[E-rundbrief] Info 737 - S. George: Global Economy Transforming

[Matthias Reichl]

E-Rundbrief - Info 737 - Susan George (F): Transforming the Global 
Economy: Solutions for a Sustainable World. The Schumacher lecture 2008.

Bad Ischl, 8.10.2008

Begegnungszentrum für aktive Gewaltlosigkeit

www.begegnungszentrum.at

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Transforming the Global Economy: Solutions for a Sustainable World

The Schumacher lecture

Susan George

6 October 2008

The current financial crisis provides the ideal opportunity to implement 
tax reforms that would finance the conversion to eco-friendly industry: 
an environmental Keynesianism that would pull the world out of economic 
ruin and social chaos while getting the runaway global financial system 
under control, argues Susan George.


The Schumacher lectures are traditionally held in Bristol but have now 
branched out so that Schumacher North, based in Leeds, also organises 
the series. They occupy a day, with three people delivering lectures and 
a final panel. My companions for this day were Anne Pettifor, well known 
for her leadership of the Jubilee 2000 Debt campaign and Andrew Simms of 
the New Economics Foundation. My contribution was written in 
mid-September 2008; the continuation of the financial crisis makes it, I 
think, all the more pertinent.


Please first let me congratulate the organisers of Schumacher North for 
their initiative in bringing this lecture series and other activities of 
the Schumacher Society to Leeds. It's an honour to be here and 
especially to share the platform with two brilliant people whom I 
greatly admire. I also want to thank the organisers for the privilege of 
honouring the memory of Dr Schumacher, a man far ahead of his time who 
bequeathed to us a lasting legacy. It's a challenge to be worthy of that 
heritage in a lecture bearing his name.

But I intend to try. My talk today will concern the stage I've arrived 
at in a kind of reflexion in progress---I don't mean a book, although it 
may well become that as well---but an effort to make sense of the fast 
moving events in our battered world and an attempt to think about them 
in a more unified way.

Philosophically speaking, the thing-in-itself, the isolated object 
whether it's an electron, a human cell, an organism, a single word 
---even a human being--makes sense only in the context of its 
relationships, its place in its physical, linguistic or social 
environment . Margaret Thatcher once famously said, "There is no such 
thing as society". She thus perfectly embodied the foundations of the 
neo-liberal ideological programme which should, ideally, prevent us from 
even thinking about ourselves and others in our natural and social 
context. We must be taught to believe that we are not citizens or 
members of a social body but discrete, individual consumers. We are 
entirely responsible for our own destinies and if we fall by the wayside 
for whatever reason---illness, job loss, accident, failure, 
whatever---it's our own fault. We should have foreseen the case and 
planned for it. We have no responsibility for other people either. 
Solidarity is a banished word. Nor are we accountable for the state of 
the planet---homo sapiens is the only important species and humans are 
isolated if not immune from natural, physical laws. That's the essence 
of the neo-liberal spirit: "You're on your own" as Barack Obama has been 
saying to Americans to encapsulate the philosophy of his opponents.

If you are well-schooled in neo-liberalism, you will never join a social 
movement, never engage in a struggle against an unjust action of the 
government, never contribute to an effort to protect the natural world 
because not only will you make a fool of yourself, not only will your 
effort fail, but even if successful it will lead eventually to 
oppression, even totalitarianism, as Thatcher's mentor Professor 
Friedrich von Hayek argued. And, as he also taught, economic freedom is 
superior to every other kind of freedom, whether political, religious or 
intellectual.

I believe to the contrary that our only hope lies in understanding 
everything we confront today as a link in an ever-more-complex chain, as 
an element in a system. The danger with this approach of course is to 
become lost and frustrated in the syndrome of "Everything is connected 
to everything". That's true, everything is connected to everything, but 
we still have an enormous task ahead in trying to identify the priority 
connections, to understand how they work together and what we can do to 
change them, because they definitely do need changing. I will argue that 
the present connections are dysfunctional, they have become perverse: 
they form a system that worsens the human condition and irrevocably 
damages the planet. But there is hope, because what has been constructed 
by humans can also be dismantled by them.

All this may sound rather vague so let's get down to specifics. To make 
matters more concrete, I'd like to talk now about the most obvious 
crises we face collectively today, why they are all linked and why the 
solutions to them must be linked as well.

