Neo-liberalism | ukwatch.net

Bad Weather, Bad Politics and Catastrophic Economics

eddie — Wed, 15 Oct 2008 17:03:20 +0000

The world is facing a serious and deteriorating water crisis. This crisis can be attributed in part to population growth and urbanisation, and also to climate change. The quantity of water on and in planet Earth remains more or less stable, though the amount available may rise or fall with overuse, geopolitical change, changes in climate, and technological progress. At the same time, the number of people is growing, as is their concentration in greater numbers in fewer areas. In many parts of the world, moreover, people have become more prosperous, and their water use has risen with their incomes. A warming world is bringing about changes in water availability which are unpredictable and often quite sudden, posing constant problems for those whose task is to ensure that adequate quantities of water get to where they are needed.

The crisis of water is not, however, simply a natural disaster to which we must respond as passive victims. As the recent UN report Water for People, Water for Life emphasises, this crisis is “essentially caused by the ways in which we mismanage water.”

It is often said that water is free, and belongs to us all. This may be the case, but getting it to where it is needed costs money and requires decisions to be made about where that money is to come from. These are political, social, and managerial decisions, and like all such they involve questions of social justice and equity.

Ensuring the extraction of sufficient water from the most appropriate available sources in the face of population growth and changes in economy, technology, politics and climate poses problems for the management of water for drinking, for sanitation, for agriculture and industry, for cooling systems and for a host of other purposes. As things stand, this management is failing, and as a result not only individual human beings but entire communities and their cultures are under threat. It is not failing, moreover, because of human error or incompetence, or because the tasks involved are simply too great or too difficult. It is failing, instead, because of two closely-related phenomena: the subordination of social and environmental goals to the economic interests of powerful corporations; and the failure to develop systems of economic and environmental planning capable of underpinning our survival as a species. This subordination and its accompanying failure of planning are both to a large extent the fault of the European Union. This is true within Europe, but even more so beyond its boundaries, though in the latter case its guilt is shared with that of other representatives of the rich and powerful countries which run the world, and the corporations on behalf of which they run it.

Extreme weather events are increasing in frequency as a result of climate change. Their implications for human societies and the environment of which they form part depend also on political decisions. The effects of climate change are comparable in many ways to the effects of war. It is a violent, disruptive and destructive process, a response to which demands careful decision-making, careful planning, and meticulous implementation of the decisions and plans which result. Total war, in which entire populations are involved, has produced a response in modern times characterised by the socialisation of economic activity and a high degree of state intervention and planning. In addition, in such times, nation and community come to be perceived as unified entities which must be nurtured and preserved. The acceptance of the need for burden-sharing and equitable treatment grows, and economic and social activity becomes directed towards a common goal. Climate change is the result of short-sighted and uninformed economic and political decisions. It is potentially disastrous that it should become manifest at a time when thirty years of propaganda based on distortion of the truth and on downright lies have led to the spread of concepts which reject and contradict such ideas. To the fantasy of “free markets” can be added an individualism and egoism which offers no possible response to the severe problems with which the world is faced.

It is unfortunate that climate change is beginning to have a tangible impact in an era when the huge commitment of public investment and endeavour which would offer the only possibility of a mitigating response are unlikely to be forthcoming. The European Union’s promotion of private ownership of water supplies and its failure, internally, to deal with major problems of waste, particularly through inefficient use of water in agriculture, makes it a cause of the problem rather than a body to which we can look for solutions. The dominant economic ethos in Brussels and almost every EU capital is neo-liberalism, an orthodoxy embodied in every treaty since Maastricht. The spread of neo-liberalism in the epoch of climate change has created a dangerous synergy which threatens to undermine global social and economic stability, leading to ecological catastrophe, disorder, epidemic and war.

It cannot be said that the European Union has failed to show an awareness of the urgency of the problem. Measures to ensure the quality of Europe’s water resources constitute a major body of EU environmental legislation, covering a range of issues including groundwater conservation, drinking water quality, bathing water quality, chemical contamination, flooding, conservation of wetlands, river and marine resources, and urban waste management. However, the effectiveness of such legislation has been persistently undermined by the overexploitation of freshwater in agriculture, in industry and by the polluting effects of much economic activity. The European Commission believes that 20% of all surface water in the EU is seriously threatened by pollution and that six out of ten European cities overexploit their groundwater resources. Meanwhile, half of European wetlands are classed as “endangered”, while the area of irrigated land in Southern Europe has increased by 20% since 1985.

Externally, the EU must share the guilt borne by the IMF, World Bank and World Trade Organisation, all of which have persistently promoted increased private sector participation in water and sanitation services. This fanatical devotion to the ‘market’ as a solution to the problems involved in organising water supply flies in the face of the available evidence. For it is a fact that, measured by the proportion of the affected population gaining access to clean water, privatisation of water supply and deregulation of the market surrounding it have failed to record a single success. Public ownership does not guarantee that problems will be effectively addressed, but privatisation guarantees that they will not.

The European Union Water Initiative, which governs much of the EU’s approach to water policy in third countries, particularly developing countries, is designed primarily to increase the world market share of European corporations. The problem goes beyond this, however, as a whole range of EU policies, including the Common Agricultural Policy, in effect deprive developing countries both of water itself and of the means to tackle water shortages. Seen in this light, the Millennium Development Goal for water, which includes a commitment to halve the number of people in the world who do not have ready access to a clean and adequate water supply, becomes nothing more than a business proposition. Internationally, water supply reflects global inequalities, and in the most grotesque fashion. Extravagant sporting and leisure facilities, many built with European capital by corporations featherbedded by EU policies, are built alongside barrios lacking any safe water supply. The EU has the means to tackle these problems, but chooses instead to transform itself into Fortress Europe, as more and more people from societies squeezed dry of resources, attempt to migrate into Europe to find work.

