The Reith Lectures part 2: The great turning

There’s little to admire about this year’s Reith lectures, delivered by ex-governor of the Bank of England Dr (a title conspicuous in its new-found usage) Mark Carney, United Nations Special Envoy for Climate Finance, and now Finance Adviser to UK PM Johnson for COP26 in Glasgow next year. Sure, they are well-structured and tightly argued. But Carney is deliberately ambiguous. His words often hit the right notes but they are open to a very wide degree of interpretation. If we take his words literally, then they could be interpreted as progressive. But when we take a moment to reflect critically on what Carney is really saying, it’s much less clear. Carney has a role to play, and he plays it very well. Don’t be fooled.

To some degree it’s reassuring that the UN has chosen Carney to be its advocate for climate finance. I mean, he’s not a climate denier, which is something. He clearly recognises that we are facing a climate and ecological emergency, and his description of our plight at the beginning of his final lecture is sobering, to say the least. And he concludes the series with these words:

“We won’t get to net zero without innovation, investment and profit. Continued growth isn’t a fairy tale; it’s a necessity. But not just any growth. The power of the market must be directed towards achieving what society wants. That requires measures of income and welfare that reflect our values. We need a world where we are not solely guided by measures like GDP that were devised a century ago when the Earth seemed immortal and the social norms of the market felt immutable”.

Well, what to make of that statement? Sounds alright, doesn’t it? Who would disagree with such progressive sentiments? Acknowledgement of the imperative of net zero carbon emissions, investment, a critique of GDP – the quintessential metric of progress, a recognition that markets can change. Critics of the growth economy might even find themselves agreeing with at least some of these words.

For example, in his new book Less Is More: How Degrowth Will Save The World, Jason Hickel is in no doubt about the need for innovation. “Let me be clear” he asserts, “technological innovation is absolutely important to the battle ahead. It is vital in fact” p155. Of course, it depends on what is being innovated: vaccines, yes; chainsaws, no. But innovation per se, bring it on.

We obviously need investment, from both public and private sectors. In his book Climate Crisis and the Green New Deal, co-authored with Noam Chomsky, Robert Pollin estimates clean energy investment would total around $120 trillion from 2024 to 2050 ($4.5 trillion a year for 27 years). If that seems like a lot, it is, but recall that governments currently subsidise the fossil fuel industry (FFI) to the tune of $5.2 trillion. And Carney himself went on record last year to warn that the global financial system was financing investments in “carbon-producing projects” to the tune of $185 trillion for stocks and bonds – investments that would warm the world by 4C. If the global financial system can invest heavily in one sector, then why not in another?

But profit. Do we need profit? Now there’s a question. And this is where we run into difficulties, and a parting of ways. Hickel is good on this. He reminds us of the important distinction between a use value economy (where you exchange useful things to generate a steady profit year on year) and an exchange value economy (where profit is re-invested to create capital, which is re-invested to create more profit and more capital, which is re-invested, etc). The profit Carney is talking about is that created through exchange value. He is a capitalist and he is defending capitalism.

Pollin argues that the huge investments required for a Global Green New Deal will come, in part, from large public and private investors (whose activities would be heavily regulated). But large private investors are large because of capitalism, so I’m guessing Pollin is not anti-capitalist per se. Hickel, on the other hand, is. He has developed a degrowth argument (in his book but also elsewhere), the economics of which approximate more closely with the use value economics that characterised pretty much all economic activity until the birth of capitalism in the mid-18th Century.

And growth? Do we need that? Carney argues that it is a necessity. Hickel comes to the opposite – and stark – conclusion: it simply isn’t possible to reduce our emission by the required amount – 7-8% a year – and grow the global economy by 2-3% a year. If we try to do that growth will outpace emissions reductions and we won’t meet our zero emissions targets. Period (Hickel, More Is Less, p20ff).