The first of these crises is social---the crisis of mass poverty and 
growing inequality within individual countries and between the rich and 
poor countries. The second is the financial crisis that Wall Street, the 
City and the public authorities refused to see coming because they were 
living in bubble-land. It began with the subprime affair in the United 
States but has spread inexorably like a lava flow in the US and 
elsewhere, threatening to plunge the global economy into a prolonged 
period of stagnation as severe as the Great Depression. Every day while 
I was writing this lecture at home, a new financial institution went 
down the drain or on the block and the end is not yet in sight. The 
third crisis, most ominous of all, is that of climate change and species 
destruction. It is accelerating faster than most scientists, much less 
governments, thought possible, causing many to ask if we have not 
already entered the era of the runaway greenhouse effect.

Each of these crises---social, financial, environmental--is negatively 
linked to the others, they intensify each other with negative feedback; 
they lead to worst-case scenarios. Let us take just a few examples of 
these perverse interactions.

The poverty-inequality crisis is a good place to start. This crisis is 
well documented; no one seriously denies the numbers. The World Bank 
recently recognised that it had grossly underestimated---by about 400 
million---the numbers of the very poor, and even then its figures stop 
at the year 2005 and don't include recent upheavals in food and energy 
costs that have swelled the ranks of the impoverished. Even more 
important, however, is the fact that for the first time in human 
history, there is no excuse for mass poverty and deprivation. Taking 
this assertion seriously already helps to point us towards a solution.

Most scholars and institutions concerned with such issues focus on 
poverty per se but I think it's more useful and enlightening to focus on 
wealth. It may not be obvious to everyone that the world is actually 
awash in money. Most of it is still in North America and Europe but the 
numbers of the seriously rich on other continents are catching up fast. 
Those who have the money know very well how to keep it and, with their 
hired help, the battalions of lawyers, accountants and lobbyists, they 
are busy salting away their profits in tax havens, finding loopholes and 
protected investments, lobbying fiercely in parliaments and ministries 
against regulations on banks and financial markets. As you can see, I 
began by talking about poverty but I am already touching on the links 
with the financial crisis.

How many of you knew that ten million people, according to the latest 
Merrill-Lynch World Wealth Report, together boast investable, liquid 
funds of more than $40 trillion? That's 40.000 billion or 40 followed by 
12 zeroes. This wealth is above and beyond the value of their houses, 
cars, yachts, wine or art collections and so on and it is equivalent to 
about three times the GDP of either the United States or Europe. You 
might like another simple calculation. Assume that you have one billion 
dollars, which is the cut-off point for the latest Forbes magazine list 
of 1125 truly rich individuals in the world. If despite your billion you 
are such a dim-witted investor that you get only a five percent return 
on your fortune, you will still have to spend $137.000 every day of the 
year in sheer consumption or you will automatically become richer. My 
point is that cash is abundant and there's no shortage of available wealth.

We also know a great deal about inequality. The UN World Institute for 
Development Economic Research, WIDER, estimates total world household 
assets at about $125 trillion. This is about three times world GDP and 
unsurprisingly, the top two percent of the world captures more than half 
of that wealth. The top 10 percent, which certainly includes many of us 
here, hold 85 percent, while the bottom half of humanity is obliged to 
stumble along with barely 1 percent. All you need to be classed in the 
top half of humanity is a meagre $2200 in total assets---that includes 
your house, your land or items like your car or your 
refrigerator--hardly a princely sum. If all household assets were 
divided equally---impossible and probably not even desirable to 
achieve---everyone on earth could have a share of $26.000. So again, 
money as such isn't the problem.

In all the countries where 90 percent of the world's population lives, 
inequalities have increased especially since the 1980s. At this point in 
the argument, the neo-liberals usually jump in to remind us that rising 
tides lifting all boats. They admit that inequalities have grown, but 
still argue that the poor are better off than they were. It seems almost 
rude to remind them in turn that falling tides have the opposite effect, 
they swamp and strand the more fragile boats and that is where the tide 
of the financial crisis is now taking us.

