Ann Pettifor

Britain, Korea and humanity’s life support systems.

This was my contribution to a publication of the Korean Labor Institute, 19th July, 2021

Since 2014 the world has endured the seven hottest years in recorded history. The wildfires, heatwaves, droughts and intense flooding that currently afflict rich and poor countries alike, are, scientists explain, the consequence of this heating. Children, led by Greta Thunberg, seem to have an acute awareness that global heating – compounded by biodiversity loss – results in extreme weather events and ecosystem collapse, and those in turn pose a threat to the very survival of humanity.

That sense of urgency is not, however, present in the halls of power.

The urgency is however, understood by scientists. In the June 2020 Proceedings of the US National Academy of Sciences, ecologists warned that

“the ongoing sixth mass extinction may be the most serious environmental threat to the persistence of civilization, because it is irreversible.” [1]  (Emphasis added). They conclude thus: “Our results reemphasize the extreme urgency of taking massive global actions to save humanity’s crucial life-support systems.”

The Coronavirus pandemic – a direct consequence of humanity’s invasion and appropriation of wildlife habitats – has exposed the economic dysfunction, injustices and fragilities of the system of globalisation.  The SARS epidemic of 2002 first revealed that without rapid detection, globalisation, population growth and urbanization can quickly facilitate the transmission of diseases, as Professor Ian Goldin of Oxford University predicted in 2014, because “increased integration fosters both the nascence and the proliferation of diseases.” [2]

Both Britain and South Korea face these challenges after decades of unprecedented technological change and economic growth. ‘Growth’ has raised living standards and pulled millions of people out of poverty. But economic expansion has led to ever-rising investment in the ‘growth’ of mining (including for the ‘rare earths’ needed in new technology), farming and housing, activities that have harmed the biosphere. It has also resulted in global economic imbalances in trade, debt and capital flows, and to obscene levels of inequality both within and between states.

The growth of GHG emissions over time

When the industrial revolution began in 1750, the UK had emitted approximately 9.4 million metric tons of carbon dioxide emissions. Within just 10 years, according to Statista,[3] it had pumped more than 100 million metric tons of carbon dioxide into the atmosphere. “Industrial activity continued at a rapid pace, and by the mid-nineteenth century, during the peak of the British Empire and the end of the first industrial revolution, this figure had increased to more than three billion metric tons of carbon dioxide emissions.”

Today South Korea has become the 7th largest emitter of carbon dioxide in the world, according to the International Energy Agency (IEA). Coal power, as Jane Chung writes,[4] “is the bedrock of South Korea’s electricity supply, accounting for about 40% of the country’s total energy mix, with renewable power accounting for less than 6%.” According to Jae-Hyup Lee and Jisuk Woo,[5] the third Korean Energy Master Plan up to 2040, adopted in June 2019, together with the 2017 power sector plan for the period up to 2030, aims

“to increase the renewable electricity share to 20% by 2030 and 30% to 35% by 2040, which is up from 3% in 2017.”

In other words, in response to the threats posed by extreme weather and to the warnings made by scientists, the government of Korea, like that of Britain, plans to do what can only be described as “too little, too late”.  Its post-COVID-19 stimulus plan is branded, wrongly, as a Green New Deal (see below). The plan would involve investment of a meagre 12.9 trillion Won ($10.5 billion) over the next two years, with the focus on the creation of just 133,000 jobs in a country where more than 27 million people are employed, many in fossil fuel-intensive sectors.

Like the very inadequate British plan for tackling climate breakdown, Korea has placed trust in the hands of private markets, which the government hopes will partner with the state to bring about the transformation needed to secure the future of Korean society and its ecosystem. This partnership is based on the hope that capitalism and ‘the market’, driven by the profit motive, and aided by the ‘invisible hand’, can bring about the changes needed to ensure the survival of the Korean and British peoples, their cultures, civilisations and ecosystems.

The British ‘Green Industrial Revolution’.

