Lisi Krall
The Green New Deal now taking
shape in Washington will aim to address climate change through economic
policies. While many of the potential policies being discussed, including a
more steeply progressive income tax, would in themselves be positive
developments, none
of them would reduce greenhouse emissions as deeply as is required. To
understand why, we should first look back at the economic foundations of the
Depression-era New Deal, which is serving as inspiration for the Green New Deal
(GND).
The original New Deal
attempted to solve what were the particular manifestations of capitalism’s
contradictions that surfaced in the 1930s. In simplistic terms,
overproduction, a common problem of industrial capitalism, resulted in massive
unemployment and a multiplying effect that eventually created 25% unemployment
by 1933. The New Deal firmly established the role of government in stabilizing
an otherwise unstable system. It also institutionalized a much needed
social welfare foundation to underpin a system which could not be relied on to
consistently provide people with income.
The New Deal was given
theoretical support by the Keynesian revolution, which provided a different
perspective on the role of government in managing the problems of an advanced
capitalist economy. Despite the rise of neoliberalism, the institutional fabric
that we function with today is still of that New Deal/Keynesian ilk.
One of the most important
policies for unequivocally ending the Great Depression (reinforcing the
legitimacy of Keynesian policy) was the massive spending on military production
for World War II. The government ran huge deficits to fund the war
effort, and after the war, the debt was repaid as the economy expanded (boosted
partly by the fact that all other industrialized nations had been decimated).
World War II was an external
and immediate exigency (in some ways analogous to climate change) that required
production and price controls as well as rationing in the short run simply
because the economy could not produce what was needed immediately for the war
and simultaneously provide consumers with all they wanted. While those
economic interventions were temporary, military spending became a more institutionalized
part of the participation of government in the economy.
The New Deal and the Keynesian
framework were clearly predicated on reinvigorating growth and curbing
stagnation—the latter an inherent tendency of a mature capitalist economy.
And the problem of maintaining growth became increasingly difficult
beginning in the latter half of the 20th century, which is to say the
problem of stagnation (not simply downturns associated with the business cycle)
became increasingly problematic.
Our history with this New Deal
legacy should sharpen our understanding of capitalism in the following ways. We
should by now understand that capitalism is an unstable economic system that
tends toward both growth and stagnation and stagnation is both cyclical and
secular. It is a system with systemic problems of inequality that
exacerbate its instability. The inherent instability of the system and its
inequality can be managed through various applications of fiscal and monetary
policy augmented with a sound social welfare foundation, as well as more direct
facilitation of the process of insuring investment outlets (again military
spending is a good example of this).
For the sake of exposition,
I’m going to label this mix of problems and challenges the first contradiction
of capital. All policies here pivot around growth with the exception of some
mechanisms for redistribution of income. Nowhere in the landscape of the
New Deal was there any recognition that there were problems with growth itself
or fossil fuel use. As Stan Cox wrote,
“As far as I know, no one complained at the time about the 65 percent increase in
fossil fuel consumption that occurred between 1935 and 1945 thanks to a growing
economy.” This was because the danger of running up against future
biophysical limits was not recognized.
The problem of biophysical
limits has now presented itself in no uncertain terms with the reality of
climate change (and for those who care to look into the myriad of other
examples of the ecological decay of Earth). Climate change is where the rubber
meets the road in confronting what I will label the second contradiction of
capital. Energy in one form or another is the food of economic life.
Growth depends on it and despite all the rhetoric to the contrary there are
limits to what we can expect without it.
As far as I can tell this
means we’ve got a problem, not just with climate change but with our ability to
manage it and also manage the first contradiction of capital. It seems
the two contradictions cannot be solved simultaneously [see Krall and Kiltgaard
(2011) and Klitgaard and Krall (2012).] We can’t both grow and de-grow at the same
time.
Absolute decoupling remains an
illusion, but I get why people might be attracted to it since the other choice
is to face the problem of the dueling contradictions of capital. It’s the
same reason we get the GNDealers talking up a carbon tax and letting the magic
of the market and human ingenuity take us to ever-higher pinnacles of
progress. I heard Thomas Friedman on NPR’s Science Friday refer to
this as “mean green” and tell us that green is the new, red, white and blue.
Let’s be clear—the GNDealers
are counting on technology to absolve us from having to figure out how to
resolve the first and second contradictions of capital simultaneously. The
GND’s problem, as I understand it, is that it wants to deal with the first
contradiction of capital (job creation and new outlets for capital
investment) and the second contradiction (biophysical limits) by assuming that
we can transition to renewable energy seamlessly and at unrealistic speed,
ultimately achieving both green growth and job security. Of course,
they advocate robust policies for dealing with inequality in addition to the
benefits of employment through the build-up of a renewable energy
infrastructure. The implicit assumption is that by dealing with the first
contradiction we will simultaneously deal with the second contradiction.
Problem solved?
As Cox points out, our
short-term problem is that a declining ceiling on greenhouse emissions will in
fact require allocation of energy among sectors and rationing among consumers
simply because the ‘external’ problem (climate change, analogous in this
example to WWII retooling to make war munitions) has to be solved quickly and
it will require fossil fuel to do that. In Cox’s words: “If we are to
avoid climate catastrophe, we have to simultaneously bring an end to
fossil-fuel burning and develop vast renewable energy capacity, both starting
right now and both on a crash schedule. That means the everyday economy
must find a way to run on much less available energy.”
