Public Banks and a Just and Green Transition

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A Socialist Project e-bulletin ... No. 1855 ... July 1, 2019

Public Banks and a Just and Green Transition

Thomas Marois

Public banks are resurgent, triggered by the failure of private finance to meaningfully confront the green transformation. But will resurgent public banks act in the public or private interest? How can progressives ensure public banks support a just green transformation? Democratization is the key.

The turning point for public banks was really the UN’s 2015 Addis Ababa Action Agenda on how to finance the 2030 Sustainable Development Goals (SDGs). The international community finally acknowledged what most already knew: private finance had no appetite for saving the planet without first feeding insatiable shareholders. Ergo, high-risk, low-return green investments weren’t on the menu.

The solution? For the UN, the World Bank, and the OECD it is to subordinate public finance to private interests. Public development banks should take the lead in absorbing private investors’ risks to guarantee their projected returns. There is no other way of cajoling otherwise reticent financiers to fund the global transition to a low-carbon, climate resilient future. Besides, public banks have... limited financial capacity. The green transition needs the seemingly unlimited pools of global financial capital. This is the core message of the UN’s Inter-Agency Task Force Financing for Sustainable Development Report 2019, with an important sub-text being public financial incapacity. Reinforcing existing neoliberal tropes, there is no alternative but to mobilize private finance for climate finance. The nuanced message being we now need public finance to underwrite it.

But what if this wasn’t true, or at least not in the way pitched by neoliberal ideologues and unhindered growth advocates? A new edited book by the Transnational Institute (Amsterdam), Public Finance for the Future We Want, paints a different picture. The contributors evidence the many ways that the future of finance can and should be public, backed by real-world examples of alternatives spanning the globe. However, the structural power of global predatory finance must be curbed in order to build the basis for a democratically-organized and life-sustaining future. Public finance must enable the public, not private, interest.

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