Water policy, in its many aspects, reveals the real nature of neo-liberalism, the final, or perhaps merely the latest, phase of the sequestration of the world’s resources into private hands and their exploitation for profit which has been proceeding for hundreds of years. The only way to solve the crisis of water and the broader crises of climate change, to address hunger and poverty and the unequal distribution of power and wealth which underlie these evils, is to reverse this process and to begin to take vital resources back into public ownership and popular control. This means that, whilst it is important for each and every one of us to conserve water as individual consumers and small producers, to lay too much emphasis on this would be at best to miss the point, at worst to offer a deliberate distraction from that point. Individual behavioural changes are perhaps most important as a constant reminder of the need, at the levels where authority is exercised – locally, nationally and internationally – for the kind of policies we need to ensure are adopted if we are to avert catastrophe and save lives. This can only be achieved, moreover, if the kind of radical thought and action necessary to win the war against climate change, against water shortage, drought and flood, is taken into every area of political, economic and social thought, reordering priorities and creating structures that would make such a reordering effective, undermining those which prevent this from occurring.

Only active and well-informed citizens capable of organising systematic campaigns against the existing power will prove effective in the global resistance so urgently needed. The current global food crisis is entirely a product of the coming together of bad weather, bad politics and catastrophic economics, including the bad politics and catastrophic economics which have been applied to water supply. Water, the supply of which to everyone on the planet poses no insuperable problems and could be achieved with good political will and modest resources within a generation is instead rapidly developing into a major source of international conflict. So-called “free markets” cannot provide the means to address climate change or the problems associated with it, including the problems of water supply, of sanitation, and of drought and flood.

Kartika Liotard is a Member of the European Parliament for the Socialist Party of the Netherlands and the United European Left. She sits on the Environment and Agriculture Committees and is currently writing a book on the politics of water with Spectrezine editor Steve McGiffen.

Solutions for a Sustainable World

Ellie Keen — Sun, 12 Oct 2008 13:49:38 +0000

The Schumacher lecture

The Schumacher lectures are traditionally held in Bristol but have now branched out so that Schumacher North, based in Leeds, also organises the series. They occupy a day, with three people delivering lectures and a final panel. My companions for this day were Anne Pettifor, well known for her leadership of the Jubilee 2000 Debt campaign and Andrew Simms of the New Economics Foundation. My contribution was written in mid-September 2008; the continuation of the financial crisis makes it, I think, all the more pertinent.

Please first let me congratulate the organisers of Schumacher North for their initiative in bringing this lecture series and other activities of the Schumacher Society to Leeds. It’s an honour to be here and especially to share the platform with two brilliant people whom I greatly admire. I also want to thank the organisers for the privilege of honouring the memory of Dr Schumacher, a man far ahead of his time who bequeathed to us a lasting legacy. It’s a challenge to be worthy of that heritage in a lecture bearing his name.

But I intend to try. My talk today will concern the stage I’ve arrived at in a kind of reflexion in progress—I don’t mean a book, although it may well become that as well—but an effort to make sense of the fast moving events in our battered world and an attempt to think about them in a more unified way.

Philosophically speaking, the thing-in-itself, the isolated object whether it’s an electron, a human cell, an organism, a single word —even a human being—makes sense only in the context of its relationships, its place in its physical, linguistic or social environment . Margaret Thatcher once famously said, “There is no such thing as society”. She thus perfectly embodied the foundations of the neo-liberal ideological programme which should, ideally, prevent us from even thinking about ourselves and others in our natural and social context. We must be taught to believe that we are not citizens or members of a social body but discrete, individual consumers. We are entirely responsible for our own destinies and if we fall by the wayside for whatever reason—illness, job loss, accident, failure, whatever—it’s our own fault. We should have foreseen the case and planned for it. We have no responsibility for other people either. Solidarity is a banished word. Nor are we accountable for the state of the planet—homo sapiens is the only important species and humans are isolated if not immune from natural, physical laws. That’s the essence of the neo-liberal spirit: “You’re on your own” as Barack Obama has been saying to Americans to encapsulate the philosophy of his opponents.

If you are well-schooled in neo-liberalism, you will never join a social movement, never engage in a struggle against an unjust action of the government, never contribute to an effort to protect the natural world because not only will you make a fool of yourself, not only will your effort fail, but even if successful it will lead eventually to oppression, even totalitarianism, as Thatcher’s mentor Professor Friedrich von Hayek argued. And, as he also taught, economic freedom is superior to every other kind of freedom, whether political, religious or intellectual.

I believe to the contrary that our only hope lies in understanding everything we confront today as a link in an ever-more-complex chain, as an element in a system. The danger with this approach of course is to become lost and frustrated in the syndrome of “Everything is connected to everything”. That’s true, everything is connected to everything, but we still have an enormous task ahead in trying to identify the priority connections, to understand how they work together and what we can do to change them, because they definitely do need changing. I will argue that the present connections are dysfunctional, they have become perverse: they form a system that worsens the human condition and irrevocably damages the planet. But there is hope, because what has been constructed by humans can also be dismantled by them.

All this may sound rather vague so let’s get down to specifics. To make matters more concrete, I’d like to talk now about the most obvious crises we face collectively today, why they are all linked and why the solutions to them must be linked as well.

The first of these crises is social—the crisis of mass poverty and growing inequality within individual countries and between the rich and poor countries. The second is the financial crisis that Wall Street, the City and the public authorities refused to see coming because they were living in bubble-land. It began with the subprime affair in the United States but has spread inexorably like a lava flow in the US and elsewhere, threatening to plunge the global economy into a prolonged period of stagnation as severe as the Great Depression. Every day while I was writing this lecture at home, a new financial institution went down the drain or on the block and the end is not yet in sight. The third crisis, most ominous of all, is that of climate change and species destruction. It is accelerating faster than most scientists, much less governments, thought possible, causing many to ask if we have not already entered the era of the runaway greenhouse effect.

Each of these crises—social, financial, environmental—is negatively linked to the others, they intensify each other with negative feedback; they lead to worst-case scenarios. Let us take just a few examples of these perverse interactions.

The poverty-inequality crisis is a good place to start. This crisis is well documented; no one seriously denies the numbers. The World Bank recently recognised that it had grossly underestimated—by about 400 million—the numbers of the very poor, and even then its figures stop at the year 2005 and don’t include recent upheavals in food and energy costs that have swelled the ranks of the impoverished. Even more important, however, is the fact that for the first time in human history, there is no excuse for mass poverty and deprivation. Taking this assertion seriously already helps to point us towards a solution.

