A green growth and innovation paradigm

Meeting the challenge of climate change requires social democracy to come up with a new social paradigm.

Europe is at a pivotal moment. After four decades, neoliberalism has run out of steam. The centre of gravity in the economic debate is moving leftwards. The growing recognition of the climate emergency has accelerated the shift in outlook. The International Monetary Fund, along with the Organisation for Economic Co-operation and Development, has upended the ‘Washington consensus’ and given its seal of approval to public investment strategies.

The pandemic has reinforced this trend, demonstrating the vital role of government and public institutions in protecting citizens. The European Union announced a trail-blazing €750 billion green-recovery plan in the summer of 2020, involving for the first time the creation of common European debt.

Keynesianism and active government are back. This offers a faltering social democracy a chance to reapply its core principles and make alliances anew. To exploit this favourable terrain, however, it needs to offer a growth and innovation paradigm fit for the challenge. Five key steps are required.

Harmony with nature

First, it has to recognise that the old model of high-carbon, fossil-fuel-intensive economies has run its course. The core task is not for ‘man to conquer nature’ but for humanity to work in harmony with it. Social democracy can no longer be the party of traditional industrialisation and producer interests. To safeguard our common future a new, low-carbon model of sustainable development has to become the ‘common sense’ of the age. That’s what the policy architects of the European Green Deal have formulated.

This represents a profound challenge for the mainstream left. In Britain Labour, like many of its European counterparts, underestimates the scale of transformation required to shift the world’s economies on to a net-zero trajectory. It still retains the baggage of the industrial era, with a supply-side fixation on long-heralded but economically unproven technologies, such as carbon capture and storage, or expensive and risky ones such as nuclear power.

Secondly, this necessitates a change of language and mindset. The ‘green industrial revolution’ should no longer be the metaphor of choice nor ‘shovel-ready’ the favourite term for public investment. These speak to a departing industrial age. Instead, social democrats need to adopt a language of 21st-century modernity. The potential of a mix of social innovation and digital revolution to transform ‘soft’ infrastructure needs to be at the heart of environmental policy and practice. Currently they play second fiddle to ‘hard’ infrastructure investment.

New technology opens new vistas in this regard. Cities from Manchester to Milan have responded to the pandemic by reconfiguring their urban systems. Digital platforms and applications offer simplified ticketing, real-time travel information, integrated transport options and cycle and vehicle sharing. There are vacancies for 21st-century European city mayors to create versions of a ‘platform socialism’ which would be the modern equivalent of Joseph Chamberlain’s 19th-century ‘municipal socialism’ in Birmingham.

Wide alliance of actors

Thirdly, green-deal politics offers a significant role for working people and local communities in the sustainability transition. This can sometimes manifest itself as a return to an old-fashioned type of class politics. The choice is neither a simplistic model of business-led green transformation nor a reassertion of an exclusive labour movement.

Successful sustainability transitions rely on a wide alliance of social actors with a shared vision. Pluralism has to be at the heart of any successful green-deal movement. The key challenge is to show positive opportunities for new broad coalitions, which combine environmental and employment benefits, as with the transition to low-energy housing.

At the same time, the enormity of the climate emergency and the diversity of progressive forces across Europe mean social-democratic parties need to establish wide political coalitions and electoral alliances. This is an especially acute problem in the United Kingdom, with its ‘first past the post’ parliamentary system. But, more generally, all parts of the left have to recognise that the era of mass parties representing the overwhelming bulk of the working class is also a relic of the departing industrial epoch.

Lifestyle changes

Fourthly, the European Green Deal rightly stresses the centrality of jobs and material sufficiency for all as the necessary co-benefits of environmental actions. Yet on the left this too readily slips into an implicitly economistic view of social aspirations. The potential widespread attractiveness of changes in lifestyle through sustainability transitions—for individuals and institutions—does not get a look-in. The fear of being accused of preaching leaves an unsustainable consumption landscape uncontested.

The latest report from the Intergovernmental Panel on Climate Change contains a chapter on such demand-side measures and behavioural change for the first time, illustrating that lifestyle shifts are an essential part of getting to sustainability. In the medium term, the mobility transition offers convenience, the food transition offers health and improved diet and the buildings transition offers comfort and lower fuel bills. The absence of positive lifestyle policies is a serious political shortcoming which a transformative social democracy needs to address.

Fifthly, there are no nationalist boltholes in the interconnected 21st-century world. Parts of the left in Europe, such as La France insoumise, have still to accept that economies have slipped the leash of the small and medium-sized nation-states that comprise it.

The Green Deal shattered the financial orthodoxies ordoliberals had previously insisted were sacrosanct. Social democrats need to campaign with others for this EU green fiscal capacity to become permanent. Already, discussions have begun about the need for a follow-up investment fund to NextGenerationEU.

The chief of the Federation of German Industries (BDI), Joachim Lang, has indicated that his organisation is open to the idea of EU borrowing to help fund the massive public and private investment necessary to meet German and European climate goals. ‘To meet its climate targets, Germany needs additional investment of €860 billion until 2030,’ Lang has said, and to secure this the German government should discuss ‘borrowing and financing at the EU level’. Such a move would confirm that Europe’s adoption of the Green Deal was no one-off transaction but rather a first step towards a green, Euro-Keynesianism macroeconomics, with the capacity to be a world leader on climate change.

Political and cultural challenge

This is the political and cultural challenge the left needs to surmount if social democracy is to revive and take the climate-change agenda fully on board. Broadly-based alliances are in the making. The Ampelkoalition in Germany marks a genuine breakthrough. It shows how the climate crisis can bring the worlds of science, civil society and business together and reshape party politics and government, forging new coalitions in the process.

The historic achievement of the 20th-century socialist movements was not to replace capitalism but to civilise it. The rise of environmentalism inspired by climate change could enable us to de-carbonise and transform it. A popular front of the climate willing is underway. The next few years will test whether the European left is capable of playing a key role in ensuring the success of this drive for green modernisation.

This is drawn from a chapter in the recent book from the Foundation for European Progressive Studies and the, Fabian Society, Enduring Values: How Progressives Across Europe Can Win