The Global Justice Project is an initiative whose aim is "to stimulate research, policymaking, and citizen engagement to shape a fairer, more democratic and sustainable 21st century". Though a collective effort, the project has been closely identified in the media with Thomas Piketty, which has inevitably led to curt dismissal by those who either deny that wealth inequality has grown or that is driving the erosion of democracy and the degradation of the planet, and have done so since the Frenchman published Capital in the Twenty First Century in 2013. While that mighty tome proposed a globally-coordinated wealth tax, the GJP proposes three key initiatives in line with its more holistic ambitions and the expertise of the collective: fast decarbonisation of energy systems; a shift away from overconsumption towards sufficiency, which would entail a sharp reduction in labour hours and the use of raw materials; and "a drastic reduction in inequality of income, wealth and power, between countries and within them." Parallel to this, leading progressive economists, including Piketty, have also signed up to a roadmap to "end poverty and inequalities on a liveable planet", as proposed by Olivier De Schutter, the former UN Special Rapporteur on extreme poverty and human rights.
Rather than getting into the detail of the proposals, what I'd like to consider is the political viability of such radical change and what that in turn might look like on a smaller, more domestic stage - i.e. the UK. Dan Neidle, the British tax lawyer who has become a media fixture since his retirement from Clifford Chance, largely by publishing opinion about the tax affairs of prominent individuals and shaking his head wearily at the government, dismissed the GJP, aka "Tomas Piketty and a large team", as "potty" (Noah Smith called it "total nonsense"). Neidle's central claim is that it would require "unprecedented global cooperation" and "a powerful and benign world authority", but that if such things were possible they would already exist and we would therefore already have solved the problems of decarbonisation, over-consumption and inequality. He describes this as a circular argument. In fact, what he is offering is a non sequitur. Bretton Woods (the WTO, the World Bank) was a system of "unprecedented global cooperation", but it did not raise up the developing world or restrain global warming. Equally, the US has long claimed to be "a powerful and benign world authority" (not least through the exorbitant privilege of the dollar), but sees fit to attack other countries, murder non-combatants and kidnap heads of state at will (that's just this year).
It is perfectly reasonable to be sceptical of the GJP's ambitions, particularly when you consider the track record of other attempts at global coordination of the economy and climate, such as GATT and COP. But those initiatives have run into the sand because there are competing interests between nations. The classic example is the desire of developing countries to catch up economically before the music stops and planetary constraints oblige us to move to a steady state or even degrowth. The GJP explicitly addresses this through wealth transfers (and does likewise for domestic inequality). Whether you think that is politically feasible is another matter. The point is that history is littered with examples of international wealth transfers, specifically in the form of colonial empire. What is being proposed now is a coordinated transfer of accumulated wealth (think of it as reparations plus) rather than genocide, slavery and coercive exploitation. Even on the more modest scale of regional cooperation, the flow of money between net contributors and net beneficiaries in the European Union over decades has shown that transfers are hardly Utopian.
If we think the degree of international coordination needed to implement the GJP's proposals is unrealistic, perhaps we should return to the idea of "socialism in one country", specifically the UK. Might Andy Burnham's proposed break with "40 years of neoliberalism" offer a more realistic course towards a radical reimagining of our political economy? According to David Edgerton & Karel Williams, writing in the New Statesman, "What we have is more of the same, with added vibes, plus a reversal of policy in certain areas, at the limits of what Labour radicalism will permit. It represents something more like political rhetoric than political change: when Margaret Thatcher and Tony Blair are associated with the free market, competition and private finance, it is argued that a small reversal in policy will itself improve things." Again, the point to emphasise is not that reversing the Thatcherite/Blairite dispensation is too challenging to even consider, but that there is a lack of political will to do so. Burnham is currently making promises left right and centre to win election as an MP and potentially as Prime Minister, but he doesn't look like a man with a radical plan.
