Fears and hopes: The crisis of the liberal-productivist model and its green alternative

Repressive Taylorism

One of the components of the Fordist crisis was the exhaustion of the productivity gains that stemmed from its technological paradigm. ‘Taylorism’ comprised a strict division between the design and execution of labour-related tasks, which was realised through the prescription of roles into designers and operators. In the LP model, Taylorism extended into tertiary jobs, and was exacerbated through greater pressure on ‘results’ through lean management. The shift from ‘prescription’ to ‘repression’ led to a steep increase in workplace stress, suicide and work-related illness in both the old industrial countries and the emerging industrial powers.

In the 1980s, an alternative appeared to be possible, based on the high skills and ‘negotiated involvement of workers’. This alternative, highly praised in Piore and Sabel’s The Second Industrial Divide (1984), prevailed in some countries or niches (Scandinavia, and in part in Germany and Japan). Yet it remained minoritory at the world level, because the combination of repressive Taylorism and social dumping was more competitive than the negotiated involvement of workers under decent working conditions (Lipietz 1991).

The trickle-down regime and the credit economy

In Fordism, social demand was driven by popular demand, which was in turn based on wages’ increasing at the same rate as productivity. National social compromises mediated and defined how wage increases were linked to productivity gains, often through tripartite negotiations between state, labour and business. In the LP model, the gap between productivity gains and reduced wages (at the world level) turned into increasing profit share. Profits were partly distributed to property owners and spent out (trickled-down) to wage-earning producers of leisure goods and services, and partly invested.

Under Fordism, capitalists therefore lived on what workers spent on mass-produced consumer items. Under the LP regime, workers lived on what the rich spent in services and high quality goods. But this process of trickle-down was insufficient to provide the levels of social demand that would offer exhilarating investment opportunities to investors. To achieve higher levels of demand, innovation in financial services provided cheap credit that could be distributed to insolvent (or ‘subprime’) consumers. The LP regime thus appeared to be as ‘consumerist’ and ‘productivist’ as Fordism, but it was the prospect of growth rather than planned or regulated growth that was the condition for the stability of growth.

Neoliberalism

Unlike Fordism, which was heavily regulated, regulation by public authorities, or even private contract regulation, was dramatically reduced under the LP regime. As in the pre-Second World War period of laissez faire, belief in the self-regulating power of markets prevailed, and with this belief, business cycles came back in force. Yet neoliberalism did not forget all the blessings of the Fordist-Keynesian mode of regulation. Not only did public expenditures maintain their high levels (but funded on credit, since taxes were reduced), but private consumers benefited from the creation of huge liquidity through the development of private credit. Indeed, credit itself turned into a form of private money with legal tender, and with private banks levying a private seignorage even on public debt (the ‘spread’). As a result, a growing share of social surplus-value was appropriated by private banks, with a reduction not only in the wage-share in GDP, but also in the profit-share of entrepreneurs.

Chinamerica

The transition from Fordism to LP in the early 1980s was met by two important global economic changes. First, there was a spread of a ‘new industrialisation’ across the Third World that started in the 1970s with the first ‘NICs’ – newly industrialising countries (Lipietz 1987). Second was the fall of the Soviet empire and its economic and political model in the 1990s. The result was a complete reorganisation of the hierarchy of competitiveness, production and geopolitical power during the period. Germany and Japan succeeded in adopting some forms of ‘negotiated involvement’ as a technological paradigm, at least in some niches, and became more competitive than the USA. As a form of transition to the LP model, the USA, UK and France accepted the relocation of their low-skilled industries or manufacturing tasks to the NICs, driving down labour costs but also ensuring that their trade balance became structurally negative. The fall of the Soviet empire accelerated the move of China and India to a form of ‘peripheral Fordism’ within an ocean of poverty. Russia did not follow, limiting itself to the role of energy-exporting country. While in Asia most NICs had formatted their export industries to the level of their foreign debt, indebted Latin American countries had to suffer far-reaching ‘adjustment plans’. Yet by the beginning of the 21st century, and after the Korean and Tequila crises, most NICs had paid for their debt and were accumulating huge commercial surpluses.

