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The Green Economic Environment: Green Growth, Degrowth, Sustainability

The political economy of climate change: possibilities for a post-Anthropocene

Equity and survival for human beings and other living species are contained within the overriding aim of returning the concentration of carbon dioxide in the atmosphere to 270 ppm from the present 389 ppm. Let us say we are in the Anthropocene [2] now, and a post-Anthropocene is where human labour has a positive effect on the geology and atmosphere of the planet and thus allows life to continue, but only if humans keep working at it. Thus the production base of the post-Anthropocene is entirely farming, tree planting and forestry to in the final instance sequester carbon dioxide.

Seen from this perspective, the present global financial crisis of speculative finance and excessive government debt and the unwillingness of borrowers to borrow in the USA and Europe, is an aspect of the process of adjustment to a post-petroleum post-coal, post-nuclear world. The crisis is thus the end of consumerism and the question of the possibility of a “post-Anthropocene”.

In market capitalism various elements of the economic system including corporations and the cost of money i.e. interest rates, cannot be controlled or tinkered with, without beyond a certain point upsetting capitalism itself. So once people are concerned that exploiting more hydrocarbons will lead to escalating climate change, they can only influence the rate of exploitation by consuming less. In other words consumer democracy has only the indirect mechanisms of lowering consumption available to it for reducing emissions.And indeed, consumer spending is contracting rapidly in all the developed economies.

The effect in market capitalism of this very desirable reduction in consumption and therefore in greenhouse gas emissions in relation to conserving a possibility of life on earth as we know it, is that the lower consumption results in lower trade, lower profits for business, lower taxes, and thus if governments want to keep up their welfare payments, higher government debts. Seen from this perspective, it is inevitable that governments have to do something; but what?

If the consumers, i.e. people benefiting from hydrocarbons but not sequestering carbon dioxide, in this world – around one third of the world’s inhabitants-, want to have the opportunity of a post-Anthropocene rather than auto-genocide, i.e. if they want to switch to a life where they can produce their lives sustainably, they have to switch from being emitters of carbon dioxide to being agents of sequestration. Once the task is formulated in this way, in terms of the need for new production systems that allow people to sequester carbon dioxide, then the direction which the new form of political economy has to take is clearer. Access to land is an urgent critical necessity: this entails land redistribution and access to land. And secondly, localisation of exchange and trade is needed, to reduce the need for transport. There is also a need for local economic trading systems to be independent of the demands of capital for labour, and the demand of capital for exploitation of materials of one region for global production and consumption systems. The best way to ensure this is to create local currencies in addition to new national currency based not on debt but on free currencies spent into circulation by national and local governments. Systems of altruism, reciprocity, and redistribution through festivals will become more central again as they were before political economy, and political economy can be properly acknowledged as the servant not the master of social and personal life and the servant of earth logic. [3]

These ‘consumer’ signals and the national solutions need to be translated into action at inter-government level too. But governments themselves need to be fed the new ideas, because they are all stuck in outmoded ways of thinking. During the debates on money conducted by those who thought the laws governing the production and distribution of commodities could be discovered, between the second half of the 17th century and the beginning of the 19th century, it had been decided that the solution to the problem of sovereigns using currency to their ends, was to have commodity money. Gold (and silver for the periphery) was the new commodity money subject to the laws of value, and the amount in circulation was in theory to be determined strictly by the needs of trade. This discovery, that the international currency should be based on the scarcest commodity, was the occasion for us to ask what the scarcest commodity today is, and the answer is climate stability. By monetising the remaining emission space, giving permits to every individual on earth, and letting them sell permits to hydrocarbon producers trading in an ever declining quantity of emission backed currency units [4], the world can equitably manage the transition to a post-hydrocarbon and post nuclear world.

Whilst all nations need to be involved in the discussion and all their populations will receive permits and indeed thus will have emission backed currency units (ebcu) to trade with according to the size of their population, the global money system to get out of hydrocarbons and nuclear energy needs to be operationalised mainly by around 50 largest hydrocarbon producing countries who will be most affected by the need to purchase permits in order to be permitted to continue to exploit hydrocarbons and nuclear, albeit at a steeply declining rate down to zero by 2030, 40 or 50.

The value of an ebcu will be 1 tCO2e but it will fluctuate across the year and brought back into line regularly by the ebcu authority. The quantity of money for global trade denominated in ebcus willd decline as the number of permits issued declines every year. This is discussed more below. The ebcu will be centrally managed and finally buried once emission space is considered used up within safe limits. From this perspective, the most important question is the willingness to take common actions of the 20-odd petroleum and gas producer countries around the world with around 470 GT of carbon dioxide emissions that are waiting to be emitted from their known hydrocarbon reserves (including China Seas) over the next 50 years – which is how long these reserves are expected to last at present rates of consumption; plus the actions of the 20 odd largest producers of coal, who may if they sell their coal to electricity producers be responsible for emitting another 1000 GT of carbon dioxide into the atmosphere in the next 100 years, which is how long coal reserves are expected to last.

