stabilise the Earth’s climate. Recent studies have made it clear that if we fail to change course, we are only a few decades away from disastrous ecological losses. Moreover, a successful response to the climate crisis will have multiple ecological benefits, such as cleaner air and oceans, and related improvements to health and wellbeing.
Less obvious, but also important, is the economic impact of climate policy. A wave of green investment, like that outlined in UNCTAD’s proposals for a Global Green New Deal, would be a major source of income and employment growth, contributing to a strong global recovery. Many, though not all, of the jobs created by green investment are inherently local and involve training in new skills. Such investment would complement and amplify the public push needed to bolster healthcare systems, indeed the wider care economy more generally, in response to the current pandemic.
Private Financing Delusion
There is still a good deal of debate around how to pay for the big investment push behind a Green New Deal. There shouldn’t be.
A dominant narrative calls on the private sector to do the job. Whether by appealing to their “better angels” (through pleas for social responsibility) or their economic self-interest (through impact investment), the goal is to find ways to entice high-net-worth individuals and corporations into providing the financial resources necessary to deliver public goods. In a world of financial chicanery, private equity and tax havens none of this is remotely credible.
Many policymakers have called on public and private bodies to “maximise finance” available to green investments by using ‘innovative’ financial products and techniques, underpinned by public guarantees and subsidies to reduce risk. If these terms sounds familiar, they should do; the products and techniques suggested are the very same ones that inflated and then burst a massive financial bubble in 2008.
This bias towards private financing has continued to go unchallenged, even as such schemes have consistently failed to deliver desired outcomes for the productive economy, whether in the private or the public sector. To achieve the aims of the Green New Deal, we must move beyond this kind of thinking.
Banks will, of course, be required to support public efforts, but serious banking reform has not taken place since the crisis. The best way to make the banking system work for people and planet is to expand the role of public banks, which can provide patient capital used to achieve collective goals and promote socially-useful activities. The paradox is that, just as governments are calling out for much more long-term investment, they are exhibiting little willingness to give their public banks the tools for the task.
Building a policy narrative around a Green New Deal requires rejecting the notion that markets always know best and an acknowledging that governments should not only underwrite risks, mitigate failures and fill gaps left by the private sector, but also direct resources towards socially-useful activities themselves.
For such state-led efforts to work, governments will have to work together. Multilateral support and coordination is essential, particularly for developing countries whose growth trajectory will determine the future of the planet. The erosion of multilateral principles by the forces of hyperglobalisation certainly poses a big challenge in taking the Green New Deal global.
We need a new multilateralism to strike a better balance between the external pressure placed on many states – through extractive free trade agreements, bilateral investment treaties and open capital accounts – and the collective action those same states will need to manage global public goods and mitigate common risks. Above all, this new multilateralism should ensure that no nation’s pursuit of the goals of a green new deal infringe on the ability of other nations to do the same.
The “Geneva Principles for a Global Green New Deal” describe how states can work together to build a multilateral system that can meet the challenges of our age. These principles are based on five strategic, long-term goals:
- a productive global economy built around full and decent employment at liveable wages;
- a just society that targets closing socio-economic gaps, within and across generations, nations, households, race and gender;
- a caring community that protects vulnerable populations and promotes economic rights;
- a participatory politics that defeats policy capture by narrow interest groups and extends the democratic principle to economic decision making;
- and a sustainable future based on the mobilisation of resources and policies to decarbonise growth and recover environmental health in all its dimensions.
In a highly interconnected and mutually dependent world, we must let go of the idea that it is up to each of us to solve our problems ourselves. States, businesses and individuals will need to cooperate across borders to deal with the defining challenges of our age. The Global Green New Deal provides us with a blueprint to do just that.