Most scholars and institutions concerned with such issues focus on poverty per se but I think it’s more useful and enlightening to focus on wealth. It may not be obvious to everyone that the world is actually awash in money. Most of it is still in North America and Europe but the numbers of the seriously rich on other continents are catching up fast. Those who have the money know very well how to keep it and, with their hired help, the battalions of lawyers, accountants and lobbyists, they are busy salting away their profits in tax havens, finding loopholes and protected investments, lobbying fiercely in parliaments and ministries against regulations on banks and financial markets. As you can see, I began by talking about poverty but I am already touching on the links with the financial crisis.

How many of you knew that ten million people, according to the latest Merrill-Lynch World Wealth Report, together boast investable, liquid funds of more than $40 trillion? That’s 40.000 billion or 40 followed by 12 zeroes. This wealth is above and beyond the value of their houses, cars, yachts, wine or art collections and so on and it is equivalent to about three times the GDP of either the United States or Europe. You might like another simple calculation. Assume that you have one billion dollars, which is the cut-off point for the latest Forbes magazine list of 1125 truly rich individuals in the world. If despite your billion you are such a dim-witted investor that you get only a five percent return on your fortune, you will still have to spend $137.000 every day of the year in sheer consumption or you will automatically become richer. My point is that cash is abundant and there’s no shortage of available wealth.

We also know a great deal about inequality. The UN World Institute for Development Economic Research, WIDER, estimates total world household assets at about $125 trillion. This is about three times world GDP and unsurprisingly, the top two percent of the world captures more than half of that wealth. The top 10 percent, which certainly includes many of us here, hold 85 percent, while the bottom half of humanity is obliged to stumble along with barely 1 percent. All you need to be classed in the top half of humanity is a meagre $2200 in total assets—that includes your house, your land or items like your car or your refrigerator—hardly a princely sum. If all household assets were divided equally—impossible and probably not even desirable to achieve—everyone on earth could have a share of $26.000. So again, money as such isn’t the problem.

In all the countries where 90 percent of the world’s population lives, inequalities have increased especially since the 1980s. At this point in the argument, the neo-liberals usually jump in to remind us that rising tides lifting all boats. They admit that inequalities have grown, but still argue that the poor are better off than they were. It seems almost rude to remind them in turn that falling tides have the opposite effect, they swamp and strand the more fragile boats and that is where the tide of the financial crisis is now taking us.

The real point, however, is not the absolute numbers but the fact that inequality makes the economy and also the natural environment worse for everyone, rich or poor. Two experienced academics, Tony Addison and Giovanni Andrea Cornia, put it this way: “Inequality has risen in many countries over the last two decades [and] little progress can be made in poverty reduction when inequality is high and rising….Contrary to earlier theories of development, high inequality tends to reduce economic growth and therefore poverty reduction through growth.”

Although it’s true that economic growth has reduced poverty, particularly in China, one must also ask “At what cost?” China has now overtaken the United States in greenhouse gas emissions and frighteningly has hardly even begun its transition to the automobile society. China also requires at least 10 times as much energy as the more mature industrial societies to produce a unit of GDP.

Growth certainly isn’t the answer ecologically, but even economically it fails the test because the benefits accrue almost entirely to the top of society. That is Cornia and Addison’s main point.

We have also learned in the past few months that it is entirely possible to push tens of millions of poor people off the ledge where they had just gained a foothold and send them back into the depths of poverty. Food riots, most of them urban, in at least thirty different countries have revealed another scary new phenomenon: the worldwide food crisis. Until now, food shortages and famines tended to be local, but so many societies have accepted neo-liberal trade mantras and become dependent on world markets for their basic daily staples that today a sudden spurt in prices is felt from Haiti to Egypt to Bangladesh.

The neo-liberal institutions like the World Bank, the WTO and the European Commission continue to pretend that poverty reduction will result from more growth and more trade. They fail to mention that both growth and trade will reinforce the environmental crisis. The food and energy crises have in turn strong links to the financial crisis, since speculation has been an important factor in both. Food and energy are also intimately linked to the climate crisis as one can see instantly when one thinks of carbon-loaded fossil fuels or of agro-fuels taking vast amounts of land away from food production.

At this point in the discussion, especially when one is speaking to concerned, engaged, decent people like those likely to be found at a Schumacher lecture, someone will raise two highly pertinent questions. The first is this: “ Isn’t there a point where people with huge fortunes say ‘enough is enough’ and start sharing?” Some do—Bill Gates and Warren Buffet are oft- cited examples. But as a class, I’m sorry to say that the answer is no. We know a lot about poverty lines but there is no such thing as a wealth line and the word “ enough “ is not part of the vocabulary of this class. You needn’t believe me. Listen to the expert who said “All for ourselves and nothing for other people seems in every age of the world to have been the vile maxim of the masters of mankind.” That was not Karl Marx but Adam Smith, in his classic 1776 treatise on capitalism, the Wealth of Nations. Little has changed since then.

The second question is “But why don’t the neo-liberal institutions, like the World Bank, the International Monetary Fund, the World Trade Organisation, the European Commission and the US government recognise that their policies have failed? Why do they keep on pushing them wherever and whenever they can?” The answer is not just that institutions are always loath to admit their mistakes, especially when these have killed and ruined so many millions. It is also that these policies have not failed.

To the contrary, they have produced exactly the results they were intended to produce. They have made a tiny fraction of international society rich beyond imagining, they have kept many dependent countries dependent in a new, less visible sort of colonial relationship and they have made so-called free trade, privatisation and unfettered capitalism the rule in countries that previously wanted little or nothing to do with them. Furthermore, they have imposed their policies with relatively little organised protest because their ideology has been expertly produced, packaged and delivered. Ideology can alas have a far stronger influence than facts. This is why we must fight on the practical front, of course, but also — I happen to believe primarily — fight the battle of ideas.

In any event, the massive funds belonging to rich people who already have most of the material goods they need or want are generally devoted to more or less speculative investments. Hedge funds, for example, are estimated to be sitting on about three trillion dollars, even today when so many investments have suffered melt-down. The financial institutions have been frantically innovating, particularly over the last decade. The entire incentive structure of the banking and finance industry has become perverse: the large institutions know perfectly well that they are “too big to fail”, consequently they also know that no matter how risky their actions, they will be bailed out by the public purse and has become all too plain. Beforehand, top management takes the money and runs.