The real point, however, is not the absolute numbers but the fact that 
inequality makes the economy and also the natural environment worse for 
everyone, rich or poor. Two experienced academics, Tony Addison and 
Giovanni Andrea Cornia, put it this way: "Inequality has risen in many 
countries over the last two decades [and] little progress can be made in 
poverty reduction when inequality is high and rising....Contrary to 
earlier theories of development, high inequality tends to reduce 
economic growth and therefore poverty reduction through growth."

Although it's true that economic growth has reduced poverty, 
particularly in China, one must also ask "At what cost?" China has now 
overtaken the United States in greenhouse gas emissions and 
frighteningly has hardly even begun its transition to the automobile 
society. China also requires at least 10 times as much energy as the 
more mature industrial societies to produce a unit of GDP.
Growth certainly isn't the answer ecologically, but even economically it 
fails the test because the benefits accrue almost entirely to the top of 
society. That is Cornia and Addison's main point.

We have also learned in the past few months that it is entirely possible 
to push tens of millions of poor people off the ledge where they had 
just gained a foothold and send them back into the depths of poverty. 
Food riots, most of them urban, in at least thirty different countries 
have revealed another scary new phenomenon: the worldwide food crisis. 
Until now, food shortages and famines tended to be local, but so many 
societies have accepted neo-liberal trade mantras and become dependent 
on world markets for their basic daily staples that today a sudden spurt 
in prices is felt from Haiti to Egypt to Bangladesh.

The neo-liberal institutions like the World Bank, the WTO and the 
European Commission continue to pretend that poverty reduction will 
result from more growth and more trade. They fail to mention that both 
growth and trade will reinforce the environmental crisis. The food and 
energy crises have in turn strong links to the financial crisis, since 
speculation has been an important factor in both. Food and energy are 
also intimately linked to the climate crisis as one can see instantly 
when one thinks of carbon-loaded fossil fuels or of agro-fuels taking 
vast amounts of land away from food production.

At this point in the discussion, especially when one is speaking to 
concerned, engaged, decent people like those likely to be found at a 
Schumacher lecture, someone will raise two highly pertinent questions. 
The first is this: " Isn't there a point where people with huge fortunes 
say 'enough is enough' and start sharing?" Some do---Bill Gates and 
Warren Buffet are oft- cited examples. But as a class, I'm sorry to say 
that the answer is no. We know a lot about poverty lines but there is no 
such thing as a wealth line and the word " enough " is not part of the 
vocabulary of this class. You needn't believe me. Listen to the expert 
who said "All for ourselves and nothing for other people seems in every 
age of the world to have been the vile maxim of the masters of mankind." 
That was not Karl Marx but Adam Smith, in his classic 1776 treatise on 
capitalism, the Wealth of Nations. Little has changed since then.

The second question is "But why don't the neo-liberal institutions, like 
the World Bank, the International Monetary Fund, the World Trade 
Organisation, the European Commission and the US government recognise 
that their policies have failed? Why do they keep on pushing them 
wherever and whenever they can?" The answer is not just that 
institutions are always loath to admit their mistakes, especially when 
these have killed and ruined so many millions. It is also that these 
policies have not failed.

To the contrary, they have produced exactly the results they were 
intended to produce. They have made a tiny fraction of international 
society rich beyond imagining, they have kept many dependent countries 
dependent in a new, less visible sort of colonial relationship and they 
have made so-called free trade, privatisation and unfettered capitalism 
the rule in countries that previously wanted little or nothing to do 
with them. Furthermore, they have imposed their policies with relatively 
little organised protest because their ideology has been expertly 
produced, packaged and delivered. Ideology can alas have a far stronger 
influence than facts. This is why we must fight on the practical front, 
of course, but also -- I happen to believe primarily -- fight the battle 
of ideas.

In any event, the massive funds belonging to rich people who already 
have most of the material goods they need or want are generally devoted 
to more or less speculative investments. Hedge funds, for example, are 
estimated to be sitting on about three trillion dollars, even today when 
so many investments have suffered melt-down. The financial institutions 
have been frantically innovating, particularly over the last decade. The 
entire incentive structure of the banking and finance industry has 
become perverse: the large institutions know perfectly well that they 
are "too big to fail", consequently they also know that no matter how 
risky their actions, they will be bailed out by the public purse and has 
become all too plain. Beforehand, top management takes the money and runs.

