This week we are highlighting the work of advisory board member Ann Pettifor. Her new book Just Money is the definitive treatment of what money is, how it is exploited by the financial sector, and what the ramifications are for debt and the environment. Previously Ann did great work in the Third World debt crisis exacerbated by the IMF's structural adjustment policies. Now she is fellow at the new economics foundation (nef), and a contributor to their Green New Deal analysis and observations on how climate change is treated in decision-making. "Economics as if the people and the planet mattered" is the slogan of the nef.
The economy is a dynamic system. Treating it as such is one of the pillars of the reform IDEA intends to bring to the discipline of economics. As a dynamic system, the economy is not constrained to return to equilibrium, as imagined in most economic models. The science behind dynamics did not originate, but has been broadly used, in climate science. The climate is another dynamic system, not constrained by a return to "normal." In fact, there is a tipping point where local equilibria collapse and can fall into potentially catastrophic regions. It is a mistake of the first order to treat climate change as simply a slow deterioration of weather or sea levels to which we can adapt. Long-run decay will sooner or later give way to a sudden and violent collapse, to which there will be no effective adaptation.
The economy and the environment are inextricably connected. Nothing gives us more annoyance than to hear Wall Street analysts excuse Q1 2014 numbers with, "It was the weather." Nothing discourages us so much as the willingness by many -- on all sides -- to treat economic recovery as a separate issue. Building an economy for the real world must recognize that world. It is not the industrial structure, transportation system, urban design or agricultural method of the past. It is a different world. To pretend otherwise is no less delusional than pretending we live in a competitive market economy or that money doesn't matter.
It is a combination of slavery and holocaust denial. The science is in. Human beings are causing irremediable change to the climate. But current comfort depends on ignoring or minimizing the fact. It is too inconvenient to change. Just as in 19th Century America most of the slave-holding South and many in the industrial North said, "Slavery is not really so bad, and besides the economy depends on it," so we are repeating today "Climate change is not so bad, and besides the economy cannot afford to do anything about it." But today, it is not "just" a matter of moral imperative. It is a holocaust that we are visiting on the human race. We can deny it, or even say, "I will be dead. Why should I care?" Just as many Germans said, "It is not my business." Outrageous? too harsh? Perhaps. But the nonsense that the economy cannot afford its own survival is even more outrageous. Particularly as the means of dealing with the crisis are actually economically stimulative. The employment, technological innovation and industry of building an economy for the real world are far more stimulative than resource extraction and distribution. The exercise produces the real value of a livable planet.
Sooner or later we will transition to the new environment, whatever it may look like. We need to recognize that sooner is better not only for the environment, but because we will be stuck with the institutions and frameworks we have built for the old. Just as the south took a century to shed its plantation culture, so we will be constrained by our consumption culture.
The New Economics Foundation produced the Green New Deal in 2008 -- policies and approaches that recognize the economic crunch and the environmental crunch. It remains an invaluable resource. Here is Ann's IDEA page.