Between the years 2000 and 2006, average annual profits of the financial sector in Great Britain averaged 20 percent—that is, two or three times the profit rate of other sectors of the economy. Huge bonuses, especially in the US and the UK, went to a handful of people, intensifying inequalities, whereas millions further down the ladder have lost their jobs and often their homes. Such profits were themselves clearly not sustainable because at some point, financial gain must be based not just on speculation but on the real economy.

Now that the bailouts are coming thick and fast, we have before us a singular example of socialism for the rich, the well-connected and Wall Street, in which the profits are grabbed by the usual suspects and the losses, tremendous losses, are billed to taxpayers. The United States has in effect nationalised these institutions and their debts—without getting anything from the financial industry in exchange.

As the sub-prime crisis has continued to ooze like a giant oil spill over the whole economy, speculators have searched for alternative profitable areas and created the food-price bubble trouble in which we now find ourselves. What happens then? The resource-poor, the world’s hungry, grab whatever they can, they chop down trees, kill animals and overexploit what little land they may have. Poverty is bad news for nature. But so is wealth. Even though there are far fewer of them, the rich cause much greater environmental damage with their dinosaurian ecological footprints. People who use the population argument to explain the multiple crises and who see in population control the solution are missing a crucial point—it’s not so much the number of people, although numbers are important, as their relative weight.

Furthermore, as we have repeatedly witnessed, the frequency and the fury of storms provoked by global warming hit the poor and the poorer regions of the globe hardest. There is worse to come. We have not even begun to comprehend the perils of climate change, including vastly increased numbers of environmental refugees who will crowd the planet due to droughts, flooding and crop failures. The Pentagon is already working on how to stem this tide by countering by whatever means necessary the refugees frantic efforts to reach more favourable lands. Government planning for this perfectly predictable phenomenon is limited to increased surveillance and security responses, not attempts to make outmigration less necessary. And yet the UN Intergovernmental Panel on Climate Change [IPCC] which is probably the most respected scientific body in the world, has already warned us that in Africa, the yields of rain-fed agriculture are likely to be reduced by 50 percent, deserts will gain ground, species destruction has already reached such proportions that we are in the midst of the sixth geological extinction of the planet’s four and a half billion-year history. The fifth extinction was the one that put paid to the dinosaurs.

I could go on drawing out relationships between the poverty, financial and ecological crises but I’m sure you need no more. The question is what we can do about all this and by “we” , I mean people everywhere who understand that the triple crisis is real and urgent.

Knowing that I will doubtless offend a great many people here, let me say straight away that there is an exit strategy, a genuine solution exists, but it is not in my view the one that many well-meaning environmentalists have long advocated. I’m sorry, but the time has passed for telling people to change their behaviour and their lightbulbs; that if enough people do this, then together “we” can save the planet. I’m sorry, but “we” can’t. Obviously I’m not suggesting that people shouldn’t change their behaviour and their lightbulbs—but even if the entire population of Europe does so—a most unlikely scenario—it’s not going to be enough. I agree as well with proposals for localisation and scaling down, but we have also got to scale up.

We need large-scale solutions, sophisticated, industrial solutions and huge involvement of governments in order to cut greenhouse gas emissions drastically enough to save our future. In other words, we must have the courage to challenge not just our political leadership but the entire neo-liberal, unregulated, privatised, capitalist economic system in place in order to provoke and promote a quantitative and qualitative leap in the scale of environmental action. Dare I say it here? Sometimes big can be beautiful and right now is one of those times.

Since I believe that individual and local solutions are necessary but tragically insufficient to address the seriousness and the urgency of the ecological crisis, I will use the rest of my time to discuss the twin problems of how to deal with governments and with the capitalist corporate production and financial system. The dilemma I wrestle with is this: Can we save the planet while international capitalism remains the dominant system, with its focus on profit, share-holder value, predatory resource capture and with no-holds-barred finance capital making more and more decisions? Can we rescue our natural home when confronted with a powerful caste that does not know the meaning of “enough” and is allergic to the kind of fundamental change a New Ecological Economic Order requires? Can we move forward when governments basically work for the interests of that class?

On bad days I reply No: We can’t save the planet. It’s impossible to reverse the climate crisis under capitalism. But that is a despairing answer and if true, it means there is virtually no hope. No hope, because I do not see how even the most convinced, most determined people could replace, much less overthrow capitalism fast enough to carry out the necessary systemic change before a runaway climate effect takes hold—always assuming it hasn’t done so already. First of all, there are not that many convinced and determined people prepared to act against the dominant economic system and there is nothing that resembles in the smallest degree an avant-garde revolutionary party that might lead them even if they existed. There is no one-size-fits-all replacement solution for capitalism. Considering the historical record and role of such parties and such solutions, I consider this an unmistakably good thing.

But there are other obstacles to once-for-all revolutionary change. Nobody knows, figuratively speaking, who the Tsar is that we would have to overthrow today and nobody has a clue where to find the Winter Palace we would have to storm. We know the Winter Palace isn’t on Wall Street which was up and running again a few days after 11 September and is now taking full advantage of the bailouts. The US is only one of many world capitalist centres. Even if we were to win in one place, the nomadic money-moguls would simply mount their camels and head for another. The worlds of 1917 and of 2007 are utterly different, so we must try to move beyond this revolutionary impasse, this dead-end and find a new synthesis.

The question we face is not so much what to do — I think that is reasonably clear and I’m about to spell it out—but whether we will have the intelligence and the strength to seize the great opportunity with which we are now presented. Perhaps the words “great opportunity” strike you as wildly optimistic considering the long and dire preamble you’ve just listened to. However, I am now going to argue that not only are individual solutions insufficient but that the remedies offered by Kyoto, Bali, Bonn or whatever timid future agreements may be negotiated are tragically inadequate, Once more—I cannot stress this enough—the scale is crucial. And the great opportunity is to be found in the financial crisis itself. Properly targeted and used, it could open the door to the quantitative and qualitative leap we must make.

Some progressive people will reject the solution I propose, but I would then ask them what alternative they offer. The ecological crisis is of a different nature from the financial and poverty crises in the sense that once climate change is underway, as it is now, it is irreversible and we haven’t time for theoretically perfect solutions. With politics you can sometimes turn back and start over, but not where nature is concerned. So you can accuse me if you like of suggesting a way to give capitalism a new lease on life and I will plead guilty.

