Bookbuster Book Review
Case for the Green New Deal
The Commons Versus Commodities
By Ann Pettifor
Published by Pluto Press, £12.99, hardcover
Available at Printed Matter Bookshop, and Bookbusters
Review by Lee Humphries
By the time you read this we will know if the government is one that will pursue a New Green Deal, or if we will need to fight harder still to convince our leaders to do so.
The follow-up to Ann Pettifor’s previous work, The Production of Money, is an extremely pertinent book. Prior to the 2007/08 banking crisis which began in America, Ann Pettifor had a meeting with various people from an economics and/or green politics background such as Larry Elliot (from The Guardian) and Caroline Lucas. The point of the meeting was to come up with a plan to address both the potentially looming financial crash due to too much private debt and the rapid decline in our environment by climate change.
The outcome of the meeting was to promote a Green New Deal (GND) – similar to Franklin Delano Roosevelt’s New Deal in 1933 – designed to provide jobs to help the economy, using fiscal stimulus to stimulate the economy, whilst simultaneously switching from fossil-fuel use to green energy, and reducing the emissions of carbon dioxide into our environment.
Then the financial crash occurred in 2007 and carried into 2008 and the idea of promoting a GND was put on ice. The UN’s Intergovernmental Panel on Climate Change announced a stark warning in 2018 that we need to cut global emissions in half in the next twelve years if we are to stop climate change becoming irreversible.
‘The Case for the GND’ means that we cannot simply rely on the private sector to finance and switch to providing cleaner energy, as it is often profit-driven and short-termist, seeking shareholder value and as much profit as possible – privatised finance tends to aim at limitless growth on a finite planet, a clearly contradictory and dangerous position.
Ann has been an advisor to the democratic socialists in the USA, especially Alexandria Ocasio-Cortez, and also an advisor to Jeremy Corbyn’s Labour Party, promoting the GND. She concentrates here on two of the most powerful countries in the West to lead on the GND and clearly believes that only democratic socialists can put a genuinely green GND in place. Here in the UK, the Labour Party has now adopted the GND into their manifesto – indeed it forms the first quarter of the document!
Anyone familiar with Ann Pettifor’s work will be aware of her Keynesian economic thought, and this is prevalent throughout the book. How to pay for this is key, and Ann states that government borrowing by fiscal stimulus to provide a job guarantee to millions of people is essential. There will need to be a huge recruitment process, plus reskilling and retraining, to make a GND possible. Fiscal policy is the use of a government’s revenue collection and spending. First a government spends then it taxes to pay back the money it borrowed. If there’s too much money in an economy fiscal policy can claw it back by taxing, thus reducing inflation.
Ann also addresses the need to bring offshore tax havens back onshore and tax and regulate them appropriately. This will be the biggest challenge for any government on how to regulate it’s financial system, as our current models in effect operate above the law.
The idea of a basic income is refuted by Ann – she prefers a ‘job guarantee’. There does seem to be a contradiction here, in that she argues it’s ok to borrow money for spending in the economy, but that it would be wrong to give everyone a basic income. A basic income could be paid out to all citizens via fiscal stimulus. The money would be borrowed in the same way as public borrowing and as people spend in the economy, this helps to create incomes for those selling goods and services, who in turn pay taxes.
What I don’t quite understand from the book is Ann’s keenness for the Bond Market. I don’t see what value the Bond Market adds to the UK economy, or any other economy, when we live in a world of fiat currency and suffer the consequences of the disastrous trade in junk bonds.
The full details of how a GND would take effect are for a second book, so this is really an introduction to implementing a GND and the theory and reasoning behind it, and a stab at costing it. Ann is quite right that both our ecosystem and our economy are inextricably linked and both are liable to breakdown in the medium or even short-term without immediate and aggressive action.
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