This is a short story version of the way things might pan out.
For an argued presentation of the depression recovery plan, go to radical solutions.
There is another story here
Think ahead to 2012.
Our the economic situation that we find ourselves in will lie somewhere in the range between these two scenarios:
Scenario 1: The injection of $700,000,000,000 into the US economy by ex-President Bush in September 2008 saved the US economy from collapse. After a short recession, the world economy picked up, and economic growth picked up, the resilience of capitalism amazingly proving itself able to absorb the rising oil prices. Everyone was happy again, as far as they could be with crime, war &c. Green Parties across the world continued their slow but steady increase, although, worryingly, their progress was matched by a quarrelling and fissiparous assortment of neo-fascist parties.
Scenarion 2: The September 2 injection of $700,000,000,000 into the US economy by ex-President Bush in September 2008 managed to produce a rally on the stock market that lasted for less than 2 weeks. Public realisation of America’s huge £11.3 trillion debt (1,000,000,000,000 (one million million; 10 raised to the power 12; SI prefix: tera-) - for all short scale countries - increasingly common meaning in English language usage) was thought to be the conceptual lever that was triggered by a veritable domino-run of financial houses and banks. Inevitably, the failure of lenders led to a shortage of money for businesses, which began to fail in increasing numbers. Unemployment began to soar. The unemployed were unable to pay their mortgages. More huge financial organisations with exposure in the mortgage markets began to fail. People began to shift their savings around in unpredictable directions. Building Societies began to fail. Money became yet more scarce. The newly installed President McCain panicked, and tried to buy more mortgage debt, but China blocked him from that course, fearing for the safety of the US bonds that it held. McCain panicked, and began a covert programme of printing money to pay the unemployment benefits. This became public, and confidence in the dollar fell at home and abroad. A vicious spiral of hyperinflation followed. Civil unrest began on the streets of America. In the UK, the insurance industry failed from too many AGW caused weather events, while the neo-fascist BNP, already running neck and neck with the Green Party in the polls (both at 10%), made a bungled attempt at a coup.
Economically, stagflation reigned. Everywhere people stood idle, and everywhere people were in need. There were queues for jobs, queues outside the banks, food queues and soup kitchens. Theft crime soared. Vigilantism was on the up. Things looked ominous.
At this point, the British PM David Cameron formed a National Government, in which he included the Green Party Leader, Caroline Lucas MP, who for the past four years had been patiently explaining the Green new Deal in Parliament and in the media.
First ignored, then mocked: “How can you possibly find the money - $50 billion a year (2008 value) for ten years. Especially now that the £100 billion that the Brown Government put into Northern Rock has evaporated”, screamed Jeremy Paxtam, 30 seconds before closing the programme. Patiently, The Green leader unfolded a series of increasingly detailed business plans and, more importantly, the philosophy of Green Value that lay behind them. Although incomprehension and disbelief continued, as the economic situation continued to deteriorate, the message began to gain acceptance. Slowly, first the blogosphere, then the journalists, next the people, then some of the politicians, and finally the Great Civil Service Mandarin in DBERR began to understand the philosophy that lay behind the Green New Deal – Green Keynesianism. “What is ecologically necessary must be made financially possible” was the mantra.
Half of what she said fell on receptive ears. Keynes was back in fashion now. He had said in the 1930s that Government should inject money into the economy at times of recession. Which everyone now agreed was a good idea. But Keynes said Government had to borrow to pay for the programmes of public works, and there was no more borrowing to be done, because their product was discredited. The bankers were all sleeping in cardboard boxes. So Keynesian borrowing was impossible.
Prime Minister Cameron began listening seriously to the Green leader, first in small briefings, then in private. Soon, conditions forced him to form a government of national unity. He appointed Caroline Lucas to be Chancellor of the Exchequer.
Chancellor Lucas’ first action was to set up a working group charged with designing a new form of currency based, not on gold, nor either on greed (which everyone now agreed was the underpinning of the post 1970s financial system), but on a measure of economic reality developed from the Index of Sustainable Welfare.