We know that in the period 2000 to 2050 we should only emit 800 GT, and we have already emitted around 300 GT in the period 2000 to 2011. [5] It is for this reason that the International Energy Agency has said that unless the world does something before 2017, the earth as we know it is doomed and temperature rise of 7 degrees Celsius will be a certainty. Earth is already convulsing under the accumulation of the greenhouse gases in the atmosphere. The ebcu can manage the end of the exploitation of hydrocarbons and nuclear energy by stopping production at source. Of course the US Congress and Todd Stern reject equity. This position is understandable when one sees the volume of USD circulating in relation to the equitable allocation of permits to the USA on the basis of population that would happen under the emission backed currency unit regime using capping and sharing system to allocate permits. But we should also hope. Everyone should get on with things at home but in parallel push a sensible solution globally.

Home for me is India. India (though indeed any country that is both a big polluter and a country with millions of people desperate for democracy, localisation, adaptation, survival) can lead the way for this vision of a post-Anthropocene because it has large numbers of people desirous to lead an agricultural and forestry life.

Today India is run by the same Washington consensus as the consumer democracies. But whereas consumers in the West are reducing consumption and forcing market capitalism into a corner, China and India and the BRICS countries are continuing to promote consumerism as a form of production model. The nationalism of Government of India’s climate politics and economics are in fact genocidal to Indians and to the rest of the world. By insisting on the ‘right to development’ the Government of India is indeed killing its own people. The policy needs to be reversed through more democracy and localisation. And green market capitalism in any case cannot address the need for jobs of 500 million adult Indians as we are seeing today. India is experiencing jobless growth and revolution is only contained by caste and civilisation. On the other hand, if the Indian government realises that in fact the entire world is moving towards jobs only in sequestration, i.e. in farming, forestry and tree planting, Indians might just get the chance to contribute to allowing human life to continue into a kind of post-Anthropocene.

The first step for India is to immediately call a meeting of the hydrocarbon producing nations and see how the emission backed currency unit based on capping and sharing the remaining atmospheric common space can be operationalised. This is the system of emission backed currency unit as the currency of international trade for the period until all permits for hydrocarbon extraction and use are used up, after having been distributed to all human beings on earth in an equitable and sustainable manner taking into account climate science. Thereafter life will be localised and democratic and there will be no hydrocarbon energy or nuclear energy being used.

The second step is to reduce the installed MW capacity of coal electricity to 20’000 MW in India, to be used only for water pumping for agriculture in dry areas and for minimal domestic needs; and to impose an immediate total moratorium on the import and exploitation of hydrocarbons unless and until an agreement for an emission backed currency system based on cap and share is reached. And as part of this put all so-called ‘foreign relations’ efforts into getting this emission backed currency unit agreement based on capping and sharing the remaining small atmospheric emission space.

The third action needs to be to redistribute land and de-urbanise, i.e. to require urban consumers to use 100% renewable energy and to sequester more carbon dioxide than they emit by moving back to farming and forestry.

The fourth is to abandon debt-based money, engage in deficit easing to cancel all state debts, to make states smaller, and to give states and districts the powers to issue money directly into people’s pockets so that they have local currency to use as they go about the business of sequestering carbon dioxide by planting food and trees.

If we want an analogy from earlier political economy, the international emission backed currency unit will be gold, the Rupee, dollar, dirham etc will be silver, and local currencies will be paisa, copper or shells. The purpose of the emission backed currency unit and localisation is purely negative to regulate political economy until life is totally localised and hydrocarbons and nuclear energy are a thing of the past latest by 2050.

The last point concerns the size of the global economy and national economies, and their relative sizes, under the emission backed currency regime.

The permits will decline at the rate of about 1.5 billion tCO2e emissions annually, from 30 billion permits/ tCO2e this year. If one ebcu is valued at 1 tCO2e, the size of the global economy will be 30 billion ebcu in 2012, declining to zero in 2030. In other words, in 2030 there will be no more hydrocarbon or nuclear energy exploitation and international trade would be back to being done in local (national ) currencies, with the difference that international trade would be the icing on the cake for regions or countries or localities, rather than the mainstay of the political economy.

The question as to the exchange rate between the ebcu and national currencies needs to be understood. It culd be mistakenly assumed if the ebcu system is not understood, that because 3 barrels of oil cause the emissions of around 1 tCO2e, and there is a price of oil of 100 USD, the exchange rate to USD would be around 33 USD to 1 ebcu. But in actual fact this kind of statement is meaningless given that the US economy has to shift completely from being based on hydrocarbons to being based on farming, forestry and tree planting. Under the ebcu system, the USD, Euro and Yen cease to be global trading currencies. The exchange rate between the USD and the ebcu is determined solely by the ability of the US economy to generate USD based on farming, tree planting and forestry, to buy ebcus in order to get the required quantum of hydrocarbons.