There is little in the way of what Greta Thunberg called ‘cathedral thinking’ in the British government’s plan to prepare for climate breakdown. Instead, the nation is offered deferral and delay. The current Prime Minister, Boris Johnson, defines his climate ambition as a “Ten Point Plan for a Green Industrial Revolution for 250,000 Jobs.”  The plan is part of the Johnson government’s mission to “level up” across the country and will mobilise just £12bn ($16.6bn) of government investment “to create and support up to 250,000 highly-skilled green jobs in the UK, and spur over three times as much private sector investment by 2030”.[6]

The words ‘industrial revolution’ betray the government’s real intent: to maintain fossil-fuelled industrial activity, or ‘business as usual,’ for as long as possible: to defer changes to some point in the future: 2030- 2050. We know this because the 10-point plan was launched alongside an announcement in August 2020 of twice as much – £27bn ($36bn) – for investment in road projects. Far from being a ‘green revolution’, this is simply ‘business-as-usual’ where car ownership and road-building go hand-in-hand. Furthermore, the British government welcomes BP’s new Clair Ridge oil platform, with its accompanying quarter of a billion tonnes of carbon dioxide, and the new Glengorm gas field, adding a further 100 millions tonnes of CO2.[7] Finally, they plan to expand Heathrow airport, facilitating more flights with more fossil fuel consumption and hence more carbon emissions. [8]

Too little, Too late.

We are running out of time, as shown by the Coronavirus pandemic of 2020-2021; the ‘heat dome’ that burned the western United States and Canada in early 2021; and the floods that afflicted Europe, South and East Asia in the summer of 2021. Extreme weather events  and biodiversity collapse, make both the vague promises to do something by 2030 or 2040 or 2050 just another form of deferral; of stalling and delaying action.

The facts demand immediate action. Delays to cut emissions will simply lock in greenhouse emissions from, for example, cars  and airlines for the next decade or two. They will add to the existing stock of toxic emissions already stored in the atmosphere where they operate as a vast heat-blanket covering the planet.

Second, as Professor Kevin Anderson of the Tyndall Institute, Manchester University has argued,[9] delays risk locking out low carbon alternatives to the private car. To meet its Paris obligations “the UK must achieve zero-carbon energy by around 2035; that’s ‘real-zero’ not ‘net-zero’. This requires an immediate programme of deep cuts in energy emissions rising rapidly to over 10% p.a. Such an economy-wide agenda will need to embed equity at its core writes Professor Anderson, if it is to succeed mathematically and politically, as well as morally.

Finally, delays are just another way of “passing the buck” to future generations. Governments rely in large measure on future and highly speculative Negative Emission Technologies (NETs). These technologies exist as small pilot schemes, “and often only in the imagination and computers of professors and entrepreneurs” as Prof Anderson argues. Our children and grandchildren will be expected to “remove colossal quantities of (our) carbon directly from the atmosphere or attempt to live with the consequences of dangerous climate” breakdown.

If the Korean and British governments had been informed by scientists that a meteorite was heading towards earth, threatening imminent destruction – they would not have casually and sluggishly adopted drawn-out plans to spend minimal amounts in securing the very survival of their nations. Under pressure from their populations and of the extreme emergency, leaders, in this scenario would, we assume, have mobilised all the human, financial and ecological resources at their disposal to protect the security and future of human civilisation.

The ‘timid mouse’ that is the private sector

Despite the ideology of ‘free market’ risk-taking, the private sector is reluctant to undertake risks associated with transforming an economy, ending a nation’s addiction to fossil fuels, and building system-wide alternatives to carbon-intensive sectors, as Professor Mariana Mazzucato has argued.[10] Nor is the private sector capable of mobilising the scale of finance needed, and directing the investment required if Korea, for example, is to fund the retraining of millions of workers, compensate shareholders for losses and build alternative sectors and systems.

Only the ‘roaring lion’ that is the developed state has the financial clout, power and capability to undertake a transformation that would lead to more sustainable systems of finance, transport, energy, the built environment, agriculture and food production.

For states to undertake such levels of investment requires them to work with the central bank to issue the finance (bonds) for investment, but also to recoup some of that investment in tax revenues – to help ‘balance the books’.  However, taxes, including carbon taxes, aim the burden of adjustment on the population as a whole. This is unfair, because the majority are not responsible for the bulk of emissions, and in any case alternative ‘green’ systems of transport, energy etc. are generally not available for the majority. So carbon taxes will increase hostility towards the government just as the protests against carbon taxes of the Gilet Jaunes (Yellow Vests) in France from 2018-2021 demonstrated.

The answer is to aim taxes at the top 10% of the population, responsible for fully 50% of emissions, according to Professor Anderson.

However the top 10% are inclined to use the capital mobility that is a feature of globalisation to offshore their wealth and ensure tax revenues are diverted away from governments, and appropriated by tax havens. Is it any wonder that governments suffer from the build-up of debts and deficits – and are reluctant to invest in transformation?

Even if governments overcome that challenge, and build the necessary political will and drive, they face an important barrier to action: financial globalisation.