These ‘emerging economies’ became lenders to countries at the core of the world economy. Key economic agents in the USA were in deficit (households because of stagnating wages, and administrations because of tax cutting Reaganomics), and so was the national trade balance. But the very low interest rates of the US Federal Reserve permitted the development of a ‘debt’ and later ‘casino’ economy. The debt economy survived in the West (notably in the USA) because the emerging countries (notably China) could only use the dollar as a monetary means of reserve. Since they could not sell these dollar reserves, the rate of change of their currencies was kept very low. This fostered the competitiveness of their economies as a whole, while still allowing US agents to buy their cheap labour on credit. This ‘terror equilibrium’ was the basis of the world configuration of the LP regime, sometimes labeled ‘Chinamerica’.

Between Minsky and Keynes: The mainstream approaches

As a ‘debt economy model’, the LP model was condemned to fail through its most obvious sin: a debt crisis followed by a stream of bankruptcies, and then a credit crunch. This happened when the weaker actors of US society, the poor workers and lower middle classes, were induced into buying their housing on credit at ‘subprime’ rates. When they revealed their insolvency, the whole banking system became illiquid, and after an unfortunate attempt to castigate ‘moral hazard’ (i.e. refusing to bail out Lehman Brothers), the USA had to rescue the whole world of finance. Most mainstream economists concluded that markets work, but some agents in the market are so stupid that they ignore its signals. The mainstream understanding of the present crisis is the same as the mainstream understanding of 1929: ‘Let us go on, business as usual, but this time, watch your step.’

A more critical view is immediately more informative: ‘When things are doing well, an exhilarating, self-fostering financial bubble will form, until an excess of credit leads to an inflation in the price of assets, and therefore a crash. A subsequent excess of carefulness leads to a credit crunch. And that was what we had announced.’ Technically, this was a crisis as described in Minsky’s cycles (Minsky 1982). The solution to this should be first to establish a new start by the cancelation or rescheduling of some debts, using the central bank as a lender of last resort. Next: more control, with stronger prudential rules and supervision is required at the international level, since finance is internationalised more than ever before, like a ‘Super Glass-Steagal Act’.

Both the analysis and the solution are correct, but they are clearly insufficient. Why were lenders so greedy? Why were the borrowers so indebted? This is because the lenders (notably pension funds) had to raise money for their entitled principals (retired workers and renters), and because the borrowers were too poor to repay their debts. In a debt economy, the root of the problem is not finance, but bad distribution of revenues (primary or after tax). If the LP model did work despite insufficient primary effective demand, it is because poor consumers could get easy credit. But this did not apply to all of them: the LP model did not fail because the poor producers of emerging countries in the south were unable to get credit! The LP model was brought down because the poor workers and middle class in the north-west of the world could not repay their loans.

Thus what is needed is a New Deal that increases wages and cancels popular debts at the world level, including the Chinese and Indian working classes (Hein 2011). This would be based upon a ‘Super Wagner Act’, and probably also a ‘Super Tennessee Valley Authority’ with a ‘Super Marshall Plan’. Clearly, China could activate this ‘Super Keynesian policy mix’. Because of its incredible wage-productivity gap, it has indefinite reserves of potential inner demand. It also has a ready-made Big Government and no external financial constraint. Yet would a Global New Deal, with an American Way of Life for every human being, be ecologically sustainable? Certainly not!

