How to end capitalism – and build a kind, green, cooperative economy. Cont’d

Continuing from the first part of “How we could end capitalism – and build a kind, green, cooperative economy”, author Guy Dauncey lays out a roadmap for dismantling today’s capitalist system and replacing it with a kinder, greener, cooperative alternative.

In a capitalist economy, fiscal policy determines how the government balances taxation, spending, investing, and borrowing. The belief is that a nation is like a household: you need to balance the books, and that taxation produces revenues, which the government spends.

Monetary policy in a capitalist economy determines how the central bank uses interest rates to control inflation, and how it creates public money to bail out the banks and corporations when their gambling fails, and to cope in an emergency such as a pandemic.

In a kind, green, cooperative economy, by contrast, fiscal policy is how the government manages its taxation, spending, investments, and borrowing while knowing that a nation that controls its own sovereign currency can never run out of money. Economists would understand that the government creates money every time it spends, backed by the central bank, and retrieves it through taxation, and that the rate of taxation can be used to control inflation and regulate demand.

In a capitalist economy, governments finance their spending through taxation and borrowing, and the central bank is supposed to be independent, though strongly influenced by financial-sector priorities and orthodox economic assumptions.

In a kind, green, cooperative economy, fiscal and monetary policy would work hand in hand. The governors of the central bank would be appointed by the democratically elected government, taking the equivalent of a Hippocratic oath to serve the nation’s needs according to its chosen purposes.

The central bankers’ ability to create money is used to provide help during emergencies, which could include the climate crisis, the biodiversity crisis, and the housing crisis, as well as financial crises and pandemics. It would be supported by a network of public banks, one for each region. Like all licensed banks, they would create credit through lending, but they would issue the loans for socially and ecologically beneficial purposes. For every $1 million in the bank, they would be able to issue $10 million in loans.

Over ten years, reliance on the bond market to finance deficits would be gradually reduced, slowly eliminating the system by which investors earn interest by financing the government’s debt.

Restore climate stability

Capitalists are not just ignoring the climate crisis. They are making things worse by pressing the fossil fuel accelerator, spreading misinformation, and sabotaging efforts to tackle the crisis. What should a government with a strong popular mandate do to tackle the climate crisis? It should:

1. Speak out loudly and publicly about the dangers the climate emergency has created, and the path to a climate-stable world.
2. Require climate solutions education in all schools, colleges, and public agencies, including civil servants, as France is doing.
3. Ban new investments in fossil fuels, and other climate-destructive projects.
4. Ban fossil fuel advertising, as The Hague, Amsterdam, Arnhem, Stockholm, Genoa, Florence, Copenhagen and other cities have done, including advertising for cruises, conventional cars, and planes.
5. Aim to achieve a full transition off fossil fuels by 2040, with parallel goals to electrify vehicles and building heat.
6. Implement a steadily rising carbon tax, returning the income to families as monthly rebate cheques, with lower-income families gaining more from the rebates than they pay in tax.
7. Work with other nations to sign a global Fossil Fuels Non-Proliferation Treaty and an agreement to transition off fossil fuels.
8. Work with the central bank to create the money needed to underwrite climate solutions loans.
9. Encourage the formation of public banks in every region, creating the loans needed for climate solutions.
10. Form public corporations to pursue aspects of the transition off fossil fuels that the private sector is unwilling to address, such as building retrofits and the manufacture of low-cost heat pumps.
11. Work with farmers and the public to transition off cattle and chemical farming.

Solve the housing crisis

1. Require all levels of government to work together to build the millions of units of cooperative and non-market housing that are needed within ten years. This would phase out the need for most private landlords, replacing rental properties with public and cooperatively owned homes.
2. Ban the purchase of homes by speculators and private investors. In Berlin, where 84% of households rent, the city voted in 2019 to buy 15,000 apartments from two large corporate landlords and put them in public ownership. In a subsequent referendum, yet to be implemented, Berliners approved the purchase of a further 240,000 homes, which would bring 15% of all housing into public ownership.
3. Give tenants, community organizations and mobile park residents the right to buy their homes from their landlords, supported by legal advice and zero-interest loans, underwritten by the central bank.
4. Increases taxes and penalties on second and third homes and on empty homes, getting them back on the market or into public hands.
5. Tax increases on the value of the land above $100,000, payable when the land is sold, rising to 80% for second homes and 100% for third homes, with exemptions for low-income owners and protection against forced sales.

Far more is needed, but this shows what’s possible. Many landowners would strongly oppose reforms like these, but with skill, compromise, and cooperation, a smooth exit from ownership could become possible. In the 1970s, Sweden built a million units of affordable housing, borrowing the money at low interest. Today, 23% of Sweden’s housing is cooperative. In Austria, every sixth person lives in an apartment that’s affiliated with a limited-profit housing association. In a kind, green cooperative economy, all this becomes possible.

Include international trade

It could widen the ban on trade in harmful products, which currently includes endangered species and wildlife products, conflict diamonds, persistent organic pollutants, and hazardous wastes.

It could impose fair-trade and ecological-footprint tariffs, as the German economist Christian Felber has proposed. Governments would agree on what constitutes “harmful” and levy tariffs accordingly, including border carbon tariffs on goods on which no carbon tax had been levied. Harmful goods would become more expensive, and the revenues could be used to help companies switch to greener products.

It could write due diligence laws, requiring companies to prove that imports are not linked to forced labour, deforestation, ecological destruction, or human rights abuses, as the European Union is doing to protect tropical hardwoods.

To reduce our manic rate of consumption, it could remove consumer taxes from essentials and increase them on everything else, using a Citizens’ Assembly to determine what was essential and what was not.

It could create a Green and Red star rating for every product, based on its social harm and ecological footprint. Manufacturers would be required to display the ratings, and the products could be taxed accordingly. And far more.

Make it happen

How can we make this happen?

Firstly, we need a huge public movement to get people thinking, organizing, and mobilizing. We need to unite the myriad smaller movements for change into a single coherent movement, in which people can visualize the future they want and be motivated to work together to make it happen.

Secondly, we need to elect a government with strong enough support to make the necessary changes. The government will need to work hand-in-hand with the movement that got it elected, and not retreat into the basements of bureaucracy the day after the election.

We can dream about fair, representative, proportional democracies, participatory methods, and public referenda, but we are going to have to work with what we have got. This means becoming deeply engaged with the existing political parties, persuading them of the merits of abandoning capitalism in favour of a kind, green, cooperative economy.

And thirdly, we will need determined persistence in the face of the push-back from furious tycoons, who will call us communists, socialists, antisemites, pedophiles, “dumocrats“, whatever, and use personal attacks in their attempt to hold onto power. They will not go down smiling.

We are not the first to hold this vision. For centuries, our ancestors had the same hopes. It was their determined hope that the next generation would continue the struggle. We are that next generation. There is no possible world in which we can leave this to the generation that comes after us. The urgency of the climate and ecological crisis demands that we do it now.

We can re-orient our economies towards kindness, cooperation, and wellbeing for all. Many of these ideas are popular, as Jason Hickel’s research has shown. They will still be market economies, with private businesses alongside public, cooperative, and community businesses, but the overall purpose of the economy will be cooperative, seeking the well-being of all.

Nature included.

This post has been edited for length. You can read the piece in full here.