Both Korea and Britain are deeply embedded and integrated into, the globalised capitalist economy.  One lamentable consequence of that integration is the loss of considerable economic policy autonomy at the level of the state. Key economic decisions, relating to the exchange rate, to the mobility of capital, to rates of investment and to the rate of interest for both public and private risk-taking, are not made at home. Instead they are decisions determined remotely by often invisible and unaccountable global capital markets.  The question Koreans and Britons must address is this: will the financial markets of the globalised financial system support, condone and finance the implementation of a genuinely radical Korean or British Green New Deal? Would the system help these societies finance vital activities to tackle an emergency – at the national or local level – activities to avoid the equivalent of a meteorite crash and to ensure survival?

If anyone doubted that, then the experience of the COVID-19 pandemic confirmed that the system of financialised and privatised globalisation does not support societies tackling an emergency. Alan Greenspan, once the revered governor of the US Federal Reserved explained why: nation states are no longer governed by democratic, elected representatives capable of leading and launching system-wide reorganization and policy changes.[11] Instead

“….thanks to globalisation, policy decisions ….have been largely replaced by global market forces. National security aside, it hardly makes any difference who will be the next president. The world is governed by market forces.” [i]

Environmentalists, trades unionists and activists concerned about the risk of earth systems breakdown may consider the global financial system irrelevant to the important task of protecting the very foundation of our economy – the local ecosystem. That would be wrong, because the financial system is fundamental to the economic, social and political systems that generate (or withhold) finance; finance that fuels production and consumption and leads to the emission of greenhouse gas emissions; finance that could help invest in the protections needed from climate breakdown and biodiversity loss.

Furthermore, the globalised financial system demands unsustainable rates of return on credit which can only be paid by ruthless exploitation of the finite assets of both the earth (the ecosystem) and of labour.

Rates of return for wealth vs rates of return for labour

The rates of return on credit (interest) in the globalised system can be understood as rates of return for the wealthy – those that create credit (bankers and financiers) or those that own interest- or rent-bearing assets (e.g. property, intellectual property (e.g. copyright), bonds, stocks and shares, works of art). The holders of such assets are defined as rentiers. The rates of return on wealth on existing assets are stupendous and can be contrasted to disappointing rates of return on labour – the daily, weekly, monthly wage.

Globalisation has evolved into what Brett Christophers defines as Rentier Capitalism – a form of capitalism that helps ensure that rates of return on wealth (assets) rise almost exponentially; while wage rates have largely stagnated or fallen.  During the ‘lockdown’ of the 2020 Coronavirus pandemic, the total wealth of the world’s billionaires rose by $5 trillion to $13 trillion in 12 months, the most dramatic surge ever registered on the annual Forbes billionaire list, as explained here.[12] In contrast, as the ILO explains here COVID-19 drove wages down.[13] Hundreds of millions of workers were paid less than a living wage.

Globalisation has also been the means by which both British and Korean workers have lost bargaining power relative to employers. US Silicon Valley based digital platforms, as Guy Standing argues in his book The Corruption of Capitalism, “are rentier entities: they control the technological apparatus but, unlike great corporations of the past, they do not own the means of production. Rather they are labour brokers, often taking 20 per cent (sometimes more) from all (labor) transactions.”[14]

This is the international context in which both Korean and British trades unionists and their allies must fight for a just transition to the transformation of their economies away from dependence on fossil fuels.

If countries are to mobilise the financial resources needed for the ‘transformative change’ required to conserve, restore and sustain nature – then the globalised financial system must be made servant to that task and to the 99%.  As things stand, the sector acts as the capitalist master of the world’s economies – and remains aloof and unaccountable to governments and communities for whom the transformation of systems is an urgent task.

To achieve such a transformation requires international coordination and cooperation – between the world’s different labour movements.  A just transition will require the global trade union movement to build new kind of inter-nationalism: based on the interests of the 99%, broadly defined as ‘labour’. For, as President Roosevelt’s Treasury Secretary, Henry Morgenthau argued at the establishment of the Bretton Woods System in 1944, we must “…recognize that the wisest and most effective way to protect our national interests is through international cooperation – that is to say, through united effort for the attainment of common goals”. [15]

We need to build a new internationalism in contrast to what Karl Polanyi called the ‘stark utopia’ of liberal finance, or globalisation.  It is a financialised system that has served to prioritise the interests of those managing mobile, tax-avoiding capital, and that have undermined the national interest and public finances of individual states. It is a system that has led, in turn, to the rise of nationalisms and authoritarianism, as communities take measures to elect ‘strong men’ (sic) they believe (vainly) will protect them from what they perceive as the deregulated globalised market’s annihilation of both “.”the human and natural substance of society.”[16]

For, as the experience of the global pandemic has shown, financial globalisation has undermined effective international coordination and cooperation to save lives worldwide. Instead, the pandemic has fostered the economic interests of powerful financial and pharmaceutical corporations; has exacerbated international trade tensions and even threatened the launch of a new cold war. It is a system that, even in a global pandemic, has failed societies across the globe, and enriched the 1% – broadly defined as ‘the wealthy’.

