New set of principles needed for a global Green New Deal

Students hold a banner during a demonstration against climate change in Berlin, Germany. The movement was sparked by Greta Thunberg of Sweden, a sixteen year old climate activist, who has been protesting for climate action since August 2018. Picture: EPA/Felipe Trueba

Uneven economic recovery is combining with deteriorating environmental conditions to threaten humanity itself, write Richard Kozul-Wright and Kevin P Gallagher

The “Green New Deal” (GND) proposed by progressives in the United States cannot be achieved in isolation. To tackle climate change and inequality together, all countries will need to agree to new rules for international cooperation.

The start of such a rethinking began in April 2009, when the G20 met in London and promised to deliver a coordinated response to the global financial crisis, followed by a future of more robust growth.

Then, that December, world leaders met in Copenhagen under the auspices of the United Nations promised big cuts in carbon dioxide emissions, to limit global warming to 2C above pre-industrial levels.

Then British prime minister Gordon Brown announced a “new world order” founded on “a new progressive era of international cooperation”; the second ended in disarray. Yet, looking back, the false dawn of that “new progressive era” has proved to be the bigger obstacle to a secure and stable future.

For a decade now, the post-crisis recovery has oscillated between anaemic growth spurts and recurrent bouts of financial instability, owing partly to advanced economies’ discordant mix of aggressively loose monetary policies and dogged fiscal austerity.

And this has all been supported by massive build-up of debt, which has increased by more than $70tn worldwide since the crisis.

As economic power has become increasingly concentrated, inequality — both within and among countries — has reached grotesque heights. With financial speculation now commonplace, so, too, are fraud and instability.

Meanwhile, investment in public goods — globally and nationally — has stagnated, and growth has become dependent on resource extraction and energy consumption, both of which are proceeding at such a pace as to threaten human civilization itself.

For all the ambitious talk in London a decade ago, little has changed. Debates about improving global governance still revolve around ideas like “corporate social responsibility”, “public-private partnerships”, and “free-trade agreements”, none of which will bring about a fairer, more stable economic order.

Complicating matters further, global environmental conditions have become increasingly fragile since 2009. And even before US President Donald Trump’s truculent decision to abandon the 2015 Paris climate agreement, there was no clear path to keeping global temperatures below a level that scientists deem safe.

Against this dismal backdrop, bold proposals for a GND have been gaining political traction, notably in the US, where the idea is to transform the economy through a harmonious marriage of economic justice, social solidarity, and environmental rehabilitation.

But the marriage Green New Dealers envision cannot be left to the benefaction of a global hegemon. Capital is mobile, and carbon-heavy growth is no longer the preserve of the advanced economies. For the GND to work, it must also be globalised through international cooperation.

The problem is multilateral rulemaking in recent decades has been subject to the same political pressures as domestic policymaking.

It is not a coincidence the current framework for governing the global economy primarily benefits financial entities and large multinational corporations.

The original goal of post-war multilateralism was to protect the weak from the strong so that they could grow.

Yet its current version encourages strong countries to impose their preferred development model on the weak, thereby promulgating a world of “winner-takes-most” outcomes.

Under these conditions, fine-tuning existing arrangements simply will not do. To make a global GND work, many of the multilateral programs that have accumulated over decades will have to be culled, and a new generation of smarter institutions will have to be established.

What we need, then, is a new set of principles to replace those that have underpinned rulemaking in the age of hyper-globalisation.

Looking ahead, global rules must be recalibrated toward the overarching goals of social and economic stability, shared prosperity, and environmental sustainability, and rulemaking bodies must be protected from capture by the most powerful.

At the same time, individual countries should still be allowed pursue national development strategies within the framework of global rules and norms.

Finally, global public institutions will have to be more accountable to their full membership, and, to achieve that end, should maintain balanced dispute-resolution systems.

For a decade, the international community has failed to heed Winston Churchill’s advice “to never let a good crisis go to waste”. Unless that changes in the coming decade, those looking back at the current period in 2029 won’t get another chance.

Richard Kozul-Wright, the director of the division on globalisation and development strategies at the United Nations Conference on Trade and Development, is the author of Transforming Economies: Making Industrial Policy Work for Growth, Jobs and Development. Kevin P Gallagher is professor of global development policy at Boston University’s Frederick S Pardee School of Global Studies.

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