In the months while the new currency was being designed, Lucas, plagued with inherited inflation, encouraged the development of local currencies from the ideas of LETS and Time Share. Several local currencies were very successful in stimulating purposeful local activity. Most successful among these oases of activity in the desert of inactivity borne of stagflation were the depreciating currencies based on the thinking of Sylvio Gesell.
Second, Lucas added a clause to Social Security regulations allowing unemployment benefits to continue to be paid to people who enrolled into the “Carbon Army” tasked with energy conservation in domestic and other heated spaces. Recruits had their wages topped up to a more than reasonable (for the time) wage.
Six months into her Chancellorship, Lucas was able to launch the newPound (n£). Its world premiere came with an announcement of capital grants and loans worth n£2 billion to construction companies for building renewable energy plant at home and in North Africa and a HVDC grid. For some aspects of this construction, further zero- or low-interest loans from the Central Bank were available on demand.
The new currency was strongly challenged by few remaining adherents of neo-liberalism. They screamed that it was false money, because only money issued from the banks could be real. They predicted that it would fail, and more than one plot to strangle it at birth was uncovered. This in spite of the fact that the banking system, unable to withstand the vacuum of debt at its heart, had collapsed in early 2009, and was still in intensive care.
Instead of dismissing the neo-liberal rump with contempt (as was the fashion in 2010) she met their criticisms head on, with vigour yet without disrespect.
“Just as money once related to the gold standard", she said, "this money is related to human values – the values that make us what we are, our inventiveness, our ingenuity, and the infinite value of the beautiful land that we live in, beautiful in spite of the increasingly extreme weather events that are pummeling us. Our land, her water, her sun, her wind, her tides her waves, her forests, even her ravaged parts and scarred wounds: all this is our wealth, and the newPound is based on this, through the medium of a sound Index of Sustainable Welfare. This pound is sound. It will work. Trust me, I’m a doctor”. (I’m making that last bit up, btw)
One by one, led by Keyesians and Minskyists, eminent economists endorsed the newPound. They concurred with the architecture of the Index of Sustainable Welfare, which was the product of sound measurement and methodology. At its heart was the Carbon Unit Index, a summation of the use of carbon in the nation as a whole, so that every year the carbon footprint became smaller, the value of the n£ increased.
Issued in place of the tattered Sterling, of which five thousand would buy a loaf of bread, if you could find some, the n£ gained in strength as electrical power began to flow once more through the Grid and hope began to move in the hearts of the people.
The Green Chancellor then extended the Green Wage Subsidy to the fields detailed below:
The Green Sector of the economy
1 energy conservation
2 renewable energy technologies
3 energy efficient goods manufacture
4 pollution control technology
5 waste minimisation
6 repair
7 recycling
8 water management
9 sustainable agriculture
10 forestry and timber use
11 countryside management
12 housing - new building and refurbishment
13 improvements to visual environment
14 public transport
15 education and training
16 counseling, caring and healing
17 community work
18 leisure and tourism
19 innovation, research and development
20 any business which passes a certain threshold in its environmental audit.
So that the dole queues shrank, and wage packets began to swell again.
The issuance of money into the economy by the Bank of England was under strict controls, and the Monetary Policy Standing Commission had to account to Parliament annually to prove, under tough questioning, that they had stuck to their remit of granting loans only to those enterprises that were of benefit to environment and (global) society.
Much more detail could be written about this fascinating and critical era of economic history, this era when economics and ecology were reunited once more. It is enough to say that when it was seen that the UK began to flourish in a world of stagflation, other countries began to adopt the Green New Deal approach, and the world began to move as one to address the transition to a solar economy.
That is the story of how, from the ashes of the irrational, destructive, debt-based free market capitalist economy, there arose the life-sustaining GreenPhoenix economy that still flourishes today.
The End
Richard Lawson – first draft
21.9.08
Sunday, 21 September 2008
