Climate missions in a COVID-19 world
By Mariana Mazzucato and Martha McPherson
This article was originally published as part of the ‘Greater Manchester Independent Prosperity Review: One Year On’ report.
Global, national and local economies have been thrown a curveball in the shape of COVID-19. The crisis has revealed systemic shortcomings, both in the capacity of states to address the enormous public health emergency; and in the resilience of industry to immediate and sustained disruption. It has also de-blinkered our eyes to the inequality and unsustainability of modern living. Around 22% of the UK population are experiencing the pandemic from a position of poverty. 700,000 children have spent the last six months in homes without a laptop, desktop or tablet computer. Racial inequality has been thrown into sharp relief.
These are interlinked problems and come from long-term economic dysfunction — from the UK economy’s characteristics of finance-led and debt-led growth, compounded by austerity and underfunding. The crisis has shown us how unprepared we are, as a national and as a global community, to react to a crisis of this scale. Earlier this year, the news media were full of frightening images of overwhelmed firefighters, not overwhelmed health-care providers; we thought this would be the story of 2020. But the climate emergency is still the story of 2020 and the coming century. COVID-19 is a product of environmental degradation, and has been dubbed ‘the disease of the anthropocene’. This pandemic, and the recovery we need, give us an opportunity to understand and explore how to do capitalism differently, towards a climate-resilient, long-term, and sustainable economy.
This requires a rethink of what governments are for: rather than simply fixing market failures when they arise, they should move towards actively shaping and creating markets to take on society’s most pressing challenges. The green transformation of our economies is not a luxury we cannot afford due to COVID-19, but the only way through the crisis that ensures resilience against future risks of the same size, scale and severity.
Economic growth does not only have a rate, but also a direction: we can design for a recovery to address these upcoming crises head on. ‘Build Back Better’ and Green Recovery plans are being developed all around the world. My team and I at the University College London, Institute for Innovation and Public Purpose (UCL IIPP), have been advising governments from South Africa to Italy on taking up bold, ambitious, mission-oriented innovation approaches at the heart of a ‘just green recovery’ that addresses the ‘wicked problems’ of the green industrial transformation, hysteresis, inequality and healthcare together. Greater Manchester can be proud that the city-region is very much at the forefront of this work internationally. For the last year, the city-region has pioneered a path of structural industrial and social change in its mission-oriented approach to achieve carbon neutrality by 2038 — far sooner than the rest of the UK. This mission forms the heart of Greater Manchester’s Environment Plan, and trailblazing Local Industrial Strategy, and was supported in its development by our mission-oriented innovation team at the Institute.
“Economic growth does not only have a rate, but also a direction: we can design for a recovery to address these upcoming crises head on.”
The UK’s COVID-19 lockdown, and the economic activity constraints across the region over the course of spring and summer 2020, acted to illustrate the scale and significance of Greater Manchester’s ambition: the decrease in activity led to a carbon emission reduction level which aligned with the 2038 pathway for the first time — but at the cost of dramatic industrial, social and behavioural shifts.
In the same manner that the European Union’s NextGeneration EU recovery package has been developed from the carefully designed elements of its existing Green Deal, Industrial Strategy, and Just Transition Mechanisms, plans of these types should be the ‘compass’ and the ‘motor’ of national, regional and local recovery in the UK. The pandemic throws up immediate needs, but the long-term goals of the city-region also have critical importance. Citizens’ wellbeing must be the first consideration in a public health crisis: and they must be in the climate crisis too. Citizens are a key part of cumulative value creation, and the recovery must not be top-down, but bottom-up, with citizens, trade unions, and community groups brought to the table to co-design plans and activity. In the immediate term, we can expect unemployment to increase over the coming months, and impacts will be unbalanced towards our youngest and oldest workers.
The economic shock of the pandemic is likely to fall most heavily on regions already facing disadvantage and industrial decline. The 2038 mission work so far has focused intently on the development of green jobs, industries and partnerships — there are working groups on retrofit, energy, construction, nature restoration and behaviour change communications — geographically dispersed, high-quality job areas. With supportive public policy, estimates see that green job numbers could grow by 85% to 2030 in the UK. These jobs have co-benefits of decreasing pollution, addressing fuel poverty, improving comfort, and increasing health and wellbeing levels. The attachment of conditionalities to industrial bailouts is no longer a taboo; international experiences from highly dynamic market economies are testament to this, and the business community is rediscovering its merit. At national level, government support for corporations has ranged from direct cash grants and equity stakes, to tax breaks and loans at favourable terms or with a government guarantee. Far from a punitive and dirigiste attempt to put strings on the economy, attaching conditionalities to bailouts is a way to steer financial resources strategically and make sure that they are retained and reinvested within productive business organisations, instead of being distributed and captured by particularistic and speculative interests.
The next year is, of course, still very uncertain. As we have seen in the lack of national conditions on government assistance in multiple countries. There is a risk that readiness and willingness to transition may be overlooked in a misguided vision of COVID-19 and climate change as a zero-sum investment game, in which incumbent (polluting) systems are invested in because they seem like the most straightforward way to re-start the economy. But as we move from response into recovery and renewal, Greater Manchester is in a strong position, as it has already taken steps on its path towards a green transition. By continuing down this path, it can lead the world in showcasing what it means to focus the direction of growth on a more inclusive and sustainable society, with citizens at the centre.