If we are to implement a genuine Green New Deal, then it will be necessary to act as President Roosevelt acted in implementing his ‘New Deal’. In order to create employment and tackle the crisis of the ‘Dust Bowl’ across the great plains of the United States – he first had to act to transform the international system of liberal finance, based on Wall St. He began by dismantling the gold standard – the ‘globalisation’ of the 1920s and 30s.

The original Green New Deal of 2008

The original Green New Deal is a plan drafted by a group of London-based economists and environmentalists and published in September, 2008. It demands major system change to tackle climate breakdown and economic failure: both economic and ecological system change. It demands structural (governmental and inter-governmental) transformation, not just behavioural, community or technological change, in society’s approach to the financialised, globalised economy and ecosystem. In addition, and as in the 1930s, such change, we argued, must be driven by a radical structural transformation of the economy, particularly the financial sector.

The idea was developed on the understanding that finance, the economy and the ecosystem are all tightly bound together. Protecting and restoring the ecosystem to balance cannot be undertaken effectively, we argued, without the transformation of the other sectors. Joined-up policies are needed. Financing the hugely costly overhaul of the economy away from its dependence on fossil fuels cannot be achieved without the subordination of the globalised finance sector to the interests of societies and the planet.

Environmental advocates tend to focus on individual (‘change your lightbulbs’) or community (‘recycle, reuse, reduce, repair, localise’) action. We have been slow at understanding and promoting the need for radical systemic change across sectors and at a global and national level; that is, change that involves state action.

The ambition of the 2008 Green New Deal is based on, but adopts a far grander scale than Roosevelt’s 1930s New Deal. The climate threats we face are of a magnitude beyond the imagination of the New Dealers of the 1930s. However, we can learn from the radical experience of President Roosevelt’s administration.

Roosevelt deliberately pivoted away from the economic orthodoxy of the gold standard imposed by his predecessor President Hoover. Instead, he adopted the monetary policies first outlined by John Maynard Keynes at the end of World War 1. So convinced was Roosevelt that Keynes’s monetary theory and policies would enable economic recovery for the United States, that on the night of his inauguration he immediately began dismantling “the fantastic machinery” of the gold standard – the 1930s form of globalisation that in turn was based on the belief that government by markets (especially Wall St markets) was best.

As President Roosevelt later reminded others, the bank holiday announced for the Monday after his inauguration “was an emergency measure, but it was also the first of the steps in transferring to the Federal Government the more effective control and regulation of the monetary system, including monetary gold, and restricting the private profits of a privileged few out of the Government’s action”  [17]

To tackle climate change we need to reprise the actions of the Roosevelt administration if we are to simultaneously to tackle the root cause of growing toxic emissions: a self-regulating, globalised financial system based on Wall St and other financial entrepots. A system that pours exponential quantities of unregulated credit (debt) into the hands of speculators and consumers, as well as fossil fuel producers.

This credit is used in turn to accelerate the extraction and consumption of the earth’s finite assets. Only once we switch off the ‘tap’ of ‘easy money’ will it be possible to switch off the flow of oil and other fossil fuels into production and consumption.

Roosevelt, Keynes and joined-up policies lie at the heart of the Green New Deal.

The demand for a Green New Deal is realistic in that it harks back to a relatively recent era when the global economy was transformed almost overnight by the monetary policies of an American president. As Roosevelt began dismantling the globalised ‘gold standard’ on the night of his inauguration of 4 March 1933, he freed up his administration to a) end austerity and unemployment, then running at 25 per cent, before b) mobilising fiscal resources and policy to, not just create jobs and transform the domestic economy, but also to address the ecological crisis of the ‘Dust Bowl’.

Roosevelt affirmed, as Keynes had done, that ‘we can afford what we can do’ because the financial system – as a system – should enable society to do what we can do; to help mediate our economic transactions and relationships:  no more and no less.

Instead today the financial system has been captured by elites that decline to play the role of servant to the economy, and instead adopt the role of master.