Between the years 2000 and 2006, average annual profits of the financial 
sector in Great Britain averaged 20 percent---that is, two or three 
times the profit rate of other sectors of the economy. Huge bonuses, 
especially in the US and the UK, went to a handful of people, 
intensifying inequalities, whereas millions further down the ladder have 
lost their jobs and often their homes. Such profits were themselves 
clearly not sustainable because at some point, financial gain must be 
based not just on speculation but on the real economy.

Now that the bailouts are coming thick and fast, we have before us a 
singular example of socialism for the rich, the well-connected and Wall 
Street, in which the profits are grabbed by the usual suspects and the 
losses, tremendous losses, are billed to taxpayers. The United States 
has in effect nationalised these institutions and their debts--without 
getting anything from the financial industry in exchange.

As the sub-prime crisis has continued to ooze like a giant oil spill 
over the whole economy, speculators have searched for alternative 
profitable areas and created the food-price bubble trouble in which we 
now find ourselves. What happens then? The resource-poor, the world's 
hungry, grab whatever they can, they chop down trees, kill animals and 
overexploit what little land they may have. Poverty is bad news for 
nature. But so is wealth. Even though there are far fewer of them, the 
rich cause much greater environmental damage with their dinosaurian 
ecological footprints. People who use the population argument to explain 
the multiple crises and who see in population control the solution are 
missing a crucial point---it's not so much the number of people, 
although numbers are important, as their relative weight.

Furthermore, as we have repeatedly witnessed, the frequency and the fury 
of storms provoked by global warming hit the poor and the poorer regions 
of the globe hardest. There is worse to come. We have not even begun to 
comprehend the perils of climate change, including vastly increased 
numbers of environmental refugees who will crowd the planet due to 
droughts, flooding and crop failures. The Pentagon is already working on 
how to stem this tide by countering by whatever means necessary the 
refugees frantic efforts to reach more favourable lands. Government 
planning for this perfectly predictable phenomenon is limited to 
increased surveillance and security responses, not attempts to make 
outmigration less necessary. And yet the UN Intergovernmental Panel on 
Climate Change [IPCC] which is probably the most respected scientific 
body in the world, has already warned us that in Africa, the yields of 
rain-fed agriculture are likely to be reduced by 50 percent, deserts 
will gain ground, species destruction has already reached such 
proportions that we are in the midst of the sixth geological extinction 
of the planet's four and a half billion-year history. The fifth 
extinction was the one that put paid to the dinosaurs.

I could go on drawing out relationships between the poverty, financial 
and ecological crises but I'm sure you need no more. The question is 
what we can do about all this and by "we" , I mean people everywhere who 
understand that the triple crisis is real and urgent.

Knowing that I will doubtless offend a great many people here, let me 
say straight away that there is an exit strategy, a genuine solution 
exists, but it is not in my view the one that many well-meaning 
environmentalists have long advocated. I'm sorry, but the time has 
passed for telling people to change their behaviour and their 
lightbulbs; that if enough people do this, then together "we" can save 
the planet. I'm sorry, but "we" can't. Obviously I'm not suggesting that 
people shouldn't change their behaviour and their lightbulbs---but even 
if the entire population of Europe does so---a most unlikely 
scenario---it's not going to be enough. I agree as well with proposals 
for localisation and scaling down, but we have also got to scale up.

We need large-scale solutions, sophisticated, industrial solutions and 
huge involvement of governments in order to cut greenhouse gas emissions 
drastically enough to save our future. In other words, we must have the 
courage to challenge not just our political leadership but the entire 
neo-liberal, unregulated, privatised, capitalist economic system in 
place in order to provoke and promote a quantitative and qualitative 
leap in the scale of environmental action. Dare I say it here? Sometimes 
big can be beautiful and right now is one of those times.

Since I believe that individual and local solutions are necessary but 
tragically insufficient to address the seriousness and the urgency of 
the ecological crisis, I will use the rest of my time to discuss the 
twin problems of how to deal with governments and with the capitalist 
corporate production and financial system. The dilemma I wrestle with is 
this: Can we save the planet while international capitalism remains the 
dominant system, with its focus on profit, share-holder value, predatory 
resource capture and with no-holds-barred finance capital making more 
and more decisions? Can we rescue our natural home when confronted with 
a powerful caste that does not know the meaning of "enough" and is 
allergic to the kind of fundamental change a New Ecological Economic 
Order requires? Can we move forward when governments basically work for 
the interests of that class?

