Via Naked Capitalism

Yves here. I hate to sound like a broken record, but as much as the Green New Deal is an appealing idea, its time was thirty or forty years ago. We need much more radical solutions that emphasize prohibitions and/or severe limits on lots of carbon-using activities. Unfortunately, most of them are in commerce, and the big boys are well positioned to obstruct needed changes.

That isn’t to say Green New Deal approaches don’t have merit and should not be part of an effective response, but we already are well on the way to a catastrophic level of climate change, as agricultural production shortfalls and rising hunger attest.

By Robert Pollin, a professor of economics and director of the Political Economy Research Institute at UMass Amherst. Originally published at Triple Crisis

Second in a series of posts on neoliberalism and what might come next, organized to celebrate the 45th anniversary of Dollars & Sense, which publishes Triple Crisis. 

In 2007, Nicholas Stern, the prominent mainstream British economist and former chief economist at the World Bank, wrote that “Climate change is a result of the greatest market failure the world has seen.” Stern’s assessment was extreme, but not hyperbolic. This is for the simple reason that, if we take climate science at all seriously, we cannot avoid the conclusion that we are courting ecological disaster by not stabilizing the climate.

Neoliberalism is a driving force causing the climate crisis. This is because neoliberalism is a variant of classical liberalism, and classical liberalism builds from the idea that everyone should be granted maximum freedom to pursue their self-interest within capitalist market settings.

But neoliberalism also diverges substantially from classical liberalism: What really occurs in practice under neoliberalism is that governments allow giant corporations to freely pursue profit opportunities to the maximum extent, and governments even intervene on corporations’ behalf when their profits might be threatened. How the oil companies reacted to clear evidence of climate change represents a dramatic case study of neoliberalism in practice. In 1982, researchers working at the then Exxon Corporation (now Exxon Mobil) estimated that by about 2060, burning oil, coal, and natural gas to produce energy would elevate the planet’s average temperatures by about 2° Celsius. This, in turn, would generate exactly the types of massive climate disruptions that we have increasingly experienced since the 1980s—i.e., heat extremes, heavy precipitation, droughts, rising sea levels, and biodiversity losses, with corresponding impacts on health, livelihoods, food security, water supply, and human security. In 1988, researchers at the Shell Corporation reached similar conclusions. We now know what Exxon and Shell did with this information: They buried it. They did so for the obvious reason that, if the information were then known, it might have threatened their prospects for receiving massive profits from producing and selling oil.

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There is no minimizing the fact that what Exxon and Shell did was immoral. But it is equally clear that both companies behaved exactly according to the precepts of neoliberalism—i.e., they acted to protect their profits. They also continued from the 1980s onward to behave according to the precepts of neoliberalism in extracting the largest possible subsidies that they could get from any and all governments throughout the world. Amid all of this, neither company has faced any government sanctions for their behavior. Quite the contrary, they have continued to earn huge profits and receive hefty government subsidies. Defeating neoliberalism is clearly a political project of overwhelming significance. But we can’t expect to defeat neoliberalism unless we have a viable alternative in place. This is where the idea of the Green New Deal becomes central.

The Green New Deal has gained tremendous traction as an organizing framework over the past couple of years. This alone is a major achievement. But it is still imperative that we transform this big idea into a viable program. In my view, putting meat on the bones of the Green New Deal starts with a single simple idea: We have to absolutely stop burning oil, coal, and natural gas to produce energy within the next 30 years at most; and we have to do this in a way that also supports increasing living standards and expanding opportunities for working people and the poor throughout the world.

This version of a Green New Deal program is, in fact, entirely realistic in terms of its purely economic and technical features. Clean renewable energy sources—including solar, wind, geothermal, and to a lesser extent small-scale hydro and low-emissions bioenergy—are already either at cost parity with fossil fuels and nuclear or they are cheaper. In addition, the single easiest and cheapest way to lower emissions is to raise energy efficiency standards through, among other measures, retrofitting existing buildings, making new buildings operate as net zero energy consumers, and replacing gas-guzzling automobiles with expanding public transportation and electric cars. Energy efficiency measures, by definition, will save people money—for example, your home electricity bills could realistically be cut in half without having to reduce the amount that you light, heat, or cool your house. So the Green New Deal will not cost consumers anything over time, as long as we solve the problem of funding Green New Deal investments through the cost savings we gain by raising efficiency standards and producing cheap renewable energy.

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Through our work at the Political Economy Research Institute at UMass Amherst, my coworkers and I have estimated that building a 100% clean energy system will require about 2.5% of global GDP per year for roughly the next 30 years. Yes, that’s a lot of money in dollar terms (roughly $2 trillion in 2021 and rising thereafter), but it does mean that 97.5% of global economic activity can still be devoted to things other than investments in clean energy.

In addition, these clean-energy investments will be a major source of job creation, in all regions of the globe. The critical factor is that clean-energy investments will create a lot more jobs than maintaining the existing dirty-energy infrastructure—in the range of two to four times more jobs per dollar of spending in all countries that we have studied, including Brazil, China, India, Indonesia, South Africa, Spain, and the United States.

Of course, jobs that are tied to the fossil fuel industry will be eliminated. The affected workers and their communities must be supported through generous “just transition” measures, including guaranteeing workers’ pensions, moving people into new jobs without losing incomes, and investing in impacted communities. Land reclamation is just one such investment opportunity, including cleaning up abandoned coal mines and converting the residual coal ash into useful products, like paper.

In short, the Green New Deal offers a viable egalitarian and ecologically sane alternative to the reign of neoliberalism. However, to defeat neoliberalism will require unprecedented political organizing and breakthroughs along many fronts. This is obviously a daunting challenge. But as probably the most forceful proponent of neoliberalism, Margaret Thatcher, once famously declared, “There is no alternative.”

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