The Failure of Market Solutions and the Green New Deal – Pt 2

Alyssa Battistoni – 

As I argued in Part I of this post, we need to rethink not only the scope of state intervention in the economy, but what exactly the economy is. Instead of focusing on the industrial manufacturing “inside” the economy and trying to clean up the externalities that inevitably spill out, we need an economic policy that takes seriously the social and ecological functions that have been treated as external to the economy altogether. That is to say—we can no longer think of things like social and ecological wellbeing as “post-material” concerns or something to address as a “justice” bonus after we’ve gotten the economy growing again. Rather, these things are fundamental to how the economy works. So how far does “industrial policy” extend, and what would it mean with respect to social reproduction and ecological reproduction, from care work to carbon sequestration? And what in turn does this mean for the future of state action?

Climate discourse frequently moves almost seamlessly between the language of the “Green New Deal” and the call for “wartime mobilization.” World War II, this argument goes, is an example of undertaking rapid economic transformation in the face of emergency. As Bill McKibben writes, “Turning out more solar panels and wind turbines may not sound like warfare, but it’s exactly what won World War II: not just massive invasions and pitched tank battles and ferocious aerial bombardments, but the wholesale industrial retooling that was needed to build weapons and supply troops on a previously unprecedented scale.” To move away from fossil fuels, we need to “build a hell of a lot of factories to turn out thousands of acres of solar panels, and wind turbines the length of football fields, and millions and millions of electric cars and buses.” We do need to build a lot of solar panels and other clean energy technologies. But that’s a short-term transition strategy—not a model for a new economy. After the war, the expanded productive capacity was redeployed again, towards mass production of consumer goods for the benefit of private capital, with serious environmental consequences. But the emphasis on building factories also fits uneasily with the New Deal analogy.

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The Failure of Market Solutions and the Green New Deal – Pt 1

Alyssa Battistoni – 

market failures.jpgFor the three decades that climate change has been a political issue, it has been understood primarily as an instance of severe “market failure”: as the 2006 Stern Review on the Economics of Climate Change explains, “greenhouse gas emissions are externalities and represent the biggest market failure the world has seen.” In other words, carbon emissions do not have a direct price, meaning that emissions send no market signals and are not included in economic decision-making. The most prominent solutions to climate change have followed this model, recommending a carbon tax or other economic measures by which to “internalize the externality” of greenhouse gas emissions—to account for the social and environmental costs of carbon. Pricing carbon is supposed to make fossil fuels more expensive, ostensibly creating incentives for innovation in clean energy and other green technologies, and in turn prompting a shift towards their use.

In this first of two posts, I’ll explain how this model developed, and what kind of intervention the Green New Deal represents. In short, the scale of transformation called for implies a far more robust role for the state, going beyond mere market corrections to more substantial intervention in the economy. I’m not convinced, however, that the current framing of the Green New Deal is steeped in a vision of the old economy, and doesn’t address necessary support for social and ecological reproduction. (I’ll elaborate that critique in my second post.)

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The Green New Deal: What’s Green? What’s New? What’s the Deal?

Robert Hockett –

ACO.jpg

During their first weeks in the new U.S. Congress, U.S. Representative Alexandria Ocasio-Cortez and her colleagues already have done something no other American political figure has managed for decades. They have got the whole country, and indeed much of the world, talking about massively transformative public investment as a real prospect.

The ‘Green New Deal’ exceeds in scale and scope all major undertakings of U.S. federal, state, and local governments since both its namesake – Franklin Roosevelt’s original New Deal – and the mobilization effort for the Second World War in 1940s, respectively. And this is true irrespective of what measure of ‘size’ you might use – geographic and cross-sectoral scope, number of firms and sub-federal units of government apt to be playing a role, segments of the population who will be playing a role, dollar value of real expenditure, dollar value of expenditure as a percentage of GDP, … you name it.

Ambition on such a scale always draws carping and naysaying from the timid, the cynical, and the economically uninformed, and this time has been no exception. Predictable expressions of skepticism and incredulity, along with the usual ‘what about partisan gridlock’ and ‘how will you pay for it?’ queries, have abounded. Even some self-styled progressive politicians have hedged their bets, approving ‘the concept’ while studiously shying away from declaring on any particular instantiation.

Against such a backdrop, we do well to recognize that in the present case, ‘size matters’ – and matters in a way that the politically demoralized, the fiscally austere, and tepid allies alike seem to miss. The problems the Green New Deal addresses, in short, are problems where bigger is better, is imperative, and is, paradoxically, more politically feasible and ‘affordable’ too where responding is concerned.

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