Climate change probably needs socialism
The relationship between the economy, the green economy, and climate change is deeper than is often recognised.
Of the many iconic images of Democrat congresswoman, Alexandria Ocasio-Cortez, that have entered circulation during her rise, there is one that – apparently by chance – will be of great service to environmentalists. The image shows Ocasio-Cortez at the start of the Women’s March in New York, where - buttressed by a flank of activists dressed for the cold - the congresswoman leans into a lectern and addresses the crowd. Over her shoulder, someone holds a large sign, with a font made from white dots on a black background, and written like a night’s billing above a theatre or a cinema are the words “Green New Deal”.
The concept, a loan from Roosevelt’s New Deal with its public investment to boost jobs and the economy, has fast become a component of the Ocasio-Cortez platform. Americans have so far taken to it; 81 percent are apparently in-favour, and the promise of jobs and prosperity has helped to buck steadfast fears amongst a population where acceptance of manmade climate change still lags behind much of the rest of the world. The image of Ocasio-Cortez is useful not only for the accidental prominence it gives to environmental policy but for the fact that it establishes action on climate change – long seen as a niche offshoot only for environmentalists – at the heart of a regular political movement, with all the recognition, prominence, and normalisation that brings.
The relationship between the economy, the green economy, and climate change are deeper than is often recognised. The backgrounds of lobbyists and corporate funders, mostly in Big Oil, who over the decades worked to put-back awareness and acceptance of climate change science, in itself goes beyond just vested interest and reveals an existential truth about the fundamental bond between modern capitalism and climate change; if climate change and its certainty of global destruction existed, then the economy as it stands could not. One of them had to go.
By virtue of high-level action such as the Paris Accords and growing concern about extreme weather events, climate change denialism has now for the most part been defeated or successfully ignored as a meaningful counterforce to established evidence. Language is changing accordingly. A recent New York Times story referred not to those who did not believe in climate change but those who did not “understand” it, denying those who refuse science the air of the wise sceptic, and making plain that a thing exists regardless of whether or not humans acquiesce to agree about as much.
As climate change denialism loses what force it had, and the political economy of serious measures on climate change moves into mainstream territory, Ocasio-Cortez’s proposal of a Green New Deal shows – irrespective of the need for urgent action anyway – the value of climate change for progressive, avowedly socialist candidates at this moment in history. If a party means to pull off an overhaul of the economy in the way that the new intake of Democrats propose, there are few reasons bigger - or more integral and unifying - than climate change to justify such a shift. Not known as a friend of leftist thought, the economist Milton Friedman was at least right when he said that in a crisis, "the actions that are taken depend on the ideas that are lying around". There are voters who do not and might never urgently believe in socialism, but who are alarmed at the prospect of, and inaction over, climate change. In the UK, Labour’s shadow chancellor, John McDonnell, has already stated that a Labour Government will ask the increasingly valued Office for Budgetary Responsibility to report on climate impact alongside the economic impact of policy. It is one of a number of policies showing Labour’s seriousness on climate change and is reassuring to more white-collar, mainstream voters at a time when the party is often depicted as too far to the left.
The logic that socialism needs – or at least can leverage – climate change to deliver its economic renewal and redistribution also works in reverse: effective action on climate change also needs socialism, or at least some other radically different framework of economic value, in order to stem the tide of irreversible and catastrophic climate breakdown within the timeframes currently discussed. A recent report gave a new and unexpectedly generous grace period of twelve years for us to stop emitting carbon altogether. The world’s tropics will within this time reach average temperatures at which the human body stops functioning, it is negligence or fancy to believe that those bodies would compel their owners to become anything but become climate change migrants.
The most well-established market mechanism by which to arrest these changes is a meaningful carbon tax. The necessary rate would have to be set at a level that sounds sensible in terms of the chaos it could forestall, but exorbitantly high against what current politics and markets would likely tolerate. Even under the European Union's Emissions Trading Scheme (EUETS), the first and often considered to be the most successful carbon-pricing scheme, carbon is today at €24 a tonne – actually very high by historical averages – but still €6 beneath the €30/tonne mark the OECD says is needed to pay for the costs of climate change. Add to this the concern that many emissions are not captured by the scope of such schemes. Those politicians who are eyeing interventions that lead to an increase in pricing will now be looking warily at France’s Gilet Jaunes movement, where the response to proposed petrol duty increases show how forceful and effective resistance can be to green fiscal policy that appears to fall (and this is the underreported part) disproportionately on the middle class and poor, while at the same time the World Economic Forum in Davos receives record traffic from private jets into its flight path.
The other systemic economic shift capable of altering climate change outcomes fast comes from the divestment movement. The key message behind the policy is one of ‘stranded assets’; a scenario in which oil and gas corporations are left with fossil fuel assets on their books that – whether because of collapsing demand or drastic political action – can no longer be burned. Estimates of £24billion tax breaks to manage UK North Sea oil decommissioning and decline shows that for the time being taxpayers are continuing to subsidise the profits of fossil fuel corporations. This long-term bailout by stealth identifies the headache of problematic assets which no longer support the profits their owners have become accustomed to, and public subsidy to the planet’s biggest polluters and wealthiest corporations will at some point become politically unsustainable.
Between the paths of socialism addressing the cause of climate change and climate change providing socialism with a cause, there is a third way – the one we are currently journeying down – where a mixed economy delivers broadly positive results but behind the necessary pace. In this scenario, governments subsidise renewable industries – whether through direct tariff schemes to support renewable power, or in setting up facilities to research new technologies such as batteries. Results are, in conventional economic terms, very impressive. The UK price for offshore wind power went from over £140/MWh to just £57/MWh within a matter of years, the result of technological improvements such as larger turbine blades. Electric vehicles have become one of the fastest-growing markets for automobile manufacturers, delivering profits, jobs, and carbon savings. In the context of economies witnessing a general decline in growth and productivity, the returns are eye-catching. Industries that, by default, have to look to the future will always be likely to outperform large incumbents that are structurally at risk of stagnation or simply diminishing returns. It is unsurprising that indexes weighted towards investing in better environmental, social, and governance standards (ESG) have begun to outperform the wider market by up to 2.5%. It’s a solid return, one that betters many expectations for post-crisis markets, and makes an investment in the green economy seem like a win-win scenario. In this outlook, however, there lurks a danger that a respectable rate of return will - paradoxically - quell the impetus for action on a crisis for which successful intervention, at some point, must become revolutionary. What Ocasio-Cortez and the Green New Deal have grasped so clearly is that a tidy profit under capitalism will not on its own be enough to beat climate change.