Ann Pettifor, who recently spoke to a “packed” online public meeting organised by Labour International, knows a thing or two about the now popular Green New Deal (GND). She was a co-author of a seminal 2008 GND report published by the New Economics Foundation (NEF). That report was ahead of its time but now the inspiring leadership of Alexandria Ocasio-Cortez in the US has brought the GND worldwide fame. There is also now a far better understanding of the workings of the monetary system such as the role of central banks, not only among the public but also the economics profession, partly thanks to the rise of Modern Monetary Theory (MMT).
The challenge is twofold: to transform the economy while protecting the ecosystem. Ann’s take-home message on how to achieve this is straightforward:
- We can afford to transform our economy away from carbon to renewables.
- Our monetary system is a social construct and can be repurposed for the GND.
Ann gave an illuminating introduction to the creation of credit by private banks – your mortgage or student loan is not derived from existing deposits or hauled out of the bank’s vaults. It is the result of a few keystrokes on a computer, creating the money out of thin air. It’s the central bank that sets the base rate of interest and, with tax collection agencies, enforces the value of the currency by demanding that we all pay our UK tax in pounds sterling. Ben Bernanke, the former Fed chairman, explicitly acknowledged that governments too create money out of thin air. He said the $ 85 billion given to bail out AIG came from the Fed’s computer – and incidentally, this money has now been repaid to the government with interest.
So the problem is not a lack of money. Indeed there are already huge amounts of money in the system in the form of private pensions but these are used by finance companies for speculation. We can redirect pensions towards socially productive goals such as the GND. This can be part of a much bigger transformation and re-regulation of the dysfunctional neoliberal markets. One idea is the creation of a sovereign wealth fund like in Norway, which recently announced that their fund will be reinvested in renewables. The financial system currently fuels consumption and in turn carbon emissions. The best example is Brazil, burdened with high-interest hard-currency loans which it funds by ripping down the Amazon. So we need “more time but fewer things” pushed to us by advertising and funded by big finance.
Labour is so far progressing cautiously on this issue, for fear of alarming the all-powerful City and some trade unions though Rebecca Long-Bailey talks of green jobs and Clive Lewis is a keen supporter of GND.
Ann took a whole raft of questions, commenting that her audience was really well-informed – positive money, MMT, the effect of Brexit (!), “swords to ploughshares” (arms conversion), Varoufakis’s GND funded by people’s quantitative easing, job guarantee, extinction rebellion …
Here you can find the NEF’s info on the GND.
Labour International’s AGM in Amsterdam (5th-7th April) will also discuss the GND so do come along if you can.
Aidan Constable