At the height of neoliberalism in the 1990s, we were told the benefits of globalisation required nation-states to relinquish their economic control to the free flow of capital across the planet. Now it seems saving that planet requires reasserting national sovereignty. Last month, Joe Biden announced huge new tariffs on Chinese electric vehicles (EVs), batteries and solar panels – technologies most see as central to the green transition. The EU soon followed suit with up to 48 per cent of tariffs on Chinese EVs. The rationale for such tariffs is purportedly the “unfair” subsidies granted to such industries by the Chinese state, but it’s hard to take such claims seriously as the West’s own industrial policy increasingly deploys subsidies of its own.
Not least in Britain, where the Labour Party has similar ideas. Rachel Reeves’s awkward slogan of “securonomics” partially refers to the new “onshoring” industrial paradigm. And, though it has scaled back its climate ambition overall (following the Tories’ lead), Labour’s planned “climate export hubs” are meant to place the UK at the top of the global green technology race. Labour has also proposed an ambitious revival of public ownership with a new national company, Great British Energy, tasked with building up domestic clean energy generation and lowering energy bills for the working class.
This combination of subsidy and tariff represents a global protectionist revival. There are two schools of thought on this approach in the context of the climate crisis. First, green hardliners argue that tariffs in particular are a disaster for our decarbonisation goals simply because they will make “green” options more expensive. Right now, simply a border crossing away from the US to Mexico can get you access to Chinese-made BYD electric vehicles for a mere $21,000. The cheapest one in the US by comparison is the Nissan Leaf at $28,000 (BYD also just announced a new model marketed at a mere $10,000).
The greens have history on their side, as this is the ideological approach that has overwhelmingly informed economic policy for the last few decades. The rationale of neoliberal globalisation always aimed to put the consumer first – free trade would lead to cheaper stuff for all (including, the logic goes, solar panels, EVs and heat pumps). Of course, this regime empowered the consumer at the direct expense of labour. Global trade and the hyper-mobility of capital created a “race to the bottom” of stagnating wages in the Global North and exploited cheap labour in newly industrialised countries. By 2018 this was so obvious that even Larry Summers, a former US secretary of the treasury, could argue that “declining worker power” was becoming a structural economic problem.
But a second perspective on the green transition – what some call “post-neoliberal” – aims to revive the fortunes of the working class through a climate-friendly form of industrialisation. As the journalist Robinson Meyer has argued, Biden is betting that national protection for domestic industry will reinvigorate labour and manufacturing and thereby cement a popular green coalition that is able to stem the rise of Trumpism. Reeves also promises “securonomics” will lead to working-class support via, “jobs that pay well, putting more spending power in the pockets of working people”.
The question is will it work? There are reasons to be sceptical. While policies like the Inflation Reduction Act are a welcome break from the doldrums of neoliberalism, in the US industrial production overall remains stagnant. Meanwhile, the vast majority of Americans have never even heard of the Inflation Reduction Act, and the New York Times has reported that the “Democratic Party’s top strategists have discouraged campaigns from referring to it by name” in their million-dollar ad buys.
The reality is that much of Biden’s investments are extremely capital- not labour-intensive – the most obvious case being semiconductor chips. It’s not clear how this form of reindustrialisation will also lead to a boom in industrial employment (at this stage, most jobs estimates – such as those saying the Inflation Reduction Act has created 75,000 jobs – are mere projections from announced investments). As Dani Rodrik shows, the share of US manufacturing in non-farm employment has actually decreased since Biden took office from 8.4 to 8.2 per cent (it decreased under Trump too). These policies might feel like throwing pebbles to try and block a rushing river.
And while Great British Energy (GBE) sounds like a frontal attack on Thatcherite privatisation, in reality it will only empower a single public entity that still must compete among a sea of private-energy producers in a deregulated wholesale electricity market. As the geographer Brett Christophers put it bluntly, GBE would only be a “bit player”, that “can’t do anything fundamentally differently”. Indeed, Labour’s own description claims it aims to, “de-risk and unlock private sector investment” and “accelerate private sector development”.
This all represents a meek attempt to revive national sovereignty on private capital’s terms (what Daniela Gabor has dubbed the “Wall Street consensus”). After all, Bidenomics is the brainchild not of labour unions, but the BlackRock alumnus Brian Deese. History instructs that building a mass popular coalition against threats from the right requires far more ambition. For example, the US New Deal that informs its green revival was marked by highly visible public investment, large-scale planning and public jobs programmes. Institutions such as the Tennessee Valley Authority and the Works Progress Administration delivered public goods like electricity, schools and other infrastructure as part a political project to convince millions that government can serve ordinary people’s material needs.
Yet, as Biden’s investments hit the ground, they come under the name of firms like Micron or Hyundai – not a politically visible brand. And while the 2019 Labour Party promised voters these kinds of solutions, of mass public ownership and infrastructure investment, voters won’t find such promises credible unless they see evidence they could really happen. That’s why a genuine labour-centred, popular coalition is unlikely to be granted by those at Downing Street or the White House. As with the original New Deal, it will emerge from actual labour organising and real material wins – such as the United Auto Workers’ record wage increase contract last autumn – that can convince workers that politics is worth the effort.
Likewise, given fossil fuel companies remain a stubborn obstacle to climate goals, the actual history of assertions of national sovereignty suggest a more confrontational approach. The 20th century was marked by countless examples of states expropriating oil capital in the name of popular sovereignty. Today – one of the few examples of the working-class coalition Biden and Starmer seek – the Morena government in Mexico is elevating the central role of publicly owned energy against the private sector (Mexico’s national companies are themselves a legacy of the Mexican Revolution and the 1938 expropriation of oil capital).
It seems clear that a political project to revive labour and invest at the scale of the climate crisis would have to put the public sector at its centre. But the prevailing Western orthodoxy still dictates that we can confront the climate crisis only by partnering with rather than confronting private capital’s rule over the economy. As such, the contradiction of the new industrial climate policy is that it touts its success alongside record profits and boom times for fossil capital. The turn towards a more worker-centred industrial strategy is a welcome shift from decades of policy that was only meant to deliver cheap goods produced abroad. But it’s going to take much more ambition for most voters to notice.
[See also: The death of the levelling-up dream]
Content from our partners
Related