Let’s take first the slightly easier question “How can we deal with governments?” at least in the more or less democratic countries. China is another matter. People are generally way ahead of their governments in recognising the emergency. The political issue is not simply to “throw the rascals out” because they would be replaced by other rascals just as bad, just as beholden to the corporations, their lobbies and the financial markets. The trick is to convince politicians that ecological transformation and environmental practices can pay off politically.

This means that citizens, activists and experts, whether they like it or not, have got to work with local, regional and national politicians and governments; help them to find like-minded partners and formulate ambitious projects they can undertake on the broadest possible scale. Citizens, activists and experts must furthermore help these politicians and governments to become shining ecological examples with the electorate by publicising their efforts and their successes. Could the Schumacher Society become a kind of nexus for an ongoing forum of best-standards/best practice, bringing together political decision makers at every level with citizens groups and experts to discuss and carry out the best public-sector initiatives? Politicians must be convinced that these policies will not just work but also be highly popular with their constituencies.

Now let’s take the more difficult question of confronting the economic system as a whole. In his book Collapse, Jared Diamond examines several historical cases of social extinction due to over-exploitation of the environment. He identifies several common characteristics. One of these is the isolation of the elites, giving them the capacity to keep on consuming way above ecologically sustainable limits long after the crisis has already struck the poorer, more vulnerable members of society. That is where we are now globally, not just in isolated places like Easter Island or Greenland.

So how can we realistically combat the ecological footprints of our dinosaur elites, recognising that we don’t have the option of shouting “Off with their heads” in some imagined, world-wide revolution. Nor can we force them to change both themselves and the system that serves them so well, whereas we know that we must change that system because it is raping the planet and its inherent logic is to keep on doing so.

I can see only one way out: the coming together of people, business and government in a new incarnation of the Keynesian war economy strategy. I was born in the United States in 1934 and I remember well when the US switched massively to a war economy, converting all the rubber plants in my native city [Akron, Ohio] to production not for private cars and trucks but for the military. There was huge citizen involvement and support. Thousands of factories, research labs, housing projects, military bases, day care centres, and schools were built or expanded during the war. Public transport was improved and worked overtime to move millions of men and women to Army bases or new defence jobs.

Yes, there were still worker-management conflicts and yes, big corporations rather than small business got most of the government contracts but on the whole the workers were well paid, African-Americans and women began making a few modest gains and the whole war effort finally pulled the United States out of the Depression—it was Keynesianism on a huge scale. There was also an elite group of businessmen called “Dollar-a-Year Men” on loan from their companies to the government, who were charged with making sure that military production and quality targets were met. They had enormous prestige—my godfather was one and I was doubtless insufferable bragging to my little school friends about him.

Why am I going back over this ancient history? Because I think we have a similar opportunity today. The US and the world economy are heading downhill fast and the fallout for ordinary people in terms of jobs, housing, consumption and future welfare is going to be grave. If this diagnosis is right, then some new economic tools will have to be used to combat recession and stagnation, simply because the old ones have already been pushed to their limits and have little or nothing left to give.

The way Central Banks and Treasuries usually try to solve financial recession or depression is through standard remedies like interest rate cuts, currency devaluations or incurring new debt—but the United States has reached the end of its leash on that score. Interest rates are already extremely low—although not in Europe, where the European Central Bank and its hidebound president are ideologically committed to the same sorts of monetary policies that prolonged the Great Depression in the 1930s. The dollar is already weak, which makes US exports cheaper, but it can’t be devalued much further without risk. Deficit spending is already beyond belief. With the bailout of Fannie Mae and Freddie Mac, the Federal Reserve in effect took on their bad debt and added hugely to the liabilities of the United States Treasury. It risks doing so again. Households too are over-indebted and are losing more equity every day as the value of their dwellings deteriorates.

Since the traditional tools are worn out, the only new tool I can think of to pull the world out economic ruin and social chaos is a new Keynesianism, not military this time, but environmental; a push for massive investment in energy conversion, eco-friendly industry, new materials, efficient public transport; the green construction industry and so on.

Stringent standards for new buildings must become the norm; older ones can be “retro-fitted” on easy financial terms; families and commercial property-owners can receive financial incentives for installing green roofs and solar panels and sell excess energy to the grid. Research and development can be oriented towards alternative energies and strong, ultra-light materials for airplanes and vehicles. Technically speaking, we already know how to do such things, although some clean solutions are still more costly than dirty ones. Mass-produced, they would become less so.

All these new, eco-friendly industries, products and processes would have huge export value and could quickly become the world standard. I am trying to describe a scenario that can be sold to the elites because I don’t think they will embrace genuine environmental values and conversion if there’s nothing in it for them. But this approach is not merely a cynical attempt to get the elites to move in their own interests. There are also plenty of advantages in such an economy for working people. A huge ecological conversion is a job for a high-tech, high-skills, high-productivity, high-employment society. It would be supported, I believe, by the entire population because it would mean not just a better, cleaner, healthier, more climate-friendly environment, but also full employment, better wages, and new skills, as well as a humanitarian purpose and an ethical justification—just like World War II.

How could one finance such a huge effort? It would have to involve targeted government spending in the traditional Keynesian sense and governments are bound to complain that they haven’t the means to carry out such a policy.

The financial crisis provides the ideal opportunity both to finance the conversion and to get the runaway global financial system under control.

At present, taxes almost always stop at national borders. The secret is to take taxes up to the European level and to the international one through currency and other financial transaction taxes. People who oppose such schemes pretend they are not feasible because one would need to obtain the consent of every national jurisdiction in the world, but that is not correct. In fact, currency and other transaction taxes would require nothing more than political determination, the cooperation of the Central Bank and a few lines of software. For the currency transaction tax first proposed by James Tobin in the 1970s and now considerably refined, the tax base is the currency itself, not the place it’s traded. Thus the European Central Bank could easily collect the taxes on any transactions involving euros, the Bank of England the same for the pound, the Fed for the dollar and so on. Since currency trades now amount to $3.2 trillion dollars every day, a tax of one basis point, that is, a levy of one per thousand could raise a tidy sum for ecological conversion and poverty reduction. Britain already imposes a tax on stock market transactions but other European countries do not and should imitate Britain.