The ebcu monetary authority may allow the ebcu to float slightly vis a vis the underlying value of tonnes of carbon dioxide, depending on the pressure during the year for permits. But the monetary authority would regularly bring the value back to the 1 tCO2e parity in order to ensure that ebcu meets its purpose, viz. to phase out hydrocarbons and nuclear energy. If the central monetary authority were to allow ebcus to spiral out of control by giving up control of issuance of ebcus to banks and so on, the entire purpose of this monetary instrument to control hydrocarbons and nuclear energy would be defeated.

Thus as I said, the exchange rate of national currencies to the ebcu will be determined by the relation between permits and hydrocarbon energy and nuclear energy requirements in any country. Permits, which can only be bought with ebcus, are distributed according to population on a declining basis. So to get hold of one ebcu, with which to buy oil, the USA may have to pay much more because it has fewer permits in its hands than it needs. Conversely, India with a surplus of permits in the initial years, will have a much stronger currency in relation to the ebcu. It could thus earn ebcus to the extent that it does not need permits for extracting petroleum and coal, and these ebcus could be sold at very high prices to those who are presently overconsuming hydrocarbons and nuclear energy and are finding it difficult to reduce consumption.

It is seen thus that whether contraction and convergence of the global economy is handled in an orderly manner by organising the exit from fossil fuels through the emission backed currency unit; or whether it is just done in an haphazard way through changes in consumer behaviour in market capitalism, the process of the drastic contraction of the consumption of hydrocarbon and nuclear energy and the localisation of national economies and regional and local economies to allow the production base of the earth’s political economy to shift to sequestration activities in the form of farming, tree planting and forestry, is already well under way. But it has to be said that handled in an orderly manner we may just have the chance of a post-Anthropocene. Under market capitalism another 1500 GT of greenhouse gases could easily be emitted causing most of life as we know it to cease. .

[1] Anandi Sharan is an independent scholar working in the field of the political economy of climate change since 1985. She was a co-founder of the Global Commons Insititute, a founder of Women for Sustainable Development, and a co-founder of the the Green Party of India 2010.

[2] Paul J. Crutzen and Eugene F. Stoermer, “The Anthropocene,” IGBP [International Geosphere-Biosphere Programme] Newsletter 41 (2000): 17

[3] Sharan, Anandi Social, economic and political aspects of Climate Change, in Social, Economic and Political Elements of Climate Change, ed. Walter Leal, Springer Verlag, 2010., pp. 779 – 793.

[4] Douthwaite, Richard the Ecology of Money, Green Books, 2008

[5] PRIMAP, Malte Meinshausen et al; Potsdam Climate Research Institute, IPCC AR4 2009, CoP submission, accessed 1 December 2011:
http://unfccc.int/files/kyoto_protocol/application/pdf/low_mitigati…

Those critiques are certainly compatible with the strategic direction I would envision, but they do not constitute it. What I see as strategically vital is a counter-mentality that redirects the irresistible momentum of technological development toward other ends.

Werner Sombart described the concept of capital as something that “did not exist before double-entry bookkeeping.” “Capital,” he wrote, “can be defined as that amount of wealth which is used in making profits and which enters into the accounts.” Rob Bryer has written of a capitalist mentality that consists of using accounting information to control the labor process “by holding the collective worker accountable for the rate of return on capital.” Such control by the bottom line is central, not incidental, to both the domination of the labor process by capital and the evolution of the ways that domination has been implemented through successive forms of technology. Any alternative to that domination requires the development of a counter-mentality that “turns the capitalist development of calculation and accountability to other ends.”

Bryer referred to that counter-mentality as a “socialist mentality” but I would amend that to a “social accounting mentality” to both enlist and implicate an incumbent social accounting tradition as well as to distance the alternative mentality from advocacy of state socialism. Ownership of the means of production may be beside the point or it may be more eclectic than traditional socialism assumes. It is not private ownership per se that is onerous but the domination over the labor process that a one-dimensional accounting mentality enforces. Social accounting is simply the kind of accounting that has to be done when two or more accounting entities are being aggregated. It differs from the accounting of a single enterprise in the way that transactions between the constituent parts are treated. Great care needs to be taken in defining the boundaries between parties to avoid errors such as “double counting.” It is, in effect, the systematic double counting of the returns due to capital that maintains the social domination of capital and obstructs social justice.

For a fuller outline of this “social accounting mentality” at its historical grounding see “Time on the Ledger: Social Accounting for the Good Society”