A green economic vision

Stephen Lewis talks to Green Party economic spokesperson Molly Scott Cato about a new approach to economics

“We’re not going to save the planet by putting our country out of business.” This is the view of the chancellor, George Osborne, who suggested last year that protecting the environment and minimising climate change are burdens on the economy. But for others, this perspective is naive when the environment is the ultimate source of wealth and growth.

Molly Scott Cato, author of Green Economics and economics spokesperson for the Green Party, believes it is possible to have an economy, “that lives comfortably within the planet, addresses the social justice implications and is practically focused in terms of policy and community activity.”

However, this is not occurring, she believes, because “what happens in economies,” has drifted apart from how economics is taught in higher education.

Neoclassical economic theory, upon which our current system is based, is flawed because it is self-referential, says Molly: “Whatever question you put to it, it has an answer within its own ideology, but very little of what it does relates to what’s happening outside the window of the university. This is why they [neoclassical economists] weren’t able to predict the economic crisis and why they don’t worry about resource depletion.”

Most green economists derive much of their understanding from ecological economics, an approach that Molly feels is more grounded in reality. This understanding regards nature as the primary source of wealth and resources. To have a viable economy hence means that addressing the problems of dwindling supplies of fossil fuels, CO2 emissions and climate change is central.

With the need for renewable energy sources being the first pillar of green economics, this also connects to the issue of localisation, as much energy is wasted in the globalised system. Green economists also favour localisation for reasons of accountability, power and control.

“Local economies help to build strong communities whereas a global economy undermines them,” believes Molly.

Other politicians are beginning to praise the potential of a green economy. Energy secretary Ed Davey commented in April, for example: “We should make more strongly the business case for going green. Efficiency policies are unashamedly good for growth – using less resources lowers operating costs and frees up capital.”

But the defining characteristic of a green economist, according to Molly, is the idea that economic growth is the problem rather than the solution to the global economic crisis. “We start from the point that quality is more important than quantity,” she says.

“There is some good thinking in the Department of Energy and Climate Change, but by the time it gets to the Treasury it is crushed by the same last-century, pro-growth prejudices. The main problem is that the government is going for growth, so saying growth might not be the best thing for the planet, isn’t going to get very far.”

Within what the Green Party regards as the constraints of the current system, Molly’s main proposal is: “We should only invest energy in areas where we know ultimately that we will use less energy – what we might call ‘transitional investment.’”

She explains that this understanding would mean that it would make sense to invest in a national network of electric car recharging points or in insulating people’s houses, but building a new airport could not be justified.

Green economists are also suggesting carbon and land taxes. They want to see policies that will help us use land as a carbon sink. “We could use the tax system coupled with the local planning system to encourage that,” says Molly, “taking land away from wealthy farmers living from subsidies paid by the poor, and providing incentives for all those who own land to use it in the way that best captures and stores carbon.”

Green economists believe that traditional economics is unlikely to be able to make a real contribution to alleviating poverty, tackling environmental problems and moving us towards a more fair and sustainable world. If they’re right, new types of economics in which human and environmental justice are the foundation, might be the answer to building a more sustainable future.