The emergence of the sustainability constraint in the liberal-productivist model

The concept of ‘sustainability constraint’ was presented at the Stockholm UN Conference (1972) and in the publication of the famous model Limits to Growth by Meadows and others (1972) for the Club of Rome. But at the time, warnings were still imprecise and focused on the ‘source-side’ of ecological problems: the scarcity of resources. The Oil Shock (1973) outlined the dependency of the Fordist model on oil supplies, but this supply seemed to be limited only by geo-strategic reasons. It was seen as nothing more than the classical wars for energy and primary goods: if you control the source, the problem is resolved. Few people still believe that the crisis of the Fordist model (in the late-1970s) was caused by the Oil Shock, although it clearly exacerbated it. In the beginning, the LP model was not concerned about any ecological constraint, and nor were mainstream economists, regulation theorists or radical economists. On the contrary, the Oil Countershock of 1985-86 revealed an availability of oil that appeared infinite. In fact everybody knew that resources were finite, but believed the limits to be beyond any political or business horizon. Today, however, some may argue that the counter-shock was a trick on the parts of President Reagan, the CIA and Saudi Arabia to secure the total victory of the LP model, by killing the power of OPEC and weakening the oil-exporting Soviet economy. But the very possibility of such a plan proves that flooding the world market with oil was not a problem, during the first years of the LP model.

Things began to change with acid rain and the depletion of the ozone layer. At the Earth Summit (UNCED) in Rio in 1992, all the ecological problems were displayed, from their ‘source side’ to their ‘sink side’. Not only were natural resources scarce, but the production of waste (notably carbon dioxide and nuclear wastes) were shown to be a serious threat for the sustainability of decent life and even of capitalist production on the planet. In addition to the ‘productivity of labour and of capital’, new concepts arouse within growth theory, such as: ‘content in energy or carbon by unit of GDP’. Besides the ‘labour/capital’ contradiction, a second contradiction of capitalism, between nature and capital, had also now been vindicated (O’Connor 1997). There was no hope now that some form of Kaldor-Verdoon equation would resolve the problem by an automatic increase of energy-efficiency with growth. On the contrary, the story appeared better told by Malthus or Ricardo’s crisis theory: there would be a reduction of profitability for capitalist farmers, due to the growing cost of natural resources and the management of waste. The difference with Ricardo’s theory of increasing land rent was that the increase of the ecological footprint had been free for capital up to now. There was no owner of the global commons (such as the atmosphere), and the uncertain costs of nuclear damage was implicitly to be covered by states, not capital. But once these costs had been made explicit, the possibility of investing in technological solutions could be explored.

A new field emerged for the regulation approach to ask questions such as: what might an ecologically sustainable regime of accumulation be? How could the mode of regulation for such a model work? Is there a technological paradigm for increasing the ‘productivity of energy (and reducing CO2 emissions)’ at a rate superior to GDP growth rates? But the debate was scattered out between many participants. Engineers and designers attacked the efficiency problem; ecological economists built modes of regulation (from ecotaxes to tradable permits); activists insisted that the safest form of energy was one that was neither consumed nor produced. But few confronted themselves with the global ‘alternative model’ problem. There was no hurry: the world elite quickly forgot the warnings of the Rio summit, and the neoliberal model appeared more and more as a ‘liberal productivist’ model.

Yet in Europe, winds of lucidity buffeted the insurance sector. Climate change was no longer a threat for ‘future generations’, but an immediate problem for the profession, which is probably why the Kyoto conference against climate change was such a success within European elites. Unfortunately, liberalism was also progressing apace. While new development models required greater international collaboration, this was eclipsed by the free-trade agenda of the newly created World Trade Organisation. The Johannesburg UNCED (2002) concluded with a stalemate between free-trade and ecologist ideals. Nothing, then, stood in the way of the world ecological crisis.

The explosion of ecological crises

By 2007, the rapid growth of emerging economies showed that the capacity of current oil production was too limited. The oil price, which had been increasing from 2002, climbed to unprecedented peaks. We are not discussing here whether production had reached an absolute limit (Hubber’s oil peak) or not. But there was a demand peak that was clearly structural, whether a limited extension of production was possible or not. ‘Source’ and ‘sink’ problems had merged into a climate/energy crisis.

The energy crisis was trapped within a ‘triangle of energetic risks’. At one point of the triangle sit fossil fuels and the problems of greenhouse gas (GHG), climate change and exhaustion. At the second point sits nuclear energy and the associated risks of accidents, waste, military and terrorist proliferation. At the third point is bio-mass and the conflicting demands it places on land used for food production. This is taking place at a time in which the growing middle classes of emerging economies (China, India) increase their demand not only for oil but also for meat, which in turn takes up to ten times more space to grow than traditional vegetal proteins. This is also taking place at a time in which the first effects of climate change are being experienced, directly and indirectly. Directly: a persistent drought lasting for years reduced the supply from one of the world’s traditional grain lofts: Australia. Indirectly: the development of agro-fuels, as the productivist answer to the problem of the energy–climate crisis, increased the food problem.