Carbon taxes are another much mooted and equally feasible idea. So is a unitary profits tax on transnational corporations, which would require knowing the total sales of the company, the total taxes paid, the sales realised in each jurisdiction and the tax paid in each jurisdiction. If, for example, a TNC reported that in country X, a particularly low-tax jurisdiction, it made 5 percent of its sales yet paid 50 percent of its taxes, the authorities would find it a bit fishy. I’m presenting an extremely crude summary here but believe me, there are experts—bankers, corporate lawyers, fiscal experts and accountants—who know exactly how to do such things. Perhaps to encourage more local consumption, one could also think about taxing the miles travelled by the food we eat and the clothes we wear.

We would not forget the poor countries of the South which are the major terrain of the poverty crisis. Debt cancellation for poor countries that the G-8 has been promising for a decade must finally happen but against the requirement that these countries also contribute to the planetary environmental effort through re-forestation, soil conservation, species protection and the like. They would also be required to involve their own people in democratic decision-making and the funds would be carefully monitored by independent auditors.

Tax havens that allow affluent individuals and corporations to avoid paying their fair share of the conversion should be shut down: it would be cheaper to pay the inhabitants of the Cayman Islands, Liechtenstein and the rest a living wage for twenty years. Plenty of cash would remain for eco-investments, job-creation and poverty relief.

In exchange for their bailouts, the banks and investment houses have to accept regulation—not just regulations to insure transparency and eliminate the incentives for stupid behaviour but also more stringent ones forcing them to participate in the ecological offensive. They should be obliged to devote X percent of their loan portfolios to eco-projects at below market interest rates—which they could make up by charging much higher rates on loans to dirty or otherwise anti-ecological projects. Low or no-cost financing for home conversion projects should be another compulsory priority for banks. This could give a huge spurt to the construction industry.

Nobody is asking for the moon here. Banks would still make loans, finance investments and earn a fair return for their services. Taxes on currency transactions at one basis point are not going to ruin anyone. Unitary profits taxes on large corporations would simply return us to the era when the companies paid their taxes because they couldn’t avoid them. The point is that a Keynesian taxation and redistribution system would be invested, nationally and internationally, both ecologically and socially, in education, health care, clean, green energy, efficient water distribution, communications technology, public transport, and various other things the world needs and that we already know how to do. These measures would, in turn go a very long way to creating opportunities for far more people to participate in the new green economy through jobs, life-long education, more social protection and reduced inequality. Getting the present financial crisis-producing, free-flowing, unregulated financial system under public and citizen control is the prerequisite for solving both the environmental and the poverty crises.

In other words, it’s a Public Relations dream. Whichever political parties understand this can win on such a programme without anyone having to bring down the entire capitalist system as a prior condition for saving the planet.

A Keynesian ecological programme would furthermore bring many constituencies together in a common cause. As matters now stand, politically speaking, no single interest group can solve the problem that concerns it most. By this I mean that, by themselves, ecologists can’t save the environment; farmers alone can’t save family farms; trade unions alone can’t save well-paid jobs in industry and so on. Broad alliances are the only way to go, the only strategy that pays. The Global Justice Movement, as international social activists call it, has begun to have some success in working democratically and making alliances with partners who come from different constituencies but are basically on the same wavelength.

Now we must go beyond this stage and attempt something more difficult: to forge alliances also with people we don’t necessarily agree with on quite major questions—for example, with business. This can only be accomplished by recognising that disagreements, even conflicts, can be fruitful and positive so long as the areas where it is possible to agree are sought out, identified and built upon. We must find where the circles of our concerns overlap. At least one of those overlaps ought to be saving our common home. I don’t see any other way of generating citizen enthusiasm, involvement and the qualitative and quantitative leap in scale that is now required.

I haven’t time to elaborate on all the technical details concerning the content and the financing of necessary environmental investments. What I can do is guarantee you that the conversion to a green economy is technically feasible. The schemes for new taxes have been thought through; the industrial prototypes already exist; the machinery is ready to hum into action the moment people can make their politicians accept the challenge. Getting the financial system under control and taxing international capital at quite ridiculously low rates in order to redistribute it institutionally and internationally would be enormously popular. We could seriously attack climate change and eliminate the worst of world poverty within a decade. We are talking politics, not technical aspects here and trying to figure out a way to tame the raging beast, the crisis-producing, free-flowing, unregulated financial system and putting it under public and citizen control.

Capitalism is not sane in the sense that most people understand sanity. We humans normally think about our future, that of our children and the future of our countries and the world. The market, on the contrary, operates in the eternal present which, by definition, cannot even entertain the notion of the future and therefore excludes safeguards against future, looming destruction unless these safeguards are imposed upon it by law.

We need law, for sure, and political forces with the backbone to propose and to vote the law into existence, but we also need to think about human motivation. Remember the prestigious Dollar-a-Year Men of the 1940s and imagine what might happen if we could transpose them into the world of 21st century capitalism. A significant number of contemporary captains of capitalism, all of them with bloated, unimaginable salaries, might be brought to believe that money is all very well, but is there nothing more? Why not found an extremely exclusive Order of the Earth Defenders, or the Environmental Knights or the Carbon Conquerors who alone, in recognition of their special contributions to the national and international environmental conversion effort. They would have the right to display a highly visible emblem on a banner in front of their homes; a fanion on their cars, a green and gold rosette in their buttonholes like the French Legion d’Honneur or a Congressional Medal of Ecological Honour. They would belong to the small assembly of the anointed; those who provide the means and have the honour of saving the earth. Becoming a member ought to appeal to their competitive spirit.

In conclusion, let me say that myth has always been the driving force of every great human achievement, from Greek democracy to the Renaissance to the Enlightenment and the American and French Revolutions. So must it be in the coming age of Ecological Stewardship. To save the planet, we must change, quickly and profoundly, the way the majority thinks and feels and acts, and we must start with the social forces we have right here and right now, and no others. It’s no use wishing they were different ones or stronger, or wiser. We must play the hand history deals us.

For such a change, we will need six “Ms”, starting with Money, Management and Media. But even more important than these three “Ms”, we must try to create a new sense of Mission and Motivation and Myth at the noblest level. “Myth” in this sense has nothing to do with story-telling or lies. It is the grand narrative that empowers us to believe that we can accomplish what we must accomplish. It speaks to the deepest motivations of human consciousness and inspires the desire for honour and for a life’s work which transcends death. The elites already have Money, Management, Media. On our side, we have Mission, Motivation and Myth. If we can bring together all these, the future will take care of itself.