Ideally that policy measure
should lead us to an ever clearer understanding that our short-run energy problem
(the conversion problem) is but a variation on a much larger long-run energy
problem (fueling an expanding economy on renewable energy while providing
equity in access to energy). This is evident to everyone who is willing to
scratch the surface of the Jacobson and Delucchi “100% renewable for 100% of
rising demand” studies and published analyses that are critical of
their studies.
Actually, if we were willing
to pay attention to ecological decay and the 6th mass extinction we would
understand that it isn’t simply a long-run energy problem we have, it’s a
long-run growth problem. That understanding changes everything,
especially if it can’t be solved technologically. Yes, the rubber is meeting
the road.
The truth that the GND doesn’t
appear to want to face is that we’re not simply dealing with some variation on
the problems that the New Deal and its institutional legacy were meant to
confront. We are dealing with something that is much more complex and
foundational. We are dealing with two contradictions of capital that work
against each other. If we approach our present situation as if it is just
another variation on an old problem (the first contradiction of capital) we
will not be able to confront the second contradiction of capital. That’s
because in the traditional New Deal queue we will cook ourselves for jobs and
short-run economic stability through growth before we’ll pay attention to
biophysical limits. The problem is that it isn’t all that clear what
cooking ourselves will mean for the quality of human life (not to mention
other-than-human life) either in the short or the longer term. Let’s just say
it looks like a decidedly downward trajectory for all parties concerned.
The challenge for the GND is
to be revolutionary in the face of climate change. It seems clear we can’t
solve the contradictions of capital with the same institutional baggage.
Assuring some measure of equality in the face of reduced energy will require
limits. The build-up for WWII provides a precedent for our capacity to impose
collective limits when we have to do so. Collective limits are managed
fairly only when reinforced and fortified with expansive social welfare
institutions.
But we also need institutions
that orbit around limits and not around growth and stagnation. The quick and
decisive transition to renewable energy, orchestrated with strict limits, a
commitment to equity, and rationing of both production and consumption will
help us to begin this revolutionary transition recognizing that the 21st century
problems of capitalism are unique.
Access to energy must be
resolved through rationing and not through markets for two reasons. The
market can be relied upon neither to produce what is necessary and not simply
profitable nor to ensure sufficiency for all. More importantly, the market goes
with the market economy which is not just a mechanism of allocation but a
complex system of expansion and stagnation that generates inequality in its
wake. (The market economy also has a tremendous penchant for drawdown of
resources and ignoring the ecological integrities of Earth as well as sloughing
off externalities).
So far the Green New Deal
seems to be the same institutional package as the New Deal. Unfortunately
the landscape of contradictions that afflict capital has shifted. What we have
on our hands is not more of the same; we have something categorically and
foundationally different. We can’t end growth simply by imposing external
limits (caps on carbon for example) without simultaneously confronting the
inner dynamics and problems of the first contradiction of capital. Instead we
must rely on robust forms of limits coupled with more robust forms of
redistribution. And much of our production (of energy, of transportation etc.)
can no longer be merely a prerogative of capital. It must be directed and the
social relations surrounding it must be redefined.
Historically we have managed
the internal contradictions by assuring growth and drawdown of our ‘natural
capital’. The problem of external limits has been ignored or inadequately
managed with minor taxes and regulations. But when growth is no longer an
option to counteract the internal contradictions of the system, and when minor
taxes and regulations no longer suffice to keep the economy within biophysical
limits, we are required to move in a different direction. Unless the
movement to implement a GND understands that the burden of the historical
moment is not merely to provide short run prospect for jobs and to replace
fossil fuel with renewable energy, it will be inadequate to the historical
moment.
The challenge of the GND is to
erect a new economic framework that will allow us to exit the impossible
prospect of trying to resolve both the first and second contradictions of
capital that define 21st century capitalism. Renewable energy
technology doesn’t rise to the requirement of managing either the first or
second contradiction, as much as we’d like to believe otherwise. A carbon
tax or a cap in conjunction with the hope that the market will handle the rest
is a strategy that demonstrates a gross lack of understanding of 21st century
capitalism and its capacities and inclinations as well as an overly optimistic
view of technology.
Let’s be clear, neoliberal
economics is not our only problem, though there is no question neoliberal
economic policy has made both the first and second contradictions of capital
worse; it has also created a fundamentalist ideology about markets that has
dribbled into the lexicon and thinking of the mainstream (Thomas Friedman, for
example).
An unequivocal cap on carbon
and rationing of production and consumption is the beginning of a new
institutional approach to a new economic order. As Cox notes, “The Green
New Deal would not achieve an economic transformation,” and this historical
moment demands such a transformation.
The historical moment demands
the institutions of limits. Limits that not only constrain resource use but
also find expression in the institutional fabric of our economic order (in
production and distribution). We must become collectively constrained in
economic life. Limits must move beyond the realm of individual conscience
and choice and take up residence in the ordering of economic society. This is
the challenge of a revolutionary GND.
Lisi Krall is a Professor
of Economics at the State University of New York, Cortland. Her numerous essays
and articles appear in diverse journals from the Cambridge Journal of Economics
to Behavioral and Brain Sciences.