This nexus is known as the ‘FFFF’ dilemma over land-use priorities: food (for humans), feed (for cattle), fuel (for engines), or forest (that is: reserves of biodiversity and carbon sinks). The macroeconomic outcome of the FFFF nexus has been the escalation of food prices. This has been a tragedy in the LDCs, which previously had been forced by the World Bank and IMF to give up local traditional food crops. A wave of hunger riots swept the Third World. At the same time, an increase in the basic cost of living (food and energy) in the North contributed directly to the ‘subprime’ crisis. Indebted poor households in the USA had to choose between paying for food, for car fuel, or for housing. They gave up their mortgaged houses to banks, depressed the housing market and ruined the banks. For the first time in capitalist history since 1848, a bad crop triggered an ancien régime crisis. But this time, the bad crop did not fall from the sky. Rather, it came from the liberal reforms of the agro-capitalist model of the previous decades, and from the model of capitalist development through industry and urbanisation.

The state we are in: Summer 2012

After three years of bank bailouts and injecting budgetary demand, the recovery in the old capitalist countries remained anaemic while the emerging economies were still expanding dramatically. The same ‘deep’ problems reappeared in 2010. The difference with the 2006-2008 period was that the debt had shifted from private agents to sovereign debt. And immediately the banks started to bite the hands that had bailed them out. The ‘Greek crisis’ (early 2010) signaled that the ‘liquidity crisis’ was finished, but that the ‘solvability problem’ was beginning. Nothing had been done to address the regulation of financial markets, nor the revenue-repartition problem. The poor, unemployed and retired workers are just a bit poorer, while the rich have lost a part of their fictitious assets, but have returned to their pre-crisis revenues. Hence the permanence of the ecological crisis, worsened by the failure of the climate conferences in Copenhagen (December 2009), then Cancun and Durban.

The same causes with the same outcomes. A second and then a third grain store (Ukraine and Russia) went up in smoke in the summer of 2010, due to the unprecedented drought and heatwave, and a new wave of hunger riots started (in Mozambique). This time, as in 1848, tensions over food prices triggered more interesting outcomes: the Arab democratic revolutions. But there will be no exit to this great crisis without a change in the whole model, and in particular without a strong shift in the climate–energy nexus. The IPCC and Stern reports have outlined the limited window for action: from 2010 to 2020. And while peasant and activist resistance have reduced the scope for agro fuels, the Fukushima accident (combined with the bleeding of nuclear power into military uses in North-Korea and Iran) increased the perceived risks of using nuclear power solutions. And the food crisis jumped to a new peak with the US (and again Russian) drought of 2012.

Unfortunately, during the first years of the present crisis, as between 1929 and 1932, the ‘upper layers’ (the financial crisis) rapidly crowded out interest in these more fundamental challenges. Once shifted from private to public hands, the solvency crisis appeared clearly behind the liquidity crisis, with sovereign debt as ‘the problem’. This was not only apparent in Greece but also in all of peripheral Europe (Eastern Europe, Portugal, Ireland), then in ‘weak’ European central economies (Spain, Italy, Britain and France). But the most worrying was yet to come, when, during summer 2011, the US Treasury’s rating was reduced from AAA to AA.

The credit rating agencies that rate debtor credibility are of poor quality. They did not perceive the subprime insolvency, and in 2011 they gave a better rating to France than to the USA. But this downgrading signifies more than the end of the liberal-productivist model. It also represents the end of a world monetary regime, the Gold Exchange Standard, that has spanned two models of development, from the 1950s to the present: the Fordist, then the LP models. The Gold Exchange Standard expressed the idea that the dollar is as good as gold. That is: once a value (or any asset) is exchanged for dollars, it is acknowledged as a real value. Thus, the US Treasury – and in fact the entire US economy – was able to pay for its debt in money the US monetary system created. The Federal Reserve only had to swap debt titles on the US economy into money which was universally accepted. But when even US Treasury Bonds are unsafe, where is ‘real money’?