When Carney talks of profit, he is advocating for capitalism. Growth is the structural imperative that defines capitalism. If you’re a capitalist, growth is a necessity. Unfortunately, if Hickel’s arguments are correct, we cannot grow our way to net zero. It’s impossible. And by impossible, I don’t mean impossible in that weak, defeatist, I’ll-never-learn-how-to-tie-my-shoes-properly, kind of way. It’s physically impossible.

It’s not hard to understand why. To have a 2/3rds chance of keeping below 1.5C, emissions need to fall by 10% each year – starting now. If the global economy continues to grow at 2-3%, then the 10% goes up to 14%. 14% emissions reductions every year. 2020 saw emissions fall somewhere between 4 and 7% – under conditions of forced confinement during a global pandemic. But this is “a tiny blip on the long-term graph” of CO2 concentrations in the atmosphere, which hit 411ppm just a few weeks ago. Even to have a 50/50 chance of keeping below 1.5C, emissions would have to fall by 7-8% or nearly 11% if the global economy continues to grow at its current rate. I’m sorry, but we can’t have both (for analysis, see Hickel and Kallis, Is Green Growth Possible?).

Furthermore, and this is something that Carney completely glosses over – even after beginning his lecture with devastating data on species extinction – at 2-3% growth every year, the global economy will have doubled in 23 years and quadruped by mid-century. Imagine that: everything we extract, consume and throw away today, with all its associated emissions, pollution and pressures on species populations, multiplied by 2 then 4, then 8, growing exponentially. Our planet and the species that live upon it cannot accommodate our combined economic activity today. How can it possibly accommodate a global economy that is growing exponentially? We’ve all heard that observation by Alanis Obomsawin about not being able to eat money. Have you ever stopped to consider that there might just be something in that warning? That’s why we have to be very, VERY, cautious about taking Carney’s words at face value.

Carney talks a lot about society and what it wants But before answering that, it’s worth asking who is society? Perhaps you think of society as you and your mates, and their mates. But global society? Who’s that comprised of? Well, there’s the super rich 1% with a combined income of $19 trillion, or 25% of global GDP if you prefer. That’s equal to the GDP of the poorest 169 countries. And in terms of wealth, that same 1% has accumulated $158 trillion. Amongst the super rich, there are a handful of mind-bendingly rich individuals. If you’ve never come across this graphic of Jeff Bezos’ wealth, take a look now.

And then there’s the rest of the world. And you know who’s doing all the polluting, don’t you. This is what climate justice is all about – recognising that wealthy countries have a much larger carbon and material footprint that less wealthy countries, and that – within countries – wealthy individuals are responsible for more emissions, more consumption, waste and pollution than less wealthy individuals.

Now, ask yourself, whose wants are likely to be reflected in a world as grotesquely unequal as ours?

Pollin poses a similar question by way of an observation. The FFI clearly has a vested interest in continuing to extract fossil fuel. A very small number of these companies (just twenty) are responsible for a third of all emissions. But the vested interests extend beyond the polluters. As Carney knows, and warns, there is a banking industry that is only too happy to provide the FFI with finance: again, only a handful of banks (thirty-five in fact) are responsible for funding fossil fuel companies – to the tune of $2.7 trillion. With that degree of self-interest and wealth comes significant political power. Pollin’s reply is telling:

“These powerful vested interests will simply have to be defeated. How exactly we accomplish this is, of course, the most challenging question at hand. But it absolutely must be done”

Climate Crisis and the Green New Deal, 2020, p77

Taken at face value, Carney’s words seem fair enough – the market should reflect what society wants. But what kind of society? A capitalist society built on an economic system of exchange value? Carney doesn’t stop to consider that the reason we are in the mess we are might just be because of capitalism. He starts his journey with Adam Smith. Maybe he should have started a little earlier with the seizure of Common land in the 1500s, creating access to essentially free labour? He could have then gone on to describe colonial and neo-colonial practices – the mass slaughter of indigenous populations by ‘civilised’ countries looking for raw materials to steal. But of course, he didn’t. We are left to scratch our chins wondering where it all went a bit Pete Tong.