On bad days I reply No: We can't save the planet. It's impossible to 
reverse the climate crisis under capitalism. But that is a despairing 
answer and if true, it means there is virtually no hope. No hope, 
because I do not see how even the most convinced, most determined people 
could replace, much less overthrow capitalism fast enough to carry out 
the necessary systemic change before a runaway climate effect takes 
hold---always assuming it hasn't done so already. First of all, there 
are not that many convinced and determined people prepared to act 
against the dominant economic system and there is nothing that resembles 
in the smallest degree an avant-garde revolutionary party that might 
lead them even if they existed. There is no one-size-fits-all 
replacement solution for capitalism. Considering the historical record 
and role of such parties and such solutions, I consider this an 
unmistakably good thing.
.
But there are other obstacles to once-for-all revolutionary change. 
Nobody knows, figuratively speaking, who the Tsar is that we would have 
to overthrow today and nobody has a clue where to find the Winter Palace 
we would have to storm. We know the Winter Palace isn't on Wall Street 
which was up and running again a few days after 11 September and is now 
taking full advantage of the bailouts. The US is only one of many world 
capitalist centres. Even if we were to win in one place, the nomadic 
money-moguls would simply mount their camels and head for another. The 
worlds of 1917 and of 2007 are utterly different, so we must try to move 
beyond this revolutionary impasse, this dead-end and find a new synthesis.

The question we face is not so much what to do --- I think that is 
reasonably clear and I'm about to spell it out--but whether we will have 
the intelligence and the strength to seize the great opportunity with 
which we are now presented. Perhaps the words "great opportunity" strike 
you as wildly optimistic considering the long and dire preamble you've 
just listened to. However, I am now going to argue that not only are 
individual solutions insufficient but that the remedies offered by 
Kyoto, Bali, Bonn or whatever timid future agreements may be negotiated 
are tragically inadequate, Once more--I cannot stress this enough--the 
scale is crucial. And the great opportunity is to be found in the 
financial crisis itself. Properly targeted and used, it could open the 
door to the quantitative and qualitative leap we must make.

Some progressive people will reject the solution I propose, but I would 
then ask them what alternative they offer. The ecological crisis is of a 
different nature from the financial and poverty crises in the sense that 
once climate change is underway, as it is now, it is irreversible and we 
haven't time for theoretically perfect solutions. With politics you can 
sometimes turn back and start over, but not where nature is concerned. 
So you can accuse me if you like of suggesting a way to give capitalism 
a new lease on life and I will plead guilty.

Let's take first the slightly easier question "How can we deal with 
governments?" at least in the more or less democratic countries. China 
is another matter. People are generally way ahead of their governments 
in recognising the emergency. The political issue is not simply to 
"throw the rascals out" because they would be replaced by other rascals 
just as bad, just as beholden to the corporations, their lobbies and the 
financial markets. The trick is to convince politicians that ecological 
transformation and environmental practices can pay off politically.

This means that citizens, activists and experts, whether they like it or 
not, have got to work with local, regional and national politicians and 
governments; help them to find like-minded partners and formulate 
ambitious projects they can undertake on the broadest possible scale. 
Citizens, activists and experts must furthermore help these politicians 
and governments to become shining ecological examples with the 
electorate by publicising their efforts and their successes. Could the 
Schumacher Society become a kind of nexus for an ongoing forum of 
best-standards/best practice, bringing together political decision 
makers at every level with citizens groups and experts to discuss and 
carry out the best public-sector initiatives? Politicians must be 
convinced that these policies will not just work but also be highly 
popular with their constituencies.

Now let's take the more difficult question of confronting the economic 
system as a whole. In his book Collapse, Jared Diamond examines several 
historical cases of social extinction due to over-exploitation of the 
environment. He identifies several common characteristics. One of these 
is the isolation of the elites, giving them the capacity to keep on 
consuming way above ecologically sustainable limits long after the 
crisis has already struck the poorer, more vulnerable members of 
society. That is where we are now globally, not just in isolated places 
like Easter Island or Greenland.

