Greening the New Deal26th March 2019
The Green New Deal is desperately needed, and arguing about a price tag is like Henry Ford wondering if the country will be able to afford his brand new automobile. With the introduction of a House Resolution by Rep. Alexandria Ocasio-Cortez (D-New York) and Sen. Edward Markey (D-Massachusetts), a debate has surged across the country on the affordability of the Green New Deal. The sheer distraction of the affordability discussion is enough to ensure that very few people will pay attention to what is really at stake. For when the bigger fish eat up this little fish we will need to remember how we got here and what matters most. As the bright young critics have quickly observed, the Green New Deal could hardly be too green. Time is wearing thin and we need to make haste.
But there can be no greening that abstracts from political economy realities and while the tug of war taking place in the media at the moment is all about the so-called economy-of-it-all, there is next to no analysis on the political constraints of sustainably embarking on another New Deal when the first one withered away long ago. After World War II, the ambition of a nationwide spending program was quickly replicated on an international scale as the country rightly observed that in a vacuum the United States would be hard pressed to expand its economy and that what it needed to make large projects like the Tennessee Valley Authority which introduced unprecedented stimulus, sustainable in the long run was the integration of the United States capital stock’s capacity to produce output with a global trend of expanding markets. Unless the United States comes to terms with the global characteristics of its (not to mention everyone else’s) economy, we will all the rest of us more than likely pay the brunt of another American adventure. How does America exact these payments? By imposing continued low growth trajectories, low wage growth, contractionary balance of payments adjustments, and what Keynes called “forced exports”, which is basically what we call today narrow and specialized development: all opposed to diversification.
If the truth be told, the heavy handed unilateral approach of the United States renders the rest of the global economy akin to something that can be thrown off the back of a train to pay for America’s projects. By America’s choice, the world has pursued a most exclusionary development path with low growth trajectories being imposed on much of the world’s population, even Europe’s, to ensure the political dominance of one country, which itself is willing to sacrifice the high growth it could enjoy itself along with the rest of the world through inclusive multilateralism. The decision for this can be traced back to 1951, two years after what has sometimes been referred to as ‘the Kaldor Report’ was discussed at ECOSOC. This would be the last serious consideration for institutionalizing Full Employment at the international level, which is to say that it was the last serious effort to institutionalize multilateral trading in support of an expansive global economy.
It is this author’s opinion that this would have required the mediatory institutions sought by John Maynard Keynes. As he confided to his compatriots, “the difficulties are thoroughly shirked” (Keynes, 1980: 325), “The two Institutions have become different from what we were expecting.” (Ibid: 232) These statements commence a long line of lament by those working in the official institutions of international development. Contrary to the less than exhaustive investigations by the most powerful parties involved in the post-War framing, certain extensive and earnest treatments of the rationale for full employment have been attempted. The tensions that constituted the political sequence which framed the post-War economic institutions were all but resolved. They can fruitfully be resubmitted to thought.
The ability of the USA to pay for the Green New Deal is inherently connected to its relation to the global economy, at the broadest level. It can flounder on uninviting seas and when needed release its fury spanking the waves after Xerxes, or it can take stock of what Keynes called the “high ways of the real world”, and awake to the rough realities it has imposed around the globe. To the extent that America’s low growth trajectory displaces demand in the global economy— or to the extent that its low wage growth policy is the only way it manages to insert itself into the global economy, its longstanding policy of aggressive bilateralism will continue. The world’s economies are intimately interlinked and what is needed is not an American scheme but a global one — which picks up the multilateralism that once wanted to be born.
Shaun Ferguson has worked in development economics at various United Nations agencies including UNCTAD, ESCWA and UNSCO since 2002. He has a doctoral degree in Economics at the New School for Social Research.