PKT message, Ecology and global CAPEX

Ecology and Global CAPEX

Bill Mitchell published an article a few years ago (in a pkt seminar, I believe), in which he showed that CAPEX (capital expenditure, public + private) in OECD countries and its movements corresponded very closely to unemployment rates in OECD countries. Even though he describes Keynes' General Theory as a "novel", his finding supports the Keynesian view of the importance of CAPEX ("investment", I or D2 in the GT). Moreover, there is relatively little disagreement among different traditions of economics (neoclassical, (post)(-) Keynesian, Marxist) about the importance of CAPEX for economic growth. Thus, if the poor of the world want more wealth and more jobs, one way to get that would be more global CAPEX, preferably in the poor countries.

Here comes the ecological (pseudo-)conundrum. Many ecologically-minded economists equate more CAPEX and more GDP growth with more ecological destruction (e.g., Herman Daly, who rejects Keynesianism for that reason). This view is justified if one looks back on the last hundred years of economic history. However, this view is not necessarily valid in the future. Suppose someone wanted to transform the global production structure and global consumption habits from "unsustainable" to "sustainable". Such an undertaking would require huge amounts of "green" CAPEX, i.e., investment in facilities which would bring about sustainability - from alternative energy production to alternative transportation systems to alternative industrial processes to health-education-welfare supporting facilities. This kind of CAPEX would increase (global and national) GDP, (global and national) employment AND global ecological sustainability.

Who could engage in this kind of "green" CAPEX? The corporate sector is obviously not interested. Thus, it would have to be done by the (global and national) public sector(s). Traditionally, capitalist countries were only willing to engage in massive public CAPEX for military purposes (military Keynesianism). As an alternative, the public sector(s) of the world could justify massive public CAPEX for ecological reasons. Veux dire, we need massive "green" global CAPEX (in the Third World for sustainable wealth creation and in the First World for reduction of eco-destruction) and - in order to accomplish that - "green" (global) (post)(-)Keynesianism.

With greetings from Canada,
Gernot Kohler