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Olduvai III: Catacylsm
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What Kind of a Green Deal? The implications of material and monetary flows.

What Kind of a Green Deal? The implications of material and monetary flows.

What Kind of a Green Deal? The implications of material and monetary flows1.


Introduction: the resurgence of New Green Deals. 

Green Deals, Growth and Material Flows 

Paying for a Green Deal: monetary flows. 

Introduction: the resurgence of New Green Deals.

With increasing momentum, the idea of a New Green Deal (or Green New Deal) has entered the mainstream of progressive political debate. While a group of British economists and campaigners promoted the idea more than ten years ago2, it didn’t take off then. Now, however, the seriousness of, and public attention to, the climate emergency has helped to revive the idea: an ambitious transformative programme is needed to decarbonise the global economy, not least in the rich countries. Almost simultaneously, a similar set of policy proposals have emerged in several places, including in the USA, with the (New) Green New Deal3 proposed by leftists in the Democratic Party (the “Justice Democrats”4) and adopted by some of the prospective presidential candidates, in the UK, with the Labour Party’s Green Transformation paper5, in Spain, with the PSOE’s Transformación Ecológica6, and in the programme of Yannis Varoufakis’s pan-EU party DIEM 25. These all share the idea of investing in the rapid decarbonisation of the economy, creating “green jobs” in sectors such as renewable energy and housing retrofit, and offering a Just Transition for workers in those industrial sectors (predominantly fossil fuels) that will have to be closed down and replaced.

However, these policy frameworks all have shortcomings: none is, as yet, sufficiently detailed, each leaves significant gaps in the areas that have to be addressed, and all are promoted by parties that have yet to gain power or (in the Spanish case, with a challenging general election imminent) regain it.

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An economy that does not grow?

An economy that does not grow?

cover of S Lange, Macroeconomcs Without Growth - click for the publisher linkThere is now plenty of evidence that economic growth is highly problematic for human welfare and survival. The evidence comes from three domains. 1) The ecological: continual growth uses up the resources that supply and the sinks that take the waste from human activity globally. 2) The social: economic growth does not correlate well with human welfare and its supposed benefits, rather than being shared, become ever more concentrated at the top of the wealth and income pyramid. 3) The economic: economic systems that rely on perpetual growth are inherently unstable, and meet internal and external constraints (or contradictions) that undermine them.

While it may be clear that the wager on endless growth is a bad one, a more difficult question arises: “what would be the characteristics of an economy that does not grow?”.

In his book “Macroeconomics Without Growth1” Steffen Lange attempts to construct a framework for answering this question, rooted in the three main approaches to theorising the economy, hence the subtitle: “Sustainable Economies in Neoclassical, Keynesian and Marxian Theories”. The book is a valuable contribution to the theory and practice of degrowth and provides a solid grounding for interventions in the policy arena, including those by political parties that seek to construct a coherent alternative, rather than a mishmash wish list of proposals. A strength of the book is its rigorous, formal analysis of the main theoretical approaches and what they say about the preconditions for growth, and the possibilities of zero growth.

As such the book extends to 583 pages, and the detail, with recourse to mathematical formulae to capture the various models and sub-models, will mean that many will not read it. The aim of this essay review, then, is to summarise the book, emphasising the synthesis reached by Lange, and suggesting a few issues that arise.

In search of the macroeconomics of post-growth.

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The Viable Economy – and Viable Finance

The Viable Economy – and Viable Finance

money and hands

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It is all too clear that our economy is precarious, economically, socially and ecologically. Steady State Manchester promotes the Viable Economy1, which means greater resilience, localisation, and balance as economic activity is treated not an end in itself, but rather as a means to deliver a sufficiently prosperous future without continual “growth”. The Viable Economy aims to bring the economic system under the control of society, building a culture that favours equality, solidarity and cooperation. Finally, a viable economy recognises the finite nature of ecological resources and embraces an ethic of stewardship by minimising imbalances to the planetary systems – including the climate, biodiversity, and nitrogen and phosphorous cycles – upon which human life depends.2

Any economy requires a sound financial system to facilitate its necessary transactions. Here we take a look at some current and recent financial innovations, asking whether they might help us move in the Viable direction.

Types of financial innovation

We will organise what follows in terms of the following categories, even though they do overlap somewhat.

Financial institutions that serve the interests of the community.

  1. Community investment

  2. Community-based currencies

  3. Non-monetary community exchange schemes and credit.

We will not be discussing monetary reform, popular among some parts of the alternative economics and degrowth movements: we have critically discussed one set of proposals in this area previously.

  1. Financial institutions: Community banking

A movement is now gathering pace to fill a gap in the UK’s banking system, that of mutual or co-operative, regionally-based banks, orientated to the local economy, and specialising in offering financial services to smaller enterprises, as well as local citizens. As Greenham and Prieg (2015) noted,

The UK lacks … a local stakeholder banking sector, particularly in certain key markets. We use the term ‘stakeholder banks’ to include any ownership or governance structure that has a broader remit than simply to maximise returns to shareholders. 

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We need to end growth dependency, but how?

We need to end growth dependency, but how?

Introduction: escaping growth-dependency

It has long been understood that the standard economic prescription of economic “growth”, to fix multiple economic, social and environmental ills, is highly implausible3. This stems from the elementary observation that you cannot expand the material throughput of the economy (the materials and energy it consumes) without coming up against the limits imposed by the biophysical systems of the earth that we all rely on. There are other dimensions to the critique of “growth”, 1) the destabilising economic impacts of the reducing return on investment as materials and energy sources become scarcer, 2) the failure of economic growth to benefit those who are economically and socially disadvantaged, and 3) to deliver increases in well-being for the population as a whole (once a certain overall standard of living has been reached), which supports the idea that we need a different kind of civilisation ethic, one based on sufficiency rather than excess4. Against the implausible wager on “growth”, I and colleagues in Steady State Manchester have argued for a Viable Economy,

… an economy that is resilient and dynamic, providing enough for all, while supporting social well-being. And it must be ecologically viable, not causing further damage to the earth’s fragile systems without which life is not possible.”5

The understanding that you cannot grow the material economy for ever was given a clear focus by the work of Donella Meadows and colleagues in the 1970s with their Limits to Growth report6. That report was criticised, largely on spurious grounds, leading to its eclipse and the dominance of the fudge of “sustainable development”, that you can continue to grow while producing environmental and social benefit. The bankruptcy of that idea is ever more clear as the earth’s ecological and biophysical systems lurch into a series of danger zones of which climate change, biodiversity loss and pressures on freshwater systems are just the most obvious ones.7

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Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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