So how can we realistically combat the ecological footprints of our 
dinosaur elites, recognising that we don't have the option of shouting 
"Off with their heads" in some imagined, world-wide revolution. Nor can 
we force them to change both themselves and the system that serves them 
so well, whereas we know that we must change that system because it is 
raping the planet and its inherent logic is to keep on doing so.

I can see only one way out: the coming together of people, business and 
government in a new incarnation of the Keynesian war economy strategy. I 
was born in the United States in 1934 and I remember well when the US 
switched massively to a war economy, converting all the rubber plants in 
my native city [Akron, Ohio] to production not for private cars and 
trucks but for the military. There was huge citizen involvement and 
support. Thousands of factories, research labs, housing projects, 
military bases, day care centres, and schools were built or expanded 
during the war. Public transport was improved and worked overtime to 
move millions of men and women to Army bases or new defence jobs.

Yes, there were still worker-management conflicts and yes, big 
corporations rather than small business got most of the government 
contracts but on the whole the workers were well paid, African-Americans 
and women began making a few modest gains and the whole war effort 
finally pulled the United States out of the Depression---it was 
Keynesianism on a huge scale. There was also an elite group of 
businessmen called "Dollar-a-Year Men" on loan from their companies to 
the government, who were charged with making sure that military 
production and quality targets were met. They had enormous prestige---my 
godfather was one and I was doubtless insufferable bragging to my little 
school friends about him.

Why am I going back over this ancient history? Because I think we have a 
similar opportunity today. The US and the world economy are heading 
downhill fast and the fallout for ordinary people in terms of jobs, 
housing, consumption and future welfare is going to be grave. If this 
diagnosis is right, then some new economic tools will have to be used to 
combat recession and stagnation, simply because the old ones have 
already been pushed to their limits and have little or nothing left to give.

The way Central Banks and Treasuries usually try to solve financial 
recession or depression is through standard remedies like interest rate 
cuts, currency devaluations or incurring new debt---but the United 
States has reached the end of its leash on that score. Interest rates 
are already extremely low---although not in Europe, where the European 
Central Bank and its hidebound president are ideologically committed to 
the same sorts of monetary policies that prolonged the Great Depression 
in the 1930s. The dollar is already weak, which makes US exports 
cheaper, but it can't be devalued much further without risk. Deficit 
spending is already beyond belief. With the bailout of Fannie Mae and 
Freddie Mac, the Federal Reserve in effect took on their bad debt and 
added hugely to the liabilities of the United States Treasury. It risks 
doing so again. Households too are over-indebted and are losing more 
equity every day as the value of their dwellings deteriorates.

Since the traditional tools are worn out, the only new tool I can think 
of to pull the world out economic ruin and social chaos is a new 
Keynesianism, not military this time, but environmental; a push for 
massive investment in energy conversion, eco-friendly industry, new 
materials, efficient public transport; the green construction industry 
and so on.

Stringent standards for new buildings must become the norm; older ones 
can be "retro-fitted" on easy financial terms; families and commercial 
property-owners can receive financial incentives for installing green 
roofs and solar panels and sell excess energy to the grid. Research and 
development can be oriented towards alternative energies and strong, 
ultra-light materials for airplanes and vehicles. Technically speaking, 
we already know how to do such things, although some clean solutions are 
still more costly than dirty ones. Mass-produced, they would become less so.

All these new, eco-friendly industries, products and processes would 
have huge export value and could quickly become the world standard. I am 
trying to describe a scenario that can be sold to the elites because I 
don't think they will embrace genuine environmental values and 
conversion if there's nothing in it for them. But this approach is not 
merely a cynical attempt to get the elites to move in their own 
interests. There are also plenty of advantages in such an economy for 
working people. A huge ecological conversion is a job for a high-tech, 
high-skills, high-productivity, high-employment society. It would be 
supported, I believe, by the entire population because it would mean not 
just a better, cleaner, healthier, more climate-friendly environment, 
but also full employment, better wages, and new skills, as well as a 
humanitarian purpose and an ethical justification---just like World War II.

How could one finance such a huge effort? It would have to involve 
targeted government spending in the traditional Keynesian sense and 
governments are bound to complain that they haven't the means to carry 
out such a policy.
The financial crisis provides the ideal opportunity both to finance the 
conversion and to get the runaway global financial system under control.