And wouldn’t that be nicer than having another war?

Thatcher's shadow falls over Alex Salmond

tim — Tue, 26 Aug 2008 19:44:40 +0000

British politics have for the last thirty years been shaped by Margaret Thatcher, Thatcherism and the legacy of Thatcher’s period in office.

All of the mainstream politicians who have followed her – John Major, Tony Blair, Gordon Brown and David Cameron at a UK level, and Alex Salmond and his Labour predecessors as First Minister in Scotland – have been influenced by her, and their politics shaped, defined and framed by her and her achievements. This has been thrown into sharp focus by recent remarks – and the reaction to them – made by Alex Salmond in an interview for Total Politics with Iain Dale, who thought them so obvious as to be quite uncontroversial.

The fact that the political world we live in has been created by Mrs. Thatcher is well made by Simon Jenkins in his persuasive thesis, ‘Thatcher and Sons’ where he examines the Thatcher legacy and its acceptance by Major, Blair and Brown. This entailed the reconfiguration of politics, the state and polity around a new credo of free market capitalism, deregulation, privatisation, celebration of the super-rich, alongside increased centralisation and an authoritarian, powerful central state.

Blair and Brown both famously courted Margaret Thatcher once they arrived in office; both invited her to No 10 Downing Street, while at the same time overtly accepting, embracing and extending the nature of the Thatcher revolution. While they were doing this, large parts of Labour continued to see Thatcher as a hate figure and Thatcherism as something they totally detested.

This produced a strange kind of almost Alice in Wonderland politics whereby Blair and Brown attempted to send out overt signals to former Tory voters that they understood their concerns, while continuing with her policies and operating within her legacy, and at the same time, offering the pretence that they disagreed with large parts of her legacy by creating a caricature of it: going about three million unemployment or the ‘Black Wednesday’ moment of Major’s government. At its core New Labour was, in the words of sociologist Zygmunt Bauman, ‘Thatcherism consolidated’.

‘Bathgate No More, Linwood No More’ and Thatcherism North of the Border

The way Thatcherism has been perceived in Scotland has been even more pronounced on the surface, but even more complex and complicated underneath. The combination of Thatcher’s English persona and style, English nationalism and the fact that the Tories were increasingly a small, declining minority of votes, always meant that Thatcherism was never going to win the popularity stakes north of the border. Part of this was no doubt due to Mrs. Thatcher’s personality rubbing Scots up the wrong way, as much as her policies.

The Thatcherite agenda produced north of the border economic and social dislocation with massive de-industrialisation, hardship and poverty, which were interpreted in Scotland increasingly in the 1980s as ‘anti-Scottish’ – something that the North of England, Yorkshire and Wales shared in policy-wise, but could not experience through the same paradigm. The poll tax was important in precipitating this disparity as it was imposed on Scotland first: the country was singled out as a test case a year before the rest of the UK. There was a genuinely proconsular aspect to this, as one of the most Tory of policies was rolled out in the least Tory province, which precipitated anti-English sentiment.

However, as with all things life was a little more complex that the ‘Bathgate no more, Linwood no more’ lament of The Proclaimers – who compared Scotland’s experience of Thatcherism to the Highland Clearances. Scottish people enjoyed many of the benefits of Thatcherism – buying their council houses and privatised shares, while higher public spending continued north of the border – but they just didn’t vote Tory as a result of it. Instead, the majority of Scottish opinion, aided by the grotesque imposition of the poll tax, moved into a position of feeling both the ‘victim’ of and ‘morally superior’ to, the rest of the UK.

Scottish politics for the eighteen years of Tory rule was characterised by opposition politicians – Labour, Lib Dem, SNP – trying to outdo each other in their opposition and rhetoric towards Thatcher. This was an era of symbols and shibboleths which defined the nation’s resistance to Thatcherism: Linwood, Invergordon, Ravenscraig and Rosyth. All but the last were closed under the Conservatives and each cause, campaign and crisis was meant to signify that the Union might be under threat. Two politicians who excelled in this climate were Gordon Brown and Alex Salmond.

Understanding Thatcherism in the post-Thatcher Age

The election of New Labour and acceptance and consolidation of much of the Thatcher legacy, led to Scottish politics moving on as well, but with the continuation of an even more complex Alice in Wonderland set of attitudes. With the establishment of the Scottish Parliament, both Scottish Labour and the SNP had to emphasise their ‘Scottish’ credentials and their difference. They did this by stressing that they were more left-wing and social democratic than parties south of the border, and continuing with the language of detestation towards Thatcher and Thatcherism. While they presented themselves in this way, both parties moved in the same direction as New Labour and came under the same influence: accepting the logic and values of the post-Thatcherite environment, while pretending otherwise.

Thus, we come to the importance of Alex Salmond’s recent remarks on Margaret Thatcher. Salmond stated:

The SNP has a strong, beating social conscience, which is very Scottish in itself. One of the reasons Scotland didn’t take to Lady Thatcher was because of that. It didn’t mind the economic side so much. But we didn’t like the social side at all.

He then had to qualify his remarks almost immediately, taking the unprecedented (and slightly embarrassing) step as First Minister of Scotland of phoning in to BBC Radio Scotland’s Saturday ‘Morning Extra’ programme to state:

I’m well on the record as never having approved of either Margaret Thatcher’s social or economic policies – that’s clear if you look at the interview.

He also commented that he would not be following Gordon Brown (and Tony Blair before him) of inviting Margaret Thatcher for tea. Subsequently Salmond said about his remarks:

I was commenting on why Scots, in particular, were so deeply resentful of Thatcher and I think here her social message epitomised in the unfair poll tax and her comments of ‘no such thing as society’ cut against a very Scottish grain of social conscience. That doesn’t mean that the nation liked her economic policies, just that we liked her lack of concern for social consequences even less.

Now it does not take a Kremlinologist to work out the difference between Salmond’s first and last statements. The quote that Scots ‘didn’t mind the economic side so much’ is a tacit acceptance and endorsement of Thatcherism’s economic agenda; in his follow up comments Salmond attempted to quote his ‘economic and social side’ remarks and deny that they were in any way support for Thatcherite economics.

