Jeremy Green
Amidst a mood of national desperation stirred by over a decade of Conservative-led misrule, encompassing the multi-dimensional unravelling of Britain’s socio-economic settlement, it’s tempting to invert the Thatcherite mantra of ‘there is no alternative’ to ‘any alternative will do’.
This is the historically auspicious electoral context in which Keir Starmer’s Labour Party has the benefit of making its bid for power.
Labour’s strategy hinges on a bold new economic settlement that promises to tackle both economic stagnation and climate change through making the UK a ‘green growth superpower’. On growth, Labour has pledged to achieve the highest sustained levels in the G7. On climate, Labour has outlined a plan for rapid decarbonisation by nurturing world-leading clean energy capacity.
These ambitious goals form two of Starmer’s five ‘missions’ that will structure a Labour government’s policy priorities. For Labour’s approach to green transition, these are the missions that really matter.
An appraisal of the coherence, feasibility, and desirability of Labour’s plans is required. Not least, because although Starmer’s pitch for power comes at a promising electoral juncture, we are also entering a critical phase in efforts to meet the Paris Agreement climate targets. For the UK, it’s likely that the next government’s green transition strategy will be decisive.
The key question, then, is: does Labour’s strategy for green economic transition persuasively reconcile prosperity and environmental stability?
Green Corporatism
Although green growth rhetoric is alluring, we shouldn’t assume a positive connection between the two goals of enhancing growth and driving forward decarbonisation.
Restoring high and sustained growth is a broad macroeconomic goal achieved by maximising aggregate economic output, regardless of that output’s environmental impacts. Historically, economic growth and emissions have been tightly interlinked.
Decarbonisation, by contrast, is a process more attuned to sectoral specificities and distinctive metrics. Judged on its own terms, a good decarbonisation strategy must privilege rapid transformation of the most carbon-intensive sectors over others, regardless of whether or not this boosts economic growth. There is no natural alignment between these two goals. Existing evidence on decoupling growth from emissions is inconclusive regarding the prospects for achieving one.
How does Labour plan to reconcile these objectives?
At the core of its plan is a broad strategy of job-creating green industrial modernisation powered by large-scale investment in renewable energy, alongside a new model of social partnership between business, labour, and the state.
We might term this Labour’s green corporatism. Like the old corporatism of the post-war era, it’s a form of governance based on the management of organised interests mediated by the state to achieve shared goals (high productivity and stable economic growth). But there’s a crucial difference – it will be underpinned by a decarbonised economy grounded in the expansion of renewable energy and associated green industries.
In this vision, green transition is seen almost exclusively in terms of decarbonisation, and decarbonisation is about ‘winning the global race for future industries’.
Green transition is being interpreted as industrial modernisation, bringing industrial policy back to the fore. Industrial policy is the coordinating mechanism that links Labour’s plan for decarbonisation with the broader goal of economic growth, increasing the production and consumption of British-made goods as part of a project to spread good quality, unionised jobs ‘fairly’ throughout the country.
This industrial emphasis reinforces the corporatist agenda – requiring a renewed sense of partnership between unions, businesses, and devolved government, united by a commitment to long-term investment and the productivity and income gains this might provide.
Long-term planning anchored by an active state is central. Shadow Chancellor Rachel Reeves has pledged to be the UK’s first ‘green chancellor’ with a goal of £28 billion of public capital invested into the green economy annually. Sensibly, Labour are prioritising large-scale investment in renewable energy, proper insulation of homes, and the expansion of a green public transport system – mapping investment targets onto some of the most emissions-intensive sectors of the UK economy.
Public investment is intended to crowd in further private investment, bringing new sustainable jobs through decarbonisation. A planned National Wealth Fund, capitalised with an initial £8 billion, will facilitate new forms of public-private investment partnership for green British infrastructure and industries.
Investment partnership with business is part of a broader effort to bring capital back onside with Labour, after the strained relationship under Corbyn’s leadership. Starmer has proclaimed that his Labour party will be ‘unashamedly pro-business’, while he is also reported to have expressed a desire for big business to get its “fingerprints” on Labour’s policy agenda.
Courting business is counterbalanced by a renewed commitment to labour rights – Reeves has declared Labour’s growth plan to be ‘proudly pro-worker’. The restrictive 2016 Trade Union Act will be repealed and the statutory basis of trade union rights strengthened. Labour also plan to create a new Single Enforcement Body to enforce workers’ rights.
The most classically corporatist dimension is the proposed introduction of ‘Fair Pay Agreements’ throughout the economy. Under this plan, modelled on a scheme in New Zealand, worker and employer representatives would be brought into dialogue to negotiate minimum terms and conditions covering a broad range of issues – from pay and pensions to deployment of new technologies – that would be binding for all employers and workers in each sector. Agreements would require mediation and enforcement by the state, drawing the government into a more direct approach to managing relations between business and labour.
Labour’s green corporatism deploys an activist state to provide and stimulate productive green investment to drive renewable-powered industrial modernisation, win the support of business, enhance the power and conditions of workers, and promote a more deeply institutionalised and negotiated partnership between key players.
Carrots and sticks
Effective coordination of a green transition plan requires enhanced institutional capacities. Labour’s plan recognises this, including some promising efforts at new institution building, exemplified by the National Wealth Fund and the Single Enforcement Body.
But it doesn’t get close enough to developing the new institutional capacities required to deliver a green corporatist vision. And it remains silent on how it plans to engage with the traditional impediments to industrial modernisation in the UK.