It’s probably just us. We’re the greedy ones (well, some of us are). Carney recognises, indeed makes much of, what he calls “human frailties” when he talks about the tragedy of the horizon. Our inability to see beyond our own life spans and to the lives of future generations – generations that will be impacted so egregiously by our emissions today. That’s indeed a tragedy. But our frailties are also an opportunity – for capitalism, I mean.

Carney asks, somewhat niaively, what does society want? But given the beguiling and dark arts of global advertising and sophisticated social media algorithms, does it even know anymore? What do we want? I mean really want? Well, we’re not in the Matrix just yet and, guess what, it turns out we kind of do know what we want:

  • A fair society – a UK YouGov poll from 2015 had two thirds of respondents saying that capitalism was unfair;
  • A society that does less harm than good – Edelman’s Trust Barometer found that 74% of those interviewed in India thought that a capitalist society did more harm than good;
  • An honest society – 75% of respondents from across multiple economies felt that corporations were corrupt;
  • A society that values environmental protection over economic growth;
  • A happy society, even if it meant buying and owning fewer things (data from Hickel, 2020, pp25-26)

How will we get these things, Mark? Ah, glad you asked Andrew because I’ve got some great ideas:

  1. Green power everything to reduce emissions by 60%, hope to buggery that the remainder gets extracted from the air by fantasy tech that nobody thinks is feasible, and keep our fingers crossed that we don’t continue to consume the life out of our planet with all our newly generated green energy;
  2. Join Extinction Rebellion and force governments to do the right thing. Ha, ha, just kidding. Fuck Extinction Rebellion, they have no idea what they’re talking about – a global citizens assembly to decide collectively what kind of political economy everyone wants and needs – you must be fucking joking! I’ll tell you what kind of political economy you want, sonny. You want a capitalist society and you’re bloody well going to get it. We also need to build a strong political consensus.
  3. Aaand financial reform. It’s all about the 3Rs, Andrew – reading, writing and rithmatic. No, that’s not it. Yes, I know, round the robin the rotten rascal ra..no, dammit. Ermm, the 3Rs are Reporting (because, Andrew, as we all know, “what gets reported gets managed” as I like to patronise my children at breakfast when they try to steal my eggs – the little scamps); Risk (if these companies want to continue to dominate the economy into the future, they’d better bloody start diversifying); and Returns.
  4. Sorry, what was that? What can you do? So funny. Nothing, that’s my job. Oh, right, you weren’t joking. Ermm, ok, I like to call these the 5 Ps, or do I mean the 2 Ms? Nope, I’ve lost my train of thought…oh yes, here we go. You can:
  5. See if the company you work for has a plan to transition to net zero (what, oh, you work for Amazon – too bad)
  6. Put your savings into a pension fund with solid green credentials (what, you don’t have any savings – fucking hell, Audrey, where did you get this bozo?)
  7. And finally, you’ll love this one, ask your country what it’s doing for the climate (what, your mate did that and you haven’t seen him since – have you tried calling him?)

Ok, Mark, that’s all the time we have for this year’s Reith Lectures. Oh, we have just time for one more question. Gail, over to yo….beeeeeeeeeep.

Andrew

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3 Comments

  1. Pete Read
    January 25, 2021
    Reply

    Thanks for your analysis, I enjoyed watching the Reith lectures this year, until I heard “Continued growth isn’t a fairy tale” – I am no economist but surely “Continued growth is a fairy tale” in that nothing can grow forever

    • andrew
      January 25, 2021
      Reply

      Thanks Pete. It is a fairy tale. There are planetary boundaries for sustainable life, and we are already exceeding some and in danger of exceeding all if we don’t scale back our consumption. The idea that ‘green growth’ allows us to ‘grow’ sustainably is discredited in this article by Hickel and Kallis – https://doi.org/10.1080/13563467.2019.1598964. I can email a pdf to you if you aren’t able to access it.

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