December 2007: The Environmental Keynesian Alternative

Environmental crisis calls for World-War-II-type collaboration
December 1, 2007

As people become ever-more aware of climate change and ecological crisis, they are worried, anxious, and looking for solutions. Forgive me if I'm a heretic, but I think the time has passed for telling them to change their behaviour and their lightbulbs, claiming that if "we" all do this, then together "we" can save the planet. I'm sorry, but "we" can't.

I'm not suggesting that people shouldn't change their behaviour and their lightbulbs -- of course they should -- but even if we all were to change our habits drastically -- and I won't waste time pointing out how unlikely that is -- it is not going to be enough. We have also got to scale up and power up in terms of governments and capitalist economic practice. We have a problem of scale.

My premise is that local solutions are insufficient, so the question I wrestle with is: Can we save the planet while international capitalism remains the dominant system, with its focus on "shareholder value" and with ubiquitous, no-holds-barred finance capital making more and more decisions world-wide?

Most days I answer: No, there is no way we can reverse the ecological and climate crises under capitalism, but that is a despairing answer and, if true, it means there is virtually no hope. No hope, because I do not see how even the most convinced, most determined people could replace, much less overthrow capitalism fast enough to carry out the necessary systemic change before a runaway climate effect takes hold.

First of all, there are not that many convinced and determined people prepared to act against the dominant economic system, and there is nothing that resembles in the smallest degree an avant-garde political revolutionary party that might lead them, even if they existed. There is no one-size-fits-all replacement solution for capitalism.

Considering the historical role of such parties and such solutions, I consider this an unmistakably good thing. What is definitely not a good thing is the infection of the entire world with neoliberal ideology. It has created a more conservative, profit-oriented world that is allergic to the kind of fundamental change a New Ecological Economic Order requires.

It's no longer just a matter of "what if they gave a revolution and nobody came." It's also that nobody knows who the Czar is and nobody has a clue where the Winter Palace is that we would have to storm. The Winter Palace is certainly not on Wall Street, which was up and running again just a few days after September 11. The worlds of 1917 and 2007 are utterly different, so we must try to go beyond this impasse, this dead-end, and find a new synthesis.

Let me take first the slightly easier question: "What about governments?" People are generally way ahead of their governments -- perhaps not in China, but certainly in countries like the United States. The problem is not simply to "throw the rascals out," because they would be replaced by other rascals just as bad, equally beholden to the corporations, their lobbies, and the financial markets. The problem is to convince politicians that ecological transformation and environmental practices can pay off politically.

Activists and experts have got to work with local, regional, state and national politicians and governments; help them to find like-minded partners and formulate ambitious projects they can undertake on the broadest possible scale. Activists and experts must furthermore help these politicians and governments to become shining ecological examples with the electorate by publicizing their efforts and their successes.

We could hold a recognition and awards ceremony every year with original, attention-catching prizes for the best governmental initiatives, large initiatives, because best ecological practice is still pretty much small scale and often closer to folklore than to believable political undertakings. We must promote and provoke a quantum-scale leap.

The more difficult and crucial issue concerns the economic system as a whole. In his book Collapse, Jared Diamond examines several cases of previous societal extinctions due to over-exploitation of the environment, and identifies several common characteristics. One of these is the isolation of the élites, giving them the capacity to keep on consuming way above the ecologically sustainable level long after the crisis has already struck the poorer, more vulnerable members of society. That is where we are now worldwide, not just in isolated places like Easter Island or Greenland. Our global financial, corporate, and political élites are all busy grabbing what they can today and too bad about tomorrow. Look at anything from the oil companies to the brisk sales of private jets to the 946 Forbes billionnaires who have as much wealth as two-thirds of humanity. The motto remains: Apres moi le deluge!

How can we realistically combat the ecological footprints of these dinosaur élites? We can't shout "Off with their heads" in a world-wide revolution. Nor can we otherwise force them to change both themselves and the system that has served them so well, even though we know that we must change that system because it is raping the planet, and its inherent logic is to keep on doing so.

I know I will be accused by some of outlining a way to give capitalism a new lease on life. But I am going to recommend the coming together of business and government in a new incarnation of the Keynesian war economy. I was born in 1934, and I remember very well when the United States switched to a war economy, converting all the rubber plants in my native city [Akron, Ohio] to production -- not for private cars and trucks, but for the military. There was huge citizen involvement: people planted Victory Gardens, kids bought saving stamps and war-bonds with their allowances. Thousands of factories, research labs, housing projects, military bases, day care centres, and schools were built or expanded during the war. Public transport was working overtime to move millions of men and women on their way to army bases or new defence jobs.

Yes, there were still worker-management conflicts, and yes, big corporations rather than small business got most of the government contracts; but on the whole the workers were well paid, African-Americans and women began making a few modest gains, and the whole war effort finally pulled the United States out of the Depression. It was Keynesianism on a huge scale. There was also a group called the "Dollar-a-Year Men" on loan from their companies to the government, who were charged with making sure that military production and quality targets were met. They had enormous prestige: I remember that I used to brag to my little school friends that my godfather was a Dollar-a-Year man.

Why am I going back over ancient history? Because I think we have a similar opportunity today. The U.S. economy seems to be heading for a genuine recession triggered by the sub-prime affair, but which goes deeper than that, and the fallout for ordinary people in terms of jobs, housing, consumption and future welfare is going to be serious. If I am right, if the economic problems in the U.S. and therefore in the world are going to fester and get worse, if the U.S. is sliding into recession, dragging many others with it, then some new economic tools will have to be used to combat it, for the simple reason that the old ones have already been pushed to their limits and have little or nothing left to give. The American dollar is extremely weak; this has made U.S. exports cheaper, but it can be devalued further only at great risk.

