Greening the UK's economic model.

Author:Bailey, Dan
Position::THE NEXT ECONOMIC SETTLEMENT
 
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Transforming Britain's economy so that it meets our environmental obligations and conserves the natural capital that is vital to societal wellbeing requires public leadership--a 'green state'--dedicated to securing ecological and inclusive development. However, the state is itself everywhere bound up in ecological crisis. The production and consumption practices that gave rise to the environmental crisis have been brought about, and continue to be sustained by, institutionalised priorities and conventions in public policy. These include a tax regime that excludes environmental externalities, a lax regulatory framework, a failure to invest in green technologies, and the persistence of subsidies awarded to ecologically-degrading industries. In return, environmentally unsustainable industries uphold levels of employment and provide a bounty of tax income which is used to fund the state's activities. Greening Britain's political economy means challenging the institutionalised conventions and objectives in the British state, which have remained resistant to change despite the economic and environmental risks of Britain's present growth model.

Greening the British state is a political challenge which raises questions concerning the boundaries of the possible. Continuity with existing institutions is a great deal easier than challenging the various interests that benefit from them. Herein lies an important but under-appreciated dimension of the problem. State institutions are not simply the malleable product of political will. They represent the uneasy and contradictory compromises fashioned by successive politicians to contain the competing demands made by different social interest groups on the exercise of state power. When politicians seek to transform them, they confront the constituencies of entrenched interests that are their beneficiaries. It is for this reason that institutions --by definition, practices that are 'relatively enduring'--resist change.

The challenge, then, is to analyse the margin of political possibility and identify strategies for greening state institutions that minimise politically costly or socially regressive conflicts with the beneficiaries of existing institutions, whilst at the very same time building progressive societal coalitions for bigger, more ambitious changes in the near future. What, then, are the politically realistic, short-term policies which could trigger cumulative change in the balance of social forces in the long-term? What are the short-term policies which could shift the parameters of the politically possible in the long-term? Here we advocate the potential of a green industrial strategy and green quantitative easing as the first steps toward a green and socially just transformation of British political economy.

Green Industrial Strategy

It came as a surprise to many when Theresa May re-institutionalised industrial policy in the British state. The return of 'industrial policy', a phrase which most on the Labour front benches have been reticent to use in recent decades, reflects May's purported desire to make 'capitalism' operate 'more fairly for workers'. (1) In her early speeches as Prime Minister, her critique of a corporate world which had become dis-embedded from society was married to a statist rhetoric which implicitly rejected Thatcherite doctrine. In January 2017, she argued that 'people who are just managing, just getting by, don't need a government that will get out of the way, they need a government that will make the system work for them'. The creation of the Department for Business, Energy and Industrial Strategy (BEIS), to be headed by Greg Clark, suggested that her rhetoric would be matched by policy action. Its publication in November 2017 of a white paper on Industrial Strategy, whilst hamstrung by the Treasury's austerity drive, was promising in its identification of many of the UK's economic ills and apparent willingness to accept an interventionist role in coordinating economic activity. (2)

The creation of BEIS not only marked the comeback of industrial strategy, but also a re-shuffle of policy portfolios which integrated an interventionist industrial policy with energy policy into one department. The Secretary of State for BEIS is now tasked with overseeing the policy objectives associated with both of these areas, and thus appears to be well positioned to coordinate a new state project designed to decarbonise the economy. Industrial policy under this Conservative Government has yet to reflect the hybridity of these objectives, although 'clean growth' is acknowledged by the white paper as one of the 'grand challenges' facing the UK economy, but the institutional design established by May presents a clear opportunity for a future Labour minister to hit the ground running by launching a green industrial strategy.

Certainly, there are many international cases which BEIS could deploy as templates for such a strategy. The 2016 TUC report...

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