More immediately: if a minor debtor such as Greece defaults, what about its creditors, such as French or German banks? In fact, the debt economy of the LP model was based on a convention: that some debts are safe. Based on these assets, high-street banks were able to issue new credit, according to accepted prudential rules (the Cooke ratio and its developments: Basel Accords [on banking regulations] I, II and III). If the financial community considered that some debt from respected debtors would not be paid, the credit capacity (that is, ‘new money’) would reduce. How then would a new model be financed? In the years 2010-2011, there was a debate between economists and politicians, but at first (despite warnings by Keynesian economists and even by the IMF), the common wisdom was: ‘Pay off your debts first’. Only Greece benefited from a write-off of its debt, a great contrast to 1932, when German debts were considerably reduced (but too late to avoid Hitler’s victory). After 2010, the reduction of public deficits became the main goal in most countries, but the general tendency was to achieve this more by reducing expenditures than by increasing taxes. As a result, the weak recovery, resulting from 2009 expansionist budgetary policies, failed completely in the summer of 2011. This reduced economic activity, and thus tax incomes, and so increased public deficits. This recessive logic was similar to Hoover’s policy in the 1930s.

The main achievement of this first period of the crisis has been in the mutualisation of debts through the European Stability Mechanism, which is to be implemented at the end of 2012. It is a form of intra-European IMF, which borrows funds on the world market using the whole of the Euro area as security, and uses this to lend to its most indebted countries. But the next step (in the monetisation of debts through the operation of the European Central Bank on the debt market) creates tensions between ‘orthodoxy’ (mainly German and other), and the more Keynesian executives on the board of the ECB.

The mutualisation mechanism respects the dogma that ‘all debt is to be paid for’, ignoring the fact that debts were contracted within a model of development that is in crisis. When a model is failing, the credits based upon it will be cancelled too, either through bankruptcies, through inflation, or through an organised form of rescheduling, which will permit the debtor to be rescued without ruining the creditor, and provide ‘new money’ for a new model. This is what happened in Latin America in the 1990s (Brady Plan), but has yet to be proposed for the present crisis.

Meanwhile, emerging countries (the ‘BRICs’: Brazil, Russia, India, China, Turkey, etc.) went on with their still succesful LP model, ignoring financial and ecological constraints. The same had occurred in the 1930s and 1940s, when Latin America developed its import-substitution model, ignoring the Great Depression. Yet even in China, the dream of switching to a domestic consumption-led model will soon meet its social, financial and ecological limits.

Financial regulation is necessary but not sufficient

One may object that the most urgent issue is the insolvency crisis. True. But as already noted, the problem behind insolvency is the problem of ‘new’ money. Bankruptcies or the cancellation or rescheduling of debts is not sufficient if we are to create new credits for the Green Deal. So let us first look at the new model we have to create, and then return to the financing problem.

Most debates have and will focus on one of the regulatory forms of the LP model: the regulation of the finance industry. Should the EU’s ‘Stability Pact’ be strengthened, or on the contrary should its more relaxed reform of 2005 be developed into discretionary budgetary policies? Should the ECB finance any public deficit? Are the reforms of prudential rules and the supervision of the financial system adopted in USA, EU and BIRD (Basel III) sufficient? Can we accept that some careless agents are ‘to big to fail’? These are important questions. But focusing on them exclusively means we reduce the crisis to a Minsky crisis.