How will the financial resources of the City of London be tapped to generate investment for green modernisation? As the halting transition from fossil fuels to renewables has shown, private investors are driven primarily by profitability, not the good intentions of government.
This question is particularly salient, given the longstanding deficit of investment in the UK compared to G7 countries. There is also the issue of the historical schism between an internationally oriented financial centre and the needs of the UK’s deeply regionally imbalanced economic model, which has bedevilled successive Labour leaders and governments.
Labour’s plan hinges on the carrot of public investment drawing in additional private investment. But what if the stick of regulation or fiscal levies is required? It’s not clear that Starmer’s Labour has the stomach to compromise business freedoms in the name of climate stability.
Previous attempts at industrial modernisation, notably during the 1960s, have been undermined by the Treasury’s reluctance to loosen the reins on economic control. And although the Bank of England takes climate risk increasingly seriously, central bank independence is inadequate for the scale and speed of public investment and economic transformation required for rapid green transition. A deeper rethinking of the institutions and logics of public monetary power and how they might be deployed, along with a wider rebuilding of state capacity, is required.
Gambling on growth
In a speech to the Confederation of British Industry, Starmer eulogised growth as ‘the oxygen for our ambitions’ and the ‘lifeblood of a strong society’. Yet the IPCC has concluded that economic growth is a driving force of rising carbon emissions and wider environmental destruction.
Environmentally, the push for growth illustrates Labour’s narrow understanding of green transition, focused almost exclusively on the need for decarbonisation. The environmental consequences of ceaseless overexploitation of finite resources and production of waste by growth-oriented consumer societies barely gets a mention.
Global warming is the sharp edge of human-induced climate risks. It makes sense to prioritise decarbonisation, from both an environmental and strategic view. But the emphasis on growth and logics of productivism legitimating Labour’s strategy leave little room for a wider and deeper strategy of greening the economy. Policies on air quality, biodiversity, and natural habitat protection feel like insubstantial appendages.
Politically, the emphasis on growth is also risky. The old form of corporatism came unstuck during the 1970s, as stagflation and labour unrest shattered the industrial peace between capital and labour, delegitimising Labour’s status as credible stewards of the post-war settlement. That conflict was decisively resolved in the interests of business power.
Now, in the context of a long-term decline in the growth rates of high-income countries, the promise of a new industrial peace founded on high growth is Quixotic. It also fails to reckon with a deeper sense of ecological limits to growth. Can a turn to renewable energy and green industrialisation really emulate the high productivity and growth rates of the fossil fuel age? Or are we moving into an age of sharpened distributional struggles as we grapple with the limits to growth and the challenges of climate-induced instability?
The magnitude of investment and institutional upheaval associated with green transition, framed within an increasingly fraught and fractured geopolitical order, will likely generate new forms of price instability. Pledging to renew corporatist consensus and rapid growth on these shaky foundations is a major gamble.
With its governing legitimacy anchored in ambitious growth objectives, Labour’s growth gamble carries political and environmental risks. Even if green industrial policy generates an initial burst of growth, we should be sceptical that this would be stable and sustainable.
Why, then, has Labour embraced growth discourse so aggressively at a moment when strategic ambiguity or decentring of the concept might be wiser?
Promising high growth avoids the polarising distributional issues that green transition brings to the fore. If the growth-fuelled consensus politics of the past is and ought to be defunct, the distribution of existing wealth becomes more important, and new social and material foundations for consensus are required.
This scenario jars with Labour’s win-win narrative for business and workers. The problem the party faces is that this narrative is misaligned with emerging political-economic realities.
Beyond green corporatism
Transforming the energy basis and emissions intensity of growth to meet net-zero targets is critical. But it is not enough. The material throughput and waste associated with a continued high-consumption and high-production economy, even with renewable-powered industries, will likely have damaging environmental effects on biodiversity, sustainable land use, and exhaustion of finite transition resources, while shrinking the developmental space available to countries of the Global South. Green corporatism sidesteps these challenges.
There is an opportunity to take a tougher stance on fossil capital in the name of climate justice – building strategic alliances with unions and greener business coalitions and tapping the wealth of fossil fuel corporations to fund green transition. Labour’s net- zero plan contains little detail about phasing out fossil fuel subsidies.
Labour should lead with the social wellbeing benefits of green transition investment and reorientation, while remaining strategically silent on growth or elevating other indicators of social progress. Decentring growth in this way would open space for a deeper understanding of the transition, aiming to decouple economic activity from wider environmental harms through principles of sustainable sufficiency.
This deeper vision would emphasise wellbeing, equality, and the provision of universal basic services. Targeting concentrations of socially and ecologically harmful wealth could free up resources for public services and target inequality – but this requires redistributive coalitions, not false promises that everyone wins from green transition. Transforming the UK’s strained system of food production, by minimising waste and improving local production, could enhance food security and combat runaway food price inflation. Labour’s focus on energy prices and cost of living should be matched by serious engagement with food security and food prices.
Promises of green corporatism may win Labour power, but they are unlikely to be the foundation for a lasting green hegemony or an adequate response to the environmental crisis.
Jeremy Green is Professor of Political Economy at the Department of Politics and International Studies at the University of Cambridge, and a Fellow of Jesus College. He is currently researching historical and contemporary dimensions of the political economy of green transition, and is the author of two books and numerous academic journal articles. You can find out more about his work on his website.