When John McDonnell announced plans to de-list the companies wilfully destroying the planet through unchecked carbon emissions, the response from the City was predictably hyperbolic. “Financial totalitarianism,” said one banker. “Kamikaze communism,” said the right-wing propaganda website Guido Fawkes.
Labour’s thinking on industrial, fiscal and central bank policy has taken a sharp green turn under the impact of the Extinction Rebellion protests, and last October’s IPCC report, which dramatically shortened the deadline for halving global carbon emissions. But it is not yet radical enough.
Climate change is a problem where — given the scale and the deadlines — nothing short of dramatic structural change in the way capitalism works can deliver the 2030 target of a 45 per cent cut in carbon emissions. To deliver the net-zero carbon emissions demanded by 2050 will require an economy so different from ours that we are unlikely to recognise it as capitalism.
The more terrified Britain’s elite have become of a Corbyn government, the more adept McDonnell has become at presenting major financial reforms as technocratic tweaks.
At the heart of the proposal he fleshed out this week is a Sustainable Investment Board, comprising the chancellor, the business secretary and the governor of the Bank of England. First proposed by City analyst Graham Turner, the board’s original aim was to achieve a 3 per cent productivity target by funnelling private sector investment into high tech.
McDonnell now believes that target and the carbon emissions target can be combined — since the pump-priming phase for green energy will involve a large amount of infrastructure building and hi-tech manufacturing — solar farms, wind turbines and urban transport systems, for example.
The second plank of the programme is a £250bn National Investment Bank, its money raised over ten years, to fund some of that investment, combined with regional development banks.
The third plank is to use the Bank of England’s macroprudential regulatory powers to curb lending to businesses that are so heavily invested in carbon that they become a risk to the global finance system. McDonnell announced a review of the so-called “shadow banking system” which is the conduit for much of this investment. Finally, there is the threat to de-list companies that don’t play ball.
As someone who supports these measures, I need to be brutally honest: they are not “totalitarian” enough.
I am no fan of the Stalinist planned economy, and have studied its failure — and the hubris that caused it — more thoroughly than many. Yet the unpleasant fact may be that centralised state intervention, planning and ownership might be the only thing that’s going to achieve the rapid reduction in carbon emissions we need.
Let’s imagine trying to put McDonnell’s plan into action. Suppose Labour comes to power in November, unencumbered by the Lib Dems and their friends in the oil industry, and by the productivist throwbacks who are still powerful in parts of the trade union movement.
The Sustainable Investment Board is up and running by January 2020; new rules are issued to the Bank of England; and the National Investment Bank legislation begins to wend its way through Westminster, with maybe £25bn ready to invest by January 2021.
By that date you would want a clear, inviolable 30-year energy infrastructure plan for the UK, mandating the rapid decommissioning of gas-powered electricity, the complete end of coal, huge further investments in wind and solar, the first tidal lagoon project at Swansea commissioned, and a decision on new nuclear power, which only makes sense if given an overt state subsidy.
Heathrow’s planned third runway would have to be cancelled, London City Airport scheduled for closure, while a massive upgrade to all long-distance rail routes would stand at the centre of a 30-year transport plan. A ten-year scrappage programme for diesel and petrol vehicles would need overt finance from the start.
Beyond that, you would need major structural changes to city transport systems, to building regulations and to urban design — learning from the greenest towns and cities in the world. And you would need massive modal changes in the way we consume and recycle both energy and commodities.
The most powerful ally in this change would be the human brain. If millions of human brains simultaneously accepted the need for a survival level restructure of society, akin to a wartime mobilisation, the population itself would become the change agent.
The problem is for the past 100 years, urgency was not a left-wing value. The founders of modern social democracy — from the Fabians in Britain to Eduard Bernstein in Germany — advocated gradualism for a good reason. If socialism is the lawful outcome of capitalism, it must be given time.
The discovery of human-caused climate change should have, decades ago, made us rethink that assumption. It was sound when based on the idea that capitalism does not autodestruct economically, but is no longer sound once we refute the assumption that the planet is a bottomless garbage tip.
But because the science around climate change firmed up during the Blair era, when few actually believed in socialism, it never properly impacted on the thought architecture of the left.
Only now that we have serious socialist politicians on both sides of the Atlantic, contemplating radical redistribution, does the language of climate priorities have to be spoken. But it is not being spoken loudly enough.
In the week where we’re seeing a 40-plus degree heatwave in France, one month after temperatures in Finland’s Arctic region broke 28 degrees, a sweltering India and polar ice melting at record rates, it should go without saying that climate chaos is approaching faster than we thought.
Philip Alston, the UN rapporteur on human rights and poverty, spells out the consequences in a new report. Most of the human rights we today regard as universal will become negotiable: the right to life and the right to asylum, for example. And 50 years of development in the global South could be reversed.
Faced with this, Alston says we need a “deep social and economic transformation”. But there is no force in British party politics currently expressing what this means clearly, and with urgency.
For the past 30 years the left has been intellectually paralysed in its thinking about capitalism: against it in principle but unable to conceive of what its replacement might look like. It was easier, said the philosopher Frederic Jameson, to imagine the end of the world than the end of capitalism.
But now the “end of the world” is imaginable: the end of universal human rights, the end of the development curve, the fracture of globalisation and multilateral systems. As a result, those of us who want to meet the demand for radical climate action have to tell it straight.
To meet the 2030 target we will need a sharp break with neoliberalism in the early 2020s. To meet the 2050 target we are going to need a transition beyond the market and beyond an economy where incomes are largely based on work. This is the implication of the slogan “system change not climate change”, chanted by 40,000 young Germans as they shut down the country’s biggest lignite mine last week.
McDonnell’s plans would work well, at the conceptual level, as the first phase of an attack on the neoliberal model. The central bank becomes an arm of the state, its preoccupation becomes to direct capital away from carbon and to cauterise the wounds to the finance system that open up as carbon dies. The government becomes a green investment authority and takes big, clear decisions, leaving entrepreneurs, mutuals, co-ops and city governments to do the innovation at small scale.
But there’s a huge unanswered question: what do we do about resistance? The resistance won’t just be political — in the form of lobbying and backhanders from the fossil fuel burners and the hedge funds. It will most likely involve capital flight: indeed capital flight is the financial elite’s all-purpose answer to the shutdown of its gravy train. In which case, having created the carrot, a government serious about climate change has to create the stick.
So the left has to put it to people straight. The “rights” of global finance capital have to be subordinated to the needs of the human race, via the democratic states we live in.
We who have spent the decades since 1989 learning to critique command and control economics may, in the end, have to become expert in it once again.