Yes, we need a super Glass-Steagall Act – that is, a clear separation between deposit banks (the management of currency) and business banks. Yes, we need a budgetary and monetary policy mix at the European level, and a stricter monitoring of national budgetary mistakes – a condition for European budgetary solidarity. Yes, we need to forbid ‘fiscal paradises’. But it is not sufficient. This crisis has its roots in the ‘real world’, and even in the physical one: GHG, climate, nuclear risks, food scarcity …

We need to redistribute productivity in new ways

Even reform of the sharing-out of Gross Domestic Product (in order to foster effective demand) would not be sufficient. Yes, we are in a Keynesian crisis, or a Marxist ‘under-consumption’ crisis. But there are important differences with the 1930s. On the one hand, redistribution implies not only redistribution within a domestic economic space, but also a global deal. The workers are in the South and the consumers are in the North, and there is no global government to ratify the deal. On the other hand, a super international Wagner Act (or a Wagner Act + Marshall Plan) implies a choice: should the increase in world wage-share take the form of an increase of purchasing power or an increase of free time? The constraint of ecological sustainability suggests that, in the North as in the South, a reduction in labour time should occur as a priority, if under different forms. To begin with, there would be the prohibition of child labour in the South and the reduction of yearly labour in the north, with the advancement of retirement everywhere. Thus, the new regime of accumulation should be ‘green’, as far as labour-time is concerned. But it should also be outlined that effective social demand should also be ‘green’, and a green technological paradigm rule supply.

A green-investment model of development is needed …

Let us focus on the EU, since it encompasses a rich economic space of half-a-billion human beings with huge differences in revenues, and because the EU has a minimum federal state apparatus – although quite insufficient – to handle a Green Deal. Over the next thirty years – the duration of a whole model of development – the EU will have to reduce its production of greenhouse gases by a factor of four. This target should be the directing parameter of all planning and policies. It implies changes at the level of technological paradigm, models of production, models of consumption, and the logic of the regime of accumulation.

Clearly, the first condition is that ‘progress’ should be measured by free time rather than an increase in material consumption. But such ‘soberness’ will be far from sufficient. We need huge investment in new energy-saving and CO2-saving facilities (in the food circuit, ² housing and transport) and in new ‘clean’, renewable sources of energy and primary goods. Moreover, the other crisis over food and health will have to be settled through locally organised, biological, intensive agriculture. In a Green model of development, public demand (for new transport systems) or at least organised demand (e.g. for insulating existing buildings, for bio-food) will be dominant and will substitute the role of the car industry in the Fordist model.

Thus, the green model will look like a ‘mobilised economy’ à la Kornai (1982); that is, driven by demand, and mainly semi-public demand. From the regulation point of view, new problems arise. They are quite similar to a ‘reconstruction problem’ as experienced by Europe in the post-war period (1945-1950). But these are to be addressed to and by decentralised agents such as households and firms, as they struggle to save their incomes from the increasing price of ‘dirty’ energy, and from the costs of local authorities committed to building new transportation systems. Ecotaxes and tradeable permits will be a great help in the regulation of decentralised decision processes. But it is not sufficient to be ‘induced to invest’ in energy-saving devices. Agents will need credit, since they will have to invest now for future incomes and savings. A green model will also be a debt economy! But contrary to the LP model, the debt contracting and lending processes will have to be strictly oriented to the social and ecological goals of investment. As in the reconstruction and Fordist periods, credit and money creation needs to take place selectively. The most straightforward method is to think of a distribution of ‘easy money’ by the European Investment Bank, according to green criteria, with the EIB refinancing these credits at a 0 per cent rate near the European Central Bank.

… with a labour-intensive technological paradigm

In general, ‘mobilised economies’, that is, semi-public demand-driven economies, are extremely disposed to job creation because their propensity to consume and invest is close to 1, or above 1 (that is, precisely a debt-economy). Studies have been made for a typical green programme in the EU that aims to reduce CO2 emission by 30 per cent by 2020, and to reach a rate of 40 per cent bio-food. Using the evaluation of the EU Commission and the ETUC, Canfin (2009) estimated an increase of 10.5 million jobs (in the EU) in comparison to the business-as-usual path. Typically, ‘creative destruction’ through a green transport revolution would suppress 4.5 million jobs in the production of individual cars, but create 8 millions jobs in collective transport. Indeed, the new model will have to build tracks, rails, trains, underground railways, tramways and buses, and have people to drive them, or to control their automated movements. This interesting evaluation confirms, first, that ‘ecology is not the enemy of jobs’. More precisely, it indicates a decrease in labour productivity in the transport sector. In reality, this results from two factors.