Deficit spending is already beyond belief, and the country is hugely indebted, as are households. The housing bubble has already burst. The Federal Reserve has made clear it will reduce interest rates if the economy gets worse, but there too there are limits.

I'm not an economist, but the only new tool I can think of to pull the United States out of the economic doldrums is a new Keynesianism, not military this time, but environmental; a push for massive investment in eco-friendly industry, in alternative energy, in the manufacture of lightweight materials for use in new vehicles; in clean, efficient public transport; in the green construction industry.

How could one finance such an effort that would involve targeted government spending in the traditional Keynesian sense? By levying carbon taxes, taxes on movements of finance capital and purchases of shares, unitary profits taxes on transnational corporations, and – in order to encourage more local consumption -- taxes on the miles travelled by the food that we eat and the clothes we wear.

We also need safeguards to prevent delocalizing all the ecological activity once more to China and other low-wage countries. In other words, we need some form of protectionism -- but let the Indians invest in Indiana and the Chinese in Toronto if they want to pay North American level wages and respect North American laws and standards. They too should be allowed to site here to sell here. All these new, eco-friendly industries and products would have huge export value and could quickly become the world standard.

I am trying to describe a scenario that can be sold to the élites, because I don't think they will embrace genuine environmental values and conversion if there's nothing in it for them. But this approach is not merely a cynical attempt to get the élites to move: there is also plenty of advantage in such an economy for working people. Mass ecological conversion is a job for a high-tech, high-skills, high-productivity, high-employment country, and it would be supported, I believe, by the entire population because it would mean not just a better environment, but also full employment, better wages, and new skills, as well as a humanitarian purpose and an ethical justification -- just like World War II.

In other words, it's a public relations dream. Whichever political party understands this can win on such a program. We ought to be doing it in Europe, but there's no unity, no vision; the European Commission is profoundly and stupidly neoliberal and seems determined to destroy the European social model. So I'm giving Americans [and Canadians] the idea for free because in the U.S. [and Canada] you contribute even more than we do in Europe to the current crisis and because you also just might be able to do something about it, without having to bring down the entire capitalist system as a prior condition for saving the world.

Before you tell me that none of this will work, that my solution is worse than a pipe-dream, and that you don't want to save capitalism, anyway, let me conclude by making one more point. If it is true that economically the solution can come only from a massive Keynesian-type commitment bringing together government, corporations and citizens, it will also have a vital role in creating renewed social cohesion.

Let me stress that today no single interest group can solve the problem that concerns it most. Alone, ecologists can't save the environment; alone, farmers can't save family farms; or trade unions save good jobs in industry; or public service workers public services, and so on. Broad alliances are the only way to go. We have begun to be successful in making alliance partners of people who come out of different constituencies but are basically on the same wavelength. The World Social Forums have contributed enormously to this process, and so have other NGOs. Now we must go beyond the usual suspects and also try to forge alliances with people we don't necessarily agree with on major questions -- for example, with business.

This can only be accomplished by recognizing that disagreement, even conflict, can be positive so long as the areas where it is possible to agree are sought, identified, and built upon. We must find where the circles of our concerns overlap. At least one of those overlaps ought to be saving the planet.

I don't see any other way of generating citizen enthusiasm, involvement, and the qualitative and quantitative leap in scale that is now required. I can assure you that the conversion I outline is technically feasible: the schemes for new taxes and the industrial prototypes already exist; the machinery is ready to hum into action the moment people can make their politicians accept the challenge.

Capitalism is not sane in the sense that ordinary people understand sanity: people think about their future, that of their children, and often of their country and of the world. The market, on the contrary, operates by definition in the eternal present, which, also by definition, cannot even entertain the notion of the future and therefore excludes safeguards against future destruction unless these safeguards are imposed upon it by law.

We need law, for sure, and political forces with the backbone to propose and to vote the law into existence, but we also need to think about human motivation. Remember the prestige of the Dollar-a-Year Men of the 1940s, and imagine what might happen if we could transpose it into the world of 21st century capitalism. Yes, capitalism would continue, as it did during World War II, and class conflict would not disappear; nevertheless, a significant number of contemporary captains of capitalism, all of them with bloated, unimaginable salaries, might come to see that money is all very well -- but is there nothing more? Why not found an extremely exclusive Order of the Defenders of Earth, or the Environmental Knights, or the Carbon Conquerors, who alone, in recognition of their special contributions to the national and international environmental conversion effort, would have the right to display a highly visible emblem -- on a banner in front of their homes; on the licence plates of their cars; on a golden rosette in their buttonholes like the French Legion d'Honneur; like a Congressional Medal of Ecological Honour, the sign of belonging to the small assembly of the anointed: those who have decided to save the planet. It would also appeal to their competitive spirit.

Finally, myth has always been the driving force of every great human accomplishment, from Greek democracy to the Renaissance to the Enlightenment and the American and French Revolutions. So it must be in the coming age of Ecological Stewardship. If we want to change --and change fast enough -- the way the majority thinks and acts, we must start with the social forces we have right now, and no others. For this we will need several "M’s," like Money and Management and Media. But even more important than these "M’s," we must try to create a new sense of Mission and Myth at the noblest level.

Myth in this sense has nothing to do with story-telling or lies, but incorporates the deepest Motivations -- another M -- of human behaviour: the desire for honour and for a life's work which transcends death. The élites already have Money, Management, and Media. On our side, we have Mission, Motivation, and Myth. If we can put all these together on the agenda, the rest will take care of itself.

(Susan George is chair of the Planning Board of the Transnational Institute based in Amsterdam and the author of many books, including Another World is Possible and A Fate Worse than Debt. This article was adapted from a speech she delivered at a recent teach-in co-hosted by the International Forum on Globalization and the Institute for Policy Studies.)