At present, taxes almost always stop at national borders. The secret is 
to take taxes up to the European level and to the international one 
through currency and other financial transaction taxes. People who 
oppose such schemes pretend they are not feasible because one would need 
to obtain the consent of every national jurisdiction in the world, but 
that is not correct. In fact, currency and other transaction taxes would 
require nothing more than political determination, the cooperation of 
the Central Bank and a few lines of software. For the currency 
transaction tax first proposed by James Tobin in the 1970s and now 
considerably refined, the tax base is the currency itself, not the place 
it's traded. Thus the European Central Bank could easily collect the 
taxes on any transactions involving euros, the Bank of England the same 
for the pound, the Fed for the dollar and so on. Since currency trades 
now amount to $3.2 trillion dollars every day, a tax of one basis point, 
that is, a levy of one per thousand could raise a tidy sum for 
ecological conversion and poverty reduction. Britain already imposes a 
tax on stock market transactions but other European countries do not and 
should imitate Britain.

Carbon taxes are another much mooted and equally feasible idea. So is a 
unitary profits tax on transnational corporations, which would require 
knowing the total sales of the company, the total taxes paid, the sales 
realised in each jurisdiction and the tax paid in each jurisdiction. If, 
for example, a TNC reported that in country X, a particularly low-tax 
jurisdiction, it made 5 percent of its sales yet paid 50 percent of its 
taxes, the authorities would find it a bit fishy. I'm presenting an 
extremely crude summary here but believe me, there are 
experts---bankers, corporate lawyers, fiscal experts and 
accountants--who know exactly how to do such things. Perhaps to 
encourage more local consumption, one could also think about taxing the 
miles travelled by the food we eat and the clothes we wear.

We would not forget the poor countries of the South which are the major 
terrain of the poverty crisis. Debt cancellation for poor countries that 
the G-8 has been promising for a decade must finally happen but against 
the requirement that these countries also contribute to the planetary 
environmental effort through re-forestation, soil conservation, species 
protection and the like. They would also be required to involve their 
own people in democratic decision-making and the funds would be 
carefully monitored by independent auditors.

Tax havens that allow affluent individuals and corporations to avoid 
paying their fair share of the conversion should be shut down: it would 
be cheaper to pay the inhabitants of the Cayman Islands, Liechtenstein 
and the rest a living wage for twenty years. Plenty of cash would remain 
for eco-investments, job-creation and poverty relief.

In exchange for their bailouts, the banks and investment houses have to 
accept regulation---not just regulations to insure transparency and 
eliminate the incentives for stupid behaviour but also more stringent 
ones forcing them to participate in the ecological offensive. They 
should be obliged to devote X percent of their loan portfolios to 
eco-projects at below market interest rates---which they could make up 
by charging much higher rates on loans to dirty or otherwise 
anti-ecological projects. Low or no-cost financing for home conversion 
projects should be another compulsory priority for banks. This could 
give a huge spurt to the construction industry.

Nobody is asking for the moon here. Banks would still make loans, 
finance investments and earn a fair return for their services. Taxes on 
currency transactions at one basis point are not going to ruin anyone. 
Unitary profits taxes on large corporations would simply return us to 
the era when the companies paid their taxes because they couldn't avoid 
them. The point is that a Keynesian taxation and redistribution system 
would be invested, nationally and internationally, both ecologically and 
socially, in education, health care, clean, green energy, efficient 
water distribution, communications technology, public transport, and 
various other things the world needs and that we already know how to do. 
These measures would, in turn go a very long way to creating 
opportunities for far more people to participate in the new green 
economy through jobs, life-long education, more social protection and 
reduced inequality. Getting the present financial crisis-producing, 
free-flowing, unregulated financial system under public and citizen 
control is the prerequisite for solving both the environmental and the 
poverty crises.

In other words, it's a Public Relations dream. Whichever political 
parties understand this can win on such a programme without anyone 
having to bring down the entire capitalist system as a prior condition 
for saving the planet.

A Keynesian ecological programme would furthermore bring many 
constituencies together in a common cause. As matters now stand, 
politically speaking, no single interest group can solve the problem 
that concerns it most. By this I mean that, by themselves, ecologists 
can't save the environment; farmers alone can't save family farms; trade 
unions alone can't save well-paid jobs in industry and so on. Broad 
alliances are the only way to go, the only strategy that pays. The 
Global Justice Movement, as international social activists call it, has 
begun to have some success in working democratically and making 
alliances with partners who come from different constituencies but are 
basically on the same wavelength.