First, the historical gains in labour productivity were realised through increases in the coefficients of capital and ‘nature’, with nature (‘land’, in classical economics) providing the free gifts of the environment. Through some Cobb-Douglas function, the more nature-saving a technique, the more labour-intensive it must be. A green shift in the development model will substitute labour for ‘natural’ inputs (i.e. energy). This labour will be less ‘industrial’ (as in car assembly lines) and more ‘craft’ based, more ‘industrious’ (in shorter production series, more dedicated infrastructures, and the provision of bespoke transport services). A very important move in this technological paradigm will be the mobilisation of a professional training system.

Second, ‘nature’ (or the ‘External Conditions of Capitalist Accumulation’, as Marx puts it) includes the free time of workers. The difference between cars and trams, for commuters, is that waged workers drive the trams, while commuting workers drive their cars ‘for free’ for their employers. There is a hidden, unpaid labour within individual transport. The same occurs when a woman takes care of the children and the elderly persons in her family ‘for free’. A green model would substitute this reproductive labour that is hidden within a system of patriarchy, for labour delivered through some forms of social cooperatives. This an important remark: a green model will be intensive in jobs dedicated to care and personal services, which will not be subject to relocation or automation. That will have a cost, and will need a form of social financing.

New studies by Quirion (2010a, b) have translated the EU ‘Green Programme for 2020’ first to the whole French economy, then to the

Île-de-France (Paris region). Quirion used an economic model that combined input/output matrices with a distinction between direct jobs and indirect jobs (investment, input), and a second round of ‘induced’ Keynesian effects of job creation (spending less money in oil, households would create local jobs with their increased purchasing power). The variants were sensitive to the following:

An international regime based on cooperation

Clearly, we need a Green Deal between the North and South (the South being itself split between ‘emerging’ and ‘less-developed’ countries). It is absolutely necessary regarding global issues such as ecological ones. The USA and China will soon discover the perverse aspects of their non-cooperative attitude regarding climate change. But we don’t know when, and this is a major threat to the future of humankind. If they do decide to cooperate, India and other emerging powers may also follow. The New International Green Deal could be the following:

Regarding the capital–labour redistribution issues, it is clear that a global Wagner Act would be extremely difficult to realise. Probably a major outbreak of social struggle in China and other newly industrialising countries would be necessary in order for this to occur. It could be helped by social clauses on free trade (and the same would be true for countries reluctant to join a climate-change treaty).

This leads to the problem of the ‘relocation’ of production. The contemporary argument has nothing to do with the 1930 wave of protectionism. It is not a question of reserving a shrinking national market to national (or even continental) production. The first reason for limiting the product circuit is environmental: limit the energy consumed and GHG produced in the life cycle of products. A good proposal is the proposition (now accepted by China) of evaluating the quota of GHG allocated to a territory, not through the emissions of its production, but through the ‘footprint’ (the GHG produced anywhere on Earth) of what it consumes locally. The second reason is to fight against social dumping, by inducing all countries to converge towards the same norms of repartition. There is no reason for protectionism between neighbour countries where wages are equivalent.

We need to offset the insolvent past

And now, back to finance. The problem is that of how to cancel a part of the insolvent but outstanding debts without ruining the bank system. The best solution (in my view) is to accept, through international conferences, that some debt will not be paid (at least, not for a long while), and to cancel or reschedule these debts. Creditor (banks and funds) should not be forced into bankruptcy because of this, or we would be back to 2008. Rather, the smoothest way is a ‘monetisation of debts’, but with two obligations. First, we should retain a significant portion of the new money in the central banks in order to limit inflation. Second, part of the new money should be allocated to finance green conversion. In the EU, this could be the mechanism:

Such a ‘blueprint for a Green Deal’ might sound like a fairy tale. But the first four years of the crisis seem to have followed the old liberal-productivist path. It was the same in 1929-1932, when at the time of Hoover, Tardieu-Laval and Ramsay McDonald-Snowden there were deflationist policies. Whomsoever believes in the lessons of History knows that today, the bell tolls for thee …