The Case for the Green New Deal. Ann Pettifor

day after that victory the think tank where I work, Policy Research in Macroeconomics (PRIME), was contacted again by her team. We agreed to convene a small, trusted group of British economists in my apartment to deepen and broaden the discussion of how to finance AOC’s programme. We had a lot in common, including a shared commitment to the Green New Deal (GND).

      Ten years earlier, a group of British environmentalists and economists had spent many evenings in that same apartment, sustained by comfort food and the odd glass of wine, while furiously arguing, strategising and drafting a plan for transforming the economy to protect the ecosystem – a plan we called the Green New Deal. Our meetings took place at the height of the 2008 Great Financial Crisis and these events, the fall of Lehman Brothers, the debates on quantitative easing (QE) and bailing out the banks, injected a grave sense of urgency into our deliberations.

      While we were early adopters in 2008, we were not the first to call for a GND. That call had been made on 19 January 2007 by Thomas L. Friedman, a New York Times journalist in a column titled ‘A Warning from the Garden’.¹ ‘The right rallying call is for a “Green New Deal”,’ Friedman wrote. ‘The New Deal was not built on a magic bullet, but on a broad range of programs and industrial projects to revitalize America … If we are to turn the tide on climate change and end our oil addiction, we need more of everything: solar, wind, hydro, ethanol, biodiesel, clean coal and nuclear power – and conservation.’ The call was taken up first by President Obama, who included the Green New Deal in his platform.

      Later, in the autumn of 2007, Colin Hines, a onetime British Greenpeace staffer and campaigner, took up Friedman’s challenge and convened a group to draft an ambitious plan for a Green New Deal that might both transform the economy and safeguard the planet. Besides myself, the group included Britain’s only Green MP, Caroline Lucas; the macroeconomist and senior trade union economist, Dr Geoff Tily;² the Guardian’s economics editor, Larry Elliott; the environmental campaigner and author, Andrew Simms; Jeremy Leggett, director of an international solar solutions company, Solarcentury; the tax and accounting expert, Richard Murphy; and two recent directors of Friends of the Earth, Charles Secrett and Tony Juniper.

      Our report, published in July 2008, called for ‘joined-up policies to solve the triple crunch of the credit crisis, climate change and high oil prices’. It argued that

      the global economy is facing … a combination of a credit-fuelled financial crisis, accelerating climate change and soaring energy prices underpinned by an encroaching peak in oil production. These three overlapping events threaten to develop into a perfect storm, the like of which has not been seen since the Great Depression. To help prevent this from happening we are proposing a Green New Deal.

      July 2008 was a strange time, a hiatus between that bleak day in August 2007 – when inter-bank lending froze and liquidity in capital markets evaporated – and the collapse of Lehman Brothers in September 2008. Central bankers had rushed to provide liquidity to investment banks in August 2007 when their bankruptcy threatened global systemic failure. The publicly financed and taxpayer-guaranteed bailouts of that month appeared to work. Regulators and politicians were lulled into believing the crisis had been managed.

      The American and British public appeared to accept this view. By July 2008, people were going about their daily lives reassured that the worst had been averted, unaware that a huge global investment bank was about to implode and blow up the global financial system. It was during this strange lull in the crisis – a crisis that as I write, is still not over – that we tried to gain political traction for the Green New Deal.

      Initially, the United Nations Environment Programme (UNEP) took up the call because of the GND’s ‘enormous economic, social and environmental benefits … ranging from new green jobs in clean tech and clean energy businesses up to ones in sustainable agriculture and conservation-based enterprises’.³ In 2009, Gordon Brown called for an international ‘green new deal’ to boost the environmental sector and help lift the global economy out of recession, while Green members of the European Parliament called for a European Green New Deal to tackle the continent’s economic problems in a sustainable manner. Despite this support, both in Europe and the United States (where the Green Party took up the call) our efforts were soon eclipsed by the chaotic aftermath of the Lehman Brothers bankruptcy.

      Ten years later, Alexandria Ocasio-Cortez and her team came up with their own, ambitious Green New Deal – a ‘plan to solve three critical problems at once: the threat climate change poses to America’s security, poverty and inequality, and the racial wealth gap’. Central to the US GND is the Job Guarantee, to give ‘every unemployed American who wants one, a job building energy-efficient infrastructure’.

      This is how a young woman of colour, the youngest person ever elected to the US Congress, ignited a political torch under a radical proposal for preventing the collapse of earth’s life support systems. Her plan went viral on 13 November 2018, when young people blocked the corridors of US Congressional power with the warning that climate breakdown threatened their futures. The Sunrise Movement corralled the newly elected Democrat into joining their sit-in outside the office of Nancy Pelosi, likely next Speaker of the House of Representatives. Together they demanded political backing for a Green New Deal.

      At the time of writing, that political backing has not been forthcoming. Indeed, climate breakdown did not make it into the 2019 Democrat leadership’s list of priorities for the new Congress. Speaker Pelosi was dismissive, despite claiming on her Congressional website that she had ‘made the climate crisis her flagship issue’. Instead, she went on to disparage the Green New Deal as ‘one of several or maybe many suggestions that we receive. The green dream, or whatever they call it, nobody knows what it is, but they’re for it, right?’⁴

      Yet a survey conducted by the Yale Program on Climate Communication in December 2018 found that the AOC’s Green New Deal had ‘strong bipartisan support’. Most Democrats and 64 per cent of Republicans backed the plan, without knowing it was promoted by a Democrat.⁵ Millennials (those aged between eighteen and thirty-seven) supported the Green New Deal by nearly a thirty-point margin, according to a poll conducted by the Nation.⁶ Evidence of its potential popularity did not prove sufficient to persuade the Democrat leadership, older American voters, mainstream Democrats or right-wing Republicans.

      This worrying lack of support for a sound and rational programme for tackling climate breakdown and economic injustice was the spur that drove me to write this book. For, as the environmental journalist David Roberts argues, while there is immense potential energy in the GND, ‘converting that heat to power – to real results on the ground – will involve a great deal of political and policy engineering, almost all of which lies ahead.’⁷ If we are to convert that heat to power, supporters of a Green New Deal must explain how policy can be engineered so that their visionary programme can be financed – without transferring the burden of higher taxes on to the working class (often defined in the US as the ‘middle class’).

      At the heart of the scepticism around the GND lie these questions: how, realistically, can such a radical transformation be brought about within ten years or so? How can today’s governments and their allies in the private sector afford to finance such a transformation? What will happen to workers in fossil fuel industries?⁸ This book will attempt to address those questions.

      But first things first.

      What Is the Green New Deal?

      The Green New Deal demands major system change: both economic and ecological system change. It demands structural (governmental and inter-governmental) changes, not just behavioural, community or technological change, in our approach to the financialised, globalised economy and ecosystem. In addition, and as in the 1930s, such change must be driven by a radical structural transformation of the economy, particularly the financial sector.

      The idea was developed in Britain in 2008 on the understanding that finance, the economy and the ecosystem are all tightly bound together. Protecting and restoring the ecosystem to balance cannot be undertaken effectively, we argued, without the transformation of the other sectors. Joined-up policies are needed. Financing the hugely costly overhaul of the economy