The Reserve Bank (RBA) cut rates this week to a historic low of 1 per cent in an attempt to stimulate the economy in order to maintain employment growth and increase disposable income (and, thus, consumption). The ALP have argued that 1 per cent interest rates signal a 'national crisis' and that successful economic stimulus is going to take more than a rate cut.
In response, they have pushed for the LNP to bring forward its tax cuts and to increase spending on infrastructure. RBA Governor, Phillip Lowe, has a more optimistic take, stating 'the outlook for the economy remains reasonable', but has also hinted that more could be done to stimulate consumption.
Of course, the question of what should be done to stimulate the economy (if anything at all) largely depends on how you frame the problem and, in particular, on how you explain its origins. Debates around the meaning and cause of economic crises are nothing new, and they have been blamed on everything from greed, to regulatory failure, poor economic theory, culture and excessive regulation.
While all of these contain a grain of truth, David Harvey also contends that these crises are the result of systemic risks — specifically the internal contractions of capital accumulation — that are never solved but are instead moved around geographically. These contradictions are multiple — including the current imbalance of power between finance capital and labour — but perhaps the most significant one is the fact that capitalism requires endless growth in a world of limited resources, leading us into not only financial crises but ecological ones too.
So how do we respond to this combination of ecological and financial crises? One potential solution that is currently receiving a lot of attention is to adopt a 'Green New Deal'. But what does that actually mean?
Early references to a Green New Deal go back to the time of the last global financial crisis. In early 2007, Thomas Friedman called for a Green New Deal, specifically on energy policy, arguing, 'like the New Deal, if we undertake the green version, it has the potential to create a whole new clean power industry to spur our economy into the 21st century'. A more comprehensive policy was also proposed in 2008 by a group calling themselves the Green New Deal Group, which combined green energy reforms with job creation and proposals to stabilise the market via 'an orderly downsizing