Learning from the Welfare State: Political Challenges in the Transition to a Low Carbon Economy
Andreas Duit
The GND is an ambitious (some would even say utopian) program to fundamentally transform the market economy. The debate around the GND has mainly focused on issues related to the economy, and my main argument in this commentary is that there are equally important issues with regards to political side of the GND which merit further attention. In order to tease out the most salient political issues, I believe that it can be instructive to consider the equally grand-scale project of transforming the Laissez-Faire State of the early 20th century into the Welfare State that emerged half a century later on. Specifically I suggest that there are three main lessons from rise (and fall) of the Welfare State for the GND project: the importance of changing the state and not just the economy; the pivotal role of political movements; and the key need for compensating losers.
From Welfare State to Ecostate
The first lesson is about the necessity of including the state in the blueprints for the GND. While it might seem that the GND is mainly about reforming the market through massive government investment in green technology and sustainable infrastructure and energy systems, experience from welfare state development shows that in order for such programs to have more lasting effects the state had to be reformed as well. The historical cases of Sweden and the US are illustrative in this respect. Both countries were early adopters of Keynesian-type public investment programs as a response to the Great Depression in the 1930s – Roosevelt´s New Deal in the US and Hansson´s “People’s Home” in Sweden. However, as Sweden went on to develop an encompassing welfare state in the decades to follow, the US never saw the emergence of a fully-fledge welfare state similar to those that arose in Western Europe. There are of course many reasons for this difference in historical trajectories, but the important point here is that without an accompanying change the responsibilities and duties of the state, a mere restructuring of the economy is probably not enough to achieve the environmental goals of the GND. In other words, building an Ecostate – which has environmental protection as its core responsibility much in the same way as the Welfare State has social protection as a core state function- is an important part of the GND. However, an indication of the development gap between the Welfare state and the Ecostate is that OECD countries spend about 20-30% of GDP on social protection and welfare services, but only 1-3 % of GDP on environmental protection.
How to Compensate Policy Losers?
A second historical lesson is about the importance of compensating losers in transformative processes, since doing so will increase the chances that those groups will eventually accept the changes. A key element in the development of many Welfare States are historical junctures at which conflicting societal interests (mostly business and capital owners) that stood to lose from welfare reforms were compensated in some way. For example, under threat of decades of socialist dominance business interests in Sweden accepted far-ranging labor- and unionization rights in exchange for a set of rules for wage bargaining and labor market conflicts in a 1938 decision that many observers argue paved the way for the Swedish welfare state. However, one of the main reasons why the climate issue is so difficult is that it is linked to several large groups of potential losers – people who will see substantial reductions in their present-time individual well-being for the sake of future generation´s collective good of a stabilized climate. So what kind of compensations can be envisioned for laid-off coal mine workers, fossil fuel automobile owners, frequent flyers, and cattle ranchers? Although heavy government subsidies for electrical vehicles, well-functioning public transport, and alternative fuels might go some way in easing the transition pains for these groups, it is unlikely that this will be enough to convince the denizens of the fossil fuel economy to take the plunge into an unknown zero-carbon future. A better compensatory policy might be Canada´s carbon tax refund system, which provides general tax rebates compensation to large parts of society, thereby smudging the line between losers and winners altogether.
Need a stronger Green Movement and Green party
A third historical lesson is that the GND needs to be supported by a broad political movement if it is to be successful. The obvious parallel to the Welfare State is the labor movement which by virtue of its membership count and substantial electoral clout movement managed to establish itself as a major political force in the post-war period in many European countries. Today´s green NGOs and green parties are a far cry from the power and influence wielded by the labor movement in its heydays. The reason for this is difference has to do with the kind of policies the two different movements can present to electoral markets. If voters weren´t convinced by the political arguments of the labor movement, they could nonetheless be swayed by benefits such as free health care and education, affordable housing, and pension-plans that would improve life in the here and now. In contrast, the green movement offers hard-to-disagree-with arguments about the responsibility to protect our planet along with policies that reduce short-term individual well-being, prosperity, and convenience in exchange for an improved environment in a distant future and in distant places. This is a much more difficult package to sell to sufficiently large parts of the population, and therefor unlikely to ever provide the same kind of political energy for the green movement as the labor movement could harness in its prime. A stronger focus on local co-benefits such as cleaner air and water from climate policies may be a way forward for the environmental movement, but there is no escaping the trade-off between present and future well-being at the heart of the climate dilemma.
In sum, the historical lessons from the process of how Keynesian anti-poverty programs lead to the establishment of Welfare States is that even a seemingly market-based affair such as the GND must have a political side in order to achieve long-term goals. This political side includes a transformation of the role of the State, mechanisms for handling conflict between new and old interests, and a movement that is able to build political momentum. At present, these features are largely absent in most contemporary societies.
Andreas Duit is a Professor of Political Science at Stockholm University, Sweden.