Saturday, 17 December 2011
We need to design a new economic order
I want a debate about how we move away from today's failed economic order and build a new one that is socially just and ecologically sustainable.
In a month dominated by the political and economic crisis in Europe, those of us following events at the COP17 climate summit in Durban took what little hope we could from the talks.
Politically, there was some success in the form of a roadmap towards a new treaty to succeed the Kyoto protocol. The fact that this new agreement to cut emissions, which will have legal force, is to include the United States, as well as the fast growing economies such as China, India and Brazil, is encouraging.
Sadly, it says a great deal about people's faith in the UN climate negotiations process that, after so many summits and empty pledges over the years, an agreement "in principle" to tackling climate change without much in the way of substance could still be hailed as an overall success.
But at least we do now have an international consensus on the need to cut emissions. The real tragedy is that our government will completely fail to rise to the challenge in the post-Durban, euro crisis landscape - and seize the opportunity to build a different kind of economy.
Drowning out calls for the coalition to deliver on its green pledges and invest in the low-carbon industries which can help lift us out of recession and create jobs, are those who frame the debate as a false choice between "going green" and keeping the economy on track.
And drowning out news about critical decisions made in Durban has been the coverage of the prime minister's euro-sceptic swaggering at the Brussels summit, where he singularly failed to defend the interests of the people of Britain who, like Europeans, are threatened by a financial crisis that could result in the loss of their homes, their life savings and livelihoods.
Preventing financial meltdown was, after all, the purpose of the summit. Instead, Britain used the occasion to defend the interests of a tiny minority - the 1% - that are the cause of the crisis, and that thrive on the back of taxpayer-backed subsidies in the City of London.
In answer to my question to the prime minister this week: "Why did he choose to conflate the interests of the nation, with the interests of the City of London?" no real explanation was offered.
Meanwhile, Angela Merkel and Nicolas Sarkozy appear hellbent on accelerating the crisis by intensifying austerity across the eurozone. This is likely to be explosive: in economic, political and social terms.
But for all their misguided approach to the consequences of the crisis - rising public debts - German and French politicians are clear about the causes: lax and loosely regulated financial centres like the Square Mile.
And in that analysis they are not wrong. The City of London is set, once again, to play a major causal role in the coming financial catastrophe.
The reason is not hard to find. This week we learned about the impotence of the Financial Services Authority (FSA) in dealing with bankers at RBS that destroyed a bank, caused many to lose their jobs, and stripped British taxpayers of £45bn.
That's £45bn which could have been used to keep millions of young people in employment for a considerable time, to support renewable energy and energy efficiency measures to create jobs and help those in fuel poverty, or to pay more nurses and teachers.
Payday lenders have scuttled across the Atlantic to avoid the anti-usury laws of Canada and the United States, and found refuge in what the FT calls the "singularly attractive market" that is the City of London - where there are no usury laws.
According to Thomson Reuters, the City's "lax and loose regulation" allows companies, like the recently bankrupted MFGlobal, to gamble with money that belongs to clients and then " …to finance an enormous $6.2bn eurozone repo bet … a position more than five times the firm's book value, or net worth."
It is this kind of financial speculation that once again threatens not just Europe, but the global economy.
Occupy Wall St protesters at St. Paul's are exploring alternatives to this failed system of financial liberalisation. Even the Bank of England, in papers published this week, is considering a transformation away from deregulation towards a rules-based system, that constrains capital mobility and secures stability and "internal balance" for countries like Britain.
Our politicians should be debating these profoundly important issues. They should be leading us out of this global financial morass, towards a more just, stable and sustainable future.
But they are not. Across the political spectrum - from Ed Balls, to Ed Miliband, to Nick Clegg and David Cameron - we are governed by politicians that have all promoted and defended the current neo-liberal system: "light touch regulation".
They are all part of the design team that brought you credit crunch 1.0 and that is about to deliver credit crunch 2.0.
The fact that the government has confirmed it will not support a financial transactions tax such as the Robin Hood tax, or offer anything new to tackle tax avoidance and evasion, tells us all we need to know about the commitment to social justice amongst the cabinet's millionaire ministers.
So I want to appeal for a debate about how we transform our economic system away from today's failed economic order - designed to serve the interests of the City of London's 1% - and instead build a new one.
One that is socially just and ecologically sustainable. One that provides useful and meaningful employment for all and strengthens our communities. We can and must find a better way of bringing people closer together and building a better society, while operating within the limits of the ecosystem.
Why will my fellow politicians not engage in these debates? The system we have is catastrophically impaired, yet our leaders remain prostrate before neoliberalism - an ideology that has destroyed jobs and firms, ruined the life-chances of millions, while enriching crooks, thieves and oligarchs. I call on others to join me in calling on our political leaders to match progressive politics with meaningful action, and in taking a principled stand to challenge the deeply corrupt financial system that has plunged us into environmental and economic crisis.
Caroline Lucas, Green Party Leader
The article was first published in The Guardian