What was as revealing was the reaction to the remarks. The ‘cybernat’ community tried to defend Salmond saying this was not an endorsement of Thatcherite economics; that New Labour has more embraced it, and so on. Labour politicians attacked Salmond’s ‘own goal’ and ‘praise of Thatcherism’. Most interesting of all was the comments from some of Salmond’s critics in the Nationalist community. Jim Fairlie, a senior figure in the party in the 1980s called the remarks ‘a qualified acceptance of Mrs. Thatcher’s economic policies’ and talked of Salmond’s ‘drift to the right’. Jim Sillars, SNP victor of the 1988 Govan by-election commented:

It is revisionist nonsense for Alex Salmond to suggest that our society only objected to her social policies, while we accepted her economic ones.

What is going on here is that Salmond has violated the first cardinal rule of Scottish politics after Thatcher: that is namely to vilify, degrade and denounce Thatcher and Thatcherism with every word in your vocabulary, while being influenced, shaped and following in her footsteps. To be flattering, he made the ‘political error’ of being too relaxed and speaking with a degree of honesty.

All of Scotland’s mainstream political parties have had their policies and philosophies altered by Thatcherism, while at the same time, they continue to articulate a social democratic centre-left politics which has been diluted and diminished by Thatcherism; you can even include the Scottish Tories in this equation as they have been consistently devoid of a right-wing agenda and gone with the grain of Scottish politics. When you combine this mix with the national question, Scottish centre-left politicians have to emphasise even more than south of the border, their distinctiveness and moral disgust at the world Mrs. Thatcher brought about.

The ‘Catch-All’ Nature of the Scottish Nationalists

Alex Salmond’s remarks and the controversy they have caused have to be seen in this context. He has inadvertently blown open the Alice in Wonderland mentality and Janus-like attitude which exists across the whole of the UK and the political spectrum about Thatcher and Thatcherism, which is just more acute and sensitive north of the border.

The SNP like Labour north and south of the border are a broad coalition of social democratic sentiment which has acquiesced with Thatcherism and the neo-liberal project. It is not for nothing that the SNP, like Scottish Labour and New Labour, is ominously silent on the central issue of political economy. Salmond’s acceptance of the dominant economic order was evident in remarks in the same interview:

I suppose I have tried to bring the SNP into the mainstream of Scotland. We have a very competitive economic agenda. Many business people have warmed towards the SNP. We need a competitive edge, a competitive advantage. That side of SNP politics – get on with it, get things done, speed up decision making, reduce bureaucracy.

These remarks reveal the ‘catch-all’ nature of the SNP’s political agenda, and the reality that for all its popularity, statecraft and progressive elements which have been on show since it came to office, social democracy and challenging the vested interests of the global order, are just as unsafe in the SNP’s hands as they are in Scottish Labour’s.

The political project of the SNP is a ‘Scotland plc’ – not that different from the kind of economy and society envisioned by Labour modernisers, only independent. That is one of the defining features of Scottish politics: the lack of a real, distinct set of political differences between Labour and the SNP beyond independence. And that leads us to the second cardinal rule of Scottish politics after Thatcher: because of that lack of substantive difference, Labour and SNP go at it upping the ante and vitriol between each other.

The current Nationalist vision of the world is one where a ‘national project’ will see an independent Scotland and its government align with business and corporate interests to promote the nation and compete in the global economy. Jim Mather, Enterprise Minister, an ardent marketer, once commented: ‘Any notion that an independent Scotland would be left-wing is delusional nonsense’; Mike Russell, Environment Minister, penned a book ‘Grasping The Thistle’ one year before becoming a minister, filled with the most fundamental free-market proposals.

Alex Salmond, once a radical left-winger in the days when he was an economist at the Royal Bank of Scotland in the 1980s, has now undergone a full conversion to celebrating and advocating corporate interests. This can be seen in Salmond’s fully fledged support for Donald Trump’s luxury golf development in North East Scotland, or his consistent advocacy for the corporate interests of the Royal Bank of Scotland: the fifth largest banking group in the world. Sometimes it seems as if Salmond sees the interests of RBS and the Scottish economy as being one and the same; this is a bank which employs 8,500 people in Edinburgh.

1979 And All That: The Power of the BBC Consensus

There is a larger set of questions for Scottish and UK politics posed by this episode. How long are politicians in Scotland and the UK going to continue being defined and shaped by Thatcher and Thatcherism? For how long are we going to continue to allow them to act in the two-faced, hypocritical, talking one way and acting another manner towards the Thatcher legacy?

Alex Salmond inadvertently has hit a raw nerve with his recent comments. He has shown the lack of straightforwardness and honesty that lies within the SNP acceptance and continuation of Thatcherism, that is much like Labour’s. By doing so has exposed the narrowness of the SNP’s rationale as a party to the ‘left’ of Scottish Labour. 1979 was a long, long, long time: over a generation ago. Yet, its myths, folklores, triumphs and limitations still shape our politics, our political debate and political horizons and imaginations.

The current political, economic and social impasse has a direct linkage and causal relationship to the events and forces which emerged in 1979 and this cannot go on forever. However, no political settlement just collapses because of the weight of its own internal contradictions, but requires a counter-movement and set of stories. It took over thirty years before the previous watershed – 1945 – was challenged and overthrown. But that was part of an international, neo-liberal mobilisation for a new global arrangements. Despite the limitations of Thatcherism and flaws in the neo-liberal worldview, of which the ‘credit crunch’ is the latest example, we don’t yet have any countervailing economic and social strategy.

Instead, we still live in the world created by Thatcherism: the world of the BBC consensus: Blair, Brown and Cameron (with Alex Salmond providing a supporting role). It is aptly titled for it is comprehensively signed up to by the influential and powerful in the UK whether they are in politics, the corporate world or the media. The bandwidth of what is politically possible and imaginable is defined by these elites, and what passes for their commentary unquestioningly supports the present political, economic and social order.

We should be grateful to Alex Salmond for being relatively honest about this and scornful of the hypocrisy of those in the Labour Party and the Liberal Democrats who want to deny their subordination to the Thatcherite hegemony. It is up to progressives and democrats of every and no party to challenge this state of affairs. We have to push and pull, dream and work, to devise new counter-movements and widen our political horizons and imaginations from their current straightjacket.