Challenges of the Green New Deal

The term Green New Deal harkens back to FDR’s New Deal that saved capitalism by reforming and regulating it. And that then also invokes the national mobilization for WWII, calling forth all of society’s resources in a united effort. The existential threat of global climate change is on such a scale and will require a similar all-out shared commitment for survival. Both FDR’s New Deal and WWII depended on government as the instrument of the popular will. That will also be needed in the struggle against climate change.
But today we live in a very different ethos. For decades the public mind has been taught to distrust government, that big government is bad, that it threatens individual freedom. The ideology of neoliberalism is hostile to government action. In her book This Changes Everything, Naomi Klein identified the neoliberal ideology as lying behind climate denial. Today when denial is more difficult to maintain in the face of extreme weather, neoliberalism stands in the way of climate action. We need to understand that collective action is essential to saving our future. The Green New Deal calls for a transformation of the economy through a harmonious marriage of economic justice, social solidarity, and environmental rehabilitation.
The public is waking to the fierce urgency of addressing climate change. Extreme weather events, melting glaciers, rising sea levels, floods and draughts, wild fires, intense heat waves all herald a global climate system out of balance and threatening to human civilization as we know it.
July was the hottest month in human history. On August 2 Greenland lost 12.5 billion tons of ice in one day due to a record heat wave that had also melted Europe. There is enough ice in Greenland to raise the sea levels by 7.5 meters, that's about 25 feet, and it is melting fast. So too the Antarctic ice. Clear cutting of the rainforest and wild fires are ravaging the Amazon, destroying the lungs of the planet. The melting tundra is releasing methane into the atmosphere, adding to the CO2 that is warming the planet. As a result farmers cannot plant due to floods or crops wither due to draught. This contributes to historically unprecedented migrations of peoples from the global South.
The financial sector of the economy is beginning to recognize the economic threat climate change presents. Extreme weather events can cause massive property damage that is costly to insurance companies. They are factoring these losses into insurance rates. Banks are also taking climate change risk factors into account. Mark Carney, the governor of the Bank of England, believes that climate change threatens the global financial system. A consortium of international banks have now agreed to include climate risk factors in their business models. The Fed ought to do likewise.
We all know that what has been driving climate change has been the massive and increasing discharge of CO2 into the atmosphere by burning oil, gas and coal. Bernie Sanders’ Green New Deal proposal calls for “100% sustainable energy for electricity and transportation by no later than 2020 and to fully decarbonizes the economy by 2050 at the latest,” creating 20 million new jobs in the process. He recognizes the magnitude of what needs to be done. Critics say the $16 trillion he calls for over the next decade is just too much. If in 1941 someone had figured out a budget for WWII, would we have said, “sorry, we just can’t afford it”? I ask, how much is the survival of humanity worth?
One of the slogans of the climate justice movement is “keep it in the ground.” But think for a minute what that would mean for the oil companies. The value of Exxon’s stock or Shell or BP is based not just on their current production of petroleum, but on the reserves they have in the ground and can tap in the future. If they had to keep it in the ground, the value of their stock would plummet. And the consequences throughout the rest of the economy would be catastrophic, at least on the scale of the 2008 financial collapse.
This is what economists call a Minsky moment, when an asset’s value suddenly collapses after a long period of growth. To avoid that, short of nationalizing the fossil energy corporations, it is prudent for them to gradually wean themselves off fossil fuels by diversifying their energy sources. That’s what BP seemed to be moving toward when it rebranded itself as Beyond Petroleum. I don’t know how serious that was or whether it was just PR greenwashing. But it is the direction corporations need to go. Since the 1970s they have known what their industry was doing to the climate, yet have failed to accept responsibility. They continue to reap massive profits while endangering the future of humanity.
Will they change? Will they abandon the assets they have in the ground and leave them there to save the planet? That defies the logic of capitalism. Our best hope may lie in the nationalization of the fossil fuel industry and decommissioning of their stranded assets that threaten us all. The subsoil resources of the land could be declared to belong to the nation – as is the case in Mexico. This would apply to all land, not just public lands. No longer would private corporations be allowed to enclose our commons. It might be objected we have no right to take private property without compensation. But the massive public subsidies to the fossil fuel industries – some $15 billion annually – have already paid for those assets many times over. Nevertheless, the nationalization of fossil fuels would amount to the largest taking of private property in the history of the US, even greater than the abolition of slavery which eliminated the ownership of persons. It took a Civil War to accomplish that. To accomplish the nationalization of fossil fuels would also take a major social upheaval. That is exactly what we now face with climate change.
The sobering reality is that “one-third of equity and fixed income assets issued in global financial markets can be classified as belonging to the natural resource and extraction sectors, as well as carbon-intensive power utilities, chemicals, construction, and industrial goods firms.” https://www.theatlantic.com/science/archive/2019/08/how-fed-could-fight-... That fact alone highlights how massive the needed changes are.
Our entire energy system needs to be rapidly moved to clean sources. This requires massive infrastructural investments on a scale that only governments are capable of. It has been observed that the fossil fuel industry has recently shifted from casting doubt on the reality of climate change to qualified support for carbon pricing. They could change tactics again if there is an opportunity to secure public handouts through a Green New Deal. The idea of a strong role for government and justice-focused outcomes may get the neoliberal ideologs all hot and bothered, but their “Eek, socialism,” scaremongering doesn’t appear to be resonating with the public.
But while we talk about a Green New Deal in the US, or in Canada, or Europe, we must remember capital is mobile, and carbon-heavy growth is no longer the preserve of the advanced economies. For the GND to work, it must also be globalized through international cooperation. The current framework for governing the global economy primarily benefits financial entities and large transnational corporations. And there is no global political force capable of reigning them in. They could blithely go ahead dumping greenhouse gasses into the atmosphere until we all melt. Capitalist corporations live by the religion of endless accumulation.
Climate catastrophe could well end that endless accumulation. And with that end capitalism. If that economic system is not able to reform itself, it will self destruct. That is why the peoples of the world need to be preparing how to move beyond capitalism. It is the youth of the world who are pushing us forward.