Edgerton and Williams see the foundational economy and universal basic services as the vector for more profound social and economic change: "Improving household liveability should be the focus of expenditure. This should include making essential market goods affordable, ensuring foundational services work and are accessible, and integrating policies around the goals of preventing social harm and promoting environmental responsibility and social solidarity. We need to think about expansion of domestic food production as well as reforming food distribution and consumption." They make good points, notably that radical change to our political economy must start from tax reform ("Our tax system remains stuck in the 1940s when PAYE was introduced to tax the individual male bread winner"), but I feel their focus on "the four market essentials – housing, utilities, energy and transport" misses that one of those, housing, is an 800-pound gorilla. There is also a wider problem here, which we see with mainstream commentators as well, which is to view measures to alleviate poverty in supply-side terms ("making essential market goods affordable").
The UK economy has proven highly vulnerable in recent years to fluctuations in energy prices, arguably more so than in the 1970s when oil-fuelled inflation triggered labour militancy to push up wages in response. Then it caused inflation, but that was more of an issue for rentiers than for working households. Today, there is no countervailing tendency to force wages to keep pace with rising household costs (despite the Bank of England's attempt to revive the bogey of the "wage-price spriral"), with the result that even relatively small increases in energy costs can trigger a cost-of-living crisis as they impact other essentials such as food and transport. But this lack of financial resilience isn't simply down to weaker trade unions but to the fact that housing costs take up so much of household income, and to the fact that the dynamic is for those costs to expand as much as possible. In other words, there is simply no slack in most household budgets. Reforming planning laws to encourage more housebuilding will not alleviate poverty so long as rents are set by the market, both because developers are incentivised to build higher value properties and because those regulatory reforms will make it easier to do so.
It would be nice to fix our sewers and reservoirs, and fully electrify our railways and modernise the NHS, but this requires a level of real resources significantly greater than can be produced domestically, essentially because of 40 years of deindustrialisation following Thatcher's misguided Monetarism and Blair's equally misguided belief in a financial services-led economy. We could import resources - steel, bricks, engineers - but this would require us to export an equivalent amount or risk a balance of payments crisis and inflation. So, if we have only limited real resources, what should we prioritise? I would suggest that we focus on social housing initially. Not only does this address a pressing need, but it also gives us the opportunity to materially affect household spending by deliberately lowering rents, a policy that would be extended to existing council houses and flats. You might argue that this will deprive hard-pressed councils of revenue, but there is a solution to that as well, which is to buy out private landlords (using central government money - essentially by issuing mortgage-backed securities) and so increase council stock and revenues (even if those previously private tenants see their rents reduced in line with council rents).
This looks like a subsidy, but in fact it is simply deferred income as the rent can be increased once the cost of other essentials come down. So long as the investment - i.e. the cost to build and maintain - is recouped over the useful life of the asset (hopefully many decades in the case of housing - most UK council houses are over 50 years old) the timing of payments is simply a matter of cashflow, and that really isn't an issue for a monetary sovereign. Just as welfare spending is an automatic stabilisier of aggregate demand in a recession, so we should flex rents to help social tenants meet spikes in the cost of basics. This is a more practical approach than capping utility bills or freezing grocery prices. That the cost of living debate has been limited to those proposals, and the predictably choleric response of market fundamentalists, tells you how wedded the media have become to the idea that the crisis is a supply-side issue rather than the consequence of inadequate demand, and specifically demand among low income families. It sometimes feels like no one at the BBC has ever heard of Keynes.
Lowering rents is functionally no different to lowering interest rates that feed through to lower monthly mortgage repayments. The difference comes down to who benefits: tenants or mortgage-holders. The state currently has limited control over interest rates, due to the self-denying ordinance that is the Bank of England's "independence", and apparently no control over gilt yields (though in reality these are tied to inflation expectations and thus other government decisions). But it has complete control, if it wishes to exercise it, over council houses and their rents. After all, without that control Right-to-Buy would never have got off the ground, and nor would the Thatcher government have been able to impose an effective moratorium on building replacements for the properties sold off. The learned helplessness of British politics means that we easily forget the power of the state to remake society, even when such changes have been made in recent memory. It is no surprise then that more ambitious changes, on a global scale, are met with derision. But we should always remember a simple truth, most recently stated by Simon Wren-Lewis: "levels of poverty and inequality are what political elites and their influencers want them to be". That we have a government elected on the promise of "change" that has decided to change little does not mean that change is impossible, but that change is simply not what the government and its primary backers want.
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