15 March 2009

From Denial to Cognitive Dissonance

Two significant meetings are taking place this week. The conference in Copenhagen to address the science of climate change is receiving world-wide publicity. Our correspondents report that normally sober scientists are looking frightened in public: they have seen the evidence of environmental breakdown and their hair is turning white. That in Horsham, Sussex - a preparatory meeting for next month’s G20 —less so.

The meetings have different participants and different agendas because at present world leaders are seeing the environmental and financial crises as two separate issues. But they are not. We are facing a single economic crisis which can be summed up by the phrase ‘living beyond our means’. In financial terms, living beyond our means has resulted in a grossly inflated debt bubble whose explosion is decimating the world economy. In environmental terms, this same over-expansionist logic has resulted in over-exploitation of planetary resources and the atmosphere.

What we need to achieve at next month’s G20 is an economy that is stable and balanced. This cannot be achieved while we have a privatized financial system which relies on debt as the motor of the global economy. While Gordon Brown is focusing attention on bankers’ pay, re-regulation, and using the IMF to create yet more debt, the real issue is the need for a restructuring of the international financial architecture.

The financial system devised at Bretton Woods in 1944 guaranteed a lengthy period of peace and prosperity — at least for Western nations, but it did not respect planetary limits. The G20 should return us to a system of political management of the global economy but one which ties in an agreement on climate change. The evidence presented by scientists makes it clear that we can no longer wait for an agreement on climate change: radical cuts in CO2 emissions are needed now. Since it is economic growth that drives the increase in CO2 emissions we cannot achieve that outside the framework of a significant readjustment of the world’s economic system.

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