Now we must go beyond this stage and attempt something more difficult: 
to forge alliances also with people we don't necessarily agree with on 
quite major questions---for example, with business. This can only be 
accomplished by recognising that disagreements, even conflicts, can be 
fruitful and positive so long as the areas where it is possible to agree 
are sought out, identified and built upon. We must find where the 
circles of our concerns overlap. At least one of those overlaps ought to 
be saving our common home. I don't see any other way of generating 
citizen enthusiasm, involvement and the qualitative and quantitative 
leap in scale that is now required.

I haven't time to elaborate on all the technical details concerning the 
content and the financing of necessary environmental investments. What I 
can do is guarantee you that the conversion to a green economy is 
technically feasible. The schemes for new taxes have been thought 
through; the industrial prototypes already exist; the machinery is ready 
to hum into action the moment people can make their politicians accept 
the challenge. Getting the financial system under control and taxing 
international capital at quite ridiculously low rates in order to 
redistribute it institutionally and internationally would be enormously 
popular. We could seriously attack climate change and eliminate the 
worst of world poverty within a decade. We are talking politics, not 
technical aspects here and trying to figure out a way to tame the raging 
beast, the crisis-producing, free-flowing, unregulated financial system 
and putting it under public and citizen control.

Capitalism is not sane in the sense that most people understand sanity. 
We humans normally think about our future, that of our children and the 
future of our countries and the world. The market, on the contrary, 
operates in the eternal present which, by definition, cannot even 
entertain the notion of the future and therefore excludes safeguards 
against future, looming destruction unless these safeguards are imposed 
upon it by law.

We need law, for sure, and political forces with the backbone to propose 
and to vote the law into existence, but we also need to think about 
human motivation. Remember the prestigious Dollar-a-Year Men of the 
1940s and imagine what might happen if we could transpose them into the 
world of 21st century capitalism. A significant number of contemporary 
captains of capitalism, all of them with bloated, unimaginable salaries, 
might be brought to believe that money is all very well, but is there 
nothing more? Why not found an extremely exclusive Order of the Earth 
Defenders, or the Environmental Knights or the Carbon Conquerors who 
alone, in recognition of their special contributions to the national and 
international environmental conversion effort. They would have the right 
to display a highly visible emblem on a banner in front of their homes; 
a fanion on their cars, a green and gold rosette in their buttonholes 
like the French Legion d'Honneur or a Congressional Medal of Ecological 
Honour. They would belong to the small assembly of the anointed; those 
who provide the means and have the honour of saving the earth. Becoming 
a member ought to appeal to their competitive spirit.

In conclusion, let me say that myth has always been the driving force of 
every great human achievement, from Greek democracy to the Renaissance 
to the Enlightenment and the American and French Revolutions. So must it 
be in the coming age of Ecological Stewardship. To save the planet, we 
must change, quickly and profoundly, the way the majority thinks and 
feels and acts, and we must start with the social forces we have right 
here and right now, and no others. It's no use wishing they were 
different ones or stronger, or wiser. We must play the hand history 
deals us.

For such a change, we will need six "Ms", starting with Money, 
Management and Media. But even more important than these three "Ms", we 
must try to create a new sense of Mission and Motivation and Myth at the 
noblest level. "Myth" in this sense has nothing to do with story-telling 
or lies. It is the grand narrative that empowers us to believe that we 
can accomplish what we must accomplish. It speaks to the deepest 
motivations of human consciousness and inspires the desire for honour 
and for a life's work which transcends death. The elites already have 
Money, Management, Media. On our side, we have Mission, Motivation and 
Myth. If we can bring together all these, the future will take care of 
itself.

And wouldn't that be nicer than having another war?

Thank you.

Susan George is Chair of the Board of the Transnational Institute. Her 
latest books are Hijacking America: How the religious and secular right 
changed what Americans think , and We the peoples of Europe.


Speech delivered at The Schumacher lecture, 4 October 2008

http://www.tni.org/detail_page.phtml?act_id=18736

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