As then in 1933, so now in 2021. The globalised financial system must be tamed, onshored and domesticated and returned to its role as the servant, not master, of the economy and ecosystem. Many will say that is not possible, and that we must rely on new technological solutions. In response, I will quote the famous physicist, Richard Feynman,[18] who was charged with investigating the reasons for the catastrophic failure and explosion of NASA’s space shuttle Challenger, and the deaths of its its crew.

“for technology to be successful, reality must take precedence over public relations, for Nature cannot be fooled.”  (Emphasis added).

If Britain and Korea are to tackle the grave threat of climate breakdown and biodiversity collapse; if human civilisation is to survive, then “reality must take precedence over public relations, for Nature cannot be fooled.”

End.

[1] Gerardo Ceballos, Paul R. Ehrlich, Peter H. Raven, Vertebrates on the brink as indicators of biological annihilation and the sixth mass extinction. Proceedings of the National Academy of Sciences Jun 2020, 117 (24) 13596 13602; DOI: 10.1073/pnas.1922686117

[2] Ian Goldin and Mike Mariathasan, p. 145, in The Butterfly Defect: How Globalisation creates Systemic Risks, and What to Do About it. (2014).

[3] Ian Tiseo, 25 March, 2021, Cumulative carbon dioxide emissions produced in the United Kingdom in selected years from 1750 to 2019 (in million metric tons). https://www.statista.com/statistics/1224173/cumulative-co2-emissions-united-kingdom-since-1750/

[4] Jane Chung, Reuters, South Korea fires up on renewables, to close more coal plants. 9 December, 2019  

[5] Jae-Hyup Lee and Jisuk Woo, Green New Deal Policy of South Korea: Policy Innovation for a Sustainability Transition, Seoul National University School of Law, Published: 6 December 2020

[6] HM Government, The Ten Point Plan for a Green Industrial Revolution. 18 November, 2020 . https://www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution

[7]   Felicity Bradstock, UK Ramps Up North Sea Oil Production. Oilprice.com. 29 May, 2021. rice.com/Energy/Energy-General/UK-Ramps-Up-North-Sea-Oil-Production.html

[8] Roger Harrabin, BBC. Heathrow Wins Court Battle To Build Third Runway. 16 December, 2020

[9] Professor Kevin Anderson, Tyndall Centre, University of Manchester, Brief Response to the UK Government’s “net-zero’ proposal. June, 2019. https://kevinanderson.info/blog/brief-response-to-the-uk-governments-net-zero-proposal/

[10] Mariana Mazzucato, Preface, The Entrepreneurial State, 2018.  

[11] Quoted by Adam Tooze in Beyond the Crash, The Guardian, 29 July 2018. https://www.theguardian.com/commentisfree/2018/jul/29/city-of-london-desperate-gamble-china-vulnerable-economy

[12] Ann Pettifor, Quantitative Easing: How the world got hooked on magicked-up money. Prospect Magazine, 16, July 2021. https://www.prospectmagazine.co.uk/magazine/quantitative-easing-qe-magicked-up-money-finance-economy-central-banks

[13] International Labour Organisation: Global Wage Report, 2020-2021. COVID-19 drives wages down. 02 December, 2020. https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_762547/lang–en/index.htm

[14] Guy Standing, p. 213. The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay. 2017. https://www.bitebackpublishing.com/books/the-corruption-of-capitalism

[15] In a speech delivered on 22 July 1944, Henry Morgenthau, Jr, US Secretary of the Treasury and Chairman of the Bretton Woods Conference, welcomed the Keynes/White plan for establishment of a new international financial system, dubbed the Bretton Woods System – which replaced the disastrous gold standard system of austerity, financial crises and economic failure of the 1920s and 30s.

[16] Karl Polanyi, p. 3. The Great Transformation, 1957.

[17] Eric Rauchway p.54, Money Makers: How Roosevelt and Keynes Ended the Depression, Defeated Fascism, and Secured a Prosperous Peace. Basic Books, 2015.

[18] Cited by Prof. Kevin Anderson in a lecture: “Nature cannot be fooled”. Kevin Anderson on mitigation as if climate mattered. 5 September, 2019. https://redd-monitor.org/2019/09/05/nature-cannot-be-fooled-kevin-anderson-on-mitigation-as-if-climate-mattered/

[i] Quoted by Adam Tooze in the Guardian 29 July, 2018. Beyond the Crash. https://www.theguardian.com/commentisfree/2018/jul/29/city-of-london-desperate-gamble-china-vulnerable-economy Accessed 15 April, 2019

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