At last year’s COP28 climate summit in Dubai, the UN’s Intergovernmental Panel on Climate Change issued a stark warning. The world is still on track to enjoy global warming of at least 3 degrees Celsius by the end of the century and, with it, the risk. of great social and political upheaval. To avoid this looming catastrophe, countries want to push for the transition to net-zero energy and the decarbonization of their economies.
Such a transition is within reach in engineering terms, but it remains politically and economically difficult. Some observers insist that it will only come with stiff costs. During last fall’s strike in the United States by the United Autoworkers’ Union (UAW)—when employees at the “big three” car makers forced management to cave to most of their demands—many analysts framed the dispute as one that in effect pitted the green economy against workers. U.S. auto companies had created a production system for electric vehicles built around low-wage, nonunion jobs; in the process, they set up a seemingly existential choice between decarbonization on the one hand and good jobs for manufacturing workers on the other. The union, many observers insisted, was not keeping up with the times; its imperatives were at odds with the realities of the transition to clean energy.
But this picture profoundly misunderstood the strike and the challenge of fighting climate change. The solution to the UAW strike shows why a successful transition to blank power will have to be one that strengthens workers’ rights and meets the desires of all stakeholders in the economy. The strike shattered the false binary presented by its detractors. The union has pushed for the inclusion of electric vehicle production and its batteries in new and improved contracts for autoworkers, demonstrating that decarbonizing the auto industry can still create smart jobs.
The employees’ call for full inclusion in the green transition in the automotive industry is a call to revive the formula that prevailed in World War II, when state investments combined well with personal initiatives, strict rules of hard work and direct union. In fact, it was the UAW, under the leadership of its first president, Walter Reuther, that initiated this strategy in the days after Pearl Harbor, demanding a conversion to war production much faster than automakers had thought possible. this speed and scale – driven through a new kind of relationship between business, staff and the state – will be necessary to prevent the ruin of the planet.
That energy belies the way many critics of the union dismissed its campaign, invoking an unenviable tradeoff: unionized autoworkers, they insisted, would lose out if the industry accelerated its transition to electric vehicles. But the UAW was clear that it supported this transition, even as it worked to ensure that the transition did not become an excuse to destroy labor standards. In making that demand, the autoworkers enjoyed the backing of a cross section of the environmental movement.
The strike came a little more than a year after the Biden administration passed the Inflation Reduction Act (IRA), an unprecedented investment in a wide range of infrastructure and manufacturing plants designed to decarbonize the U.S. economy. Going into the strike, the “big three” were all seeking tax credits and low-interest loans under the IRA, in many cases for battery-producing facilities that were not unionized and that paid wages well below industry standards. In this sense, the strike represented a conflict over how state support for decarbonization, as mandated by the IRA, will be used. Such backing could create good jobs, or it could make bad ones with low wages and few protections. It could confirm the claims of the political right that fighting climate change would lead to a fall in living standards, or it could point the way to a better future for working people.
Another notable facet of the strike is that it has enjoyed wide acceptance in the environmental movement. Indeed, far from being at odds with decarbonization efforts, the strike suggests that democratic societies can ensure that the blank power transition benefits both hard work and the environment. The fight against climate replacement does not have to come at the expense of protective workers. In fact, it can’t be that way.
Policymakers can link climate action to a comprehensive package for innovation, expansion, and smart jobs. Such a hopeful technique stands in stark contrast to the retrograde stance that has characterized, for example, recent climate policy debates in the UK, where Prime Minister Rishi Sunak is backtracking on his green commitments, adding that he will postpone the completion of gasoline-powered vehicles, weakening domestic electrification plans with blank energy, and facilitating the continued use of oil and gas, putting the UK’s ability to meet its stated target of net-zero emissions by 2050. Such policies signal a retreat and undermine the political foundations of action. In light of the accelerating climate crisis, the need for an ambitious, integrated strategy to weather replacement politics may not be more urgent.
To this end, policymakers want to perceive that they can shape the market and not be influenced solely through it. Many governments have long viewed the market as something they can only hope to respond to, to deal with. the market to align with its public policy objectives, such as the decarbonization of transportation systems. This means making sure that public investment, whether in the form of grants, loans, or procurement budgets, leads to inclusive and sustainable growth. For example, policies may just come with subsidies for electric cars (as Norway has done in its automotive sector) and loans to corporations that are willing to invest in greening their supply chains (as Germany is doing with steel). Governments that fail to engage in this type of proactive market setup will place their industries at a competitive disadvantage compared to countries whose governments assume their role as market shapers.
Such shifts would help establish what is in effect a new social contract, bringing together communities, public institutions, workers, and providers of financial and intellectual capital. This new model was evident in the settlement of the UAW strike, which established the principle that the production of electric vehicles, when supported by public investment, can produce good, unionized jobs. Part of what makes this paradigm shift so urgent is that in the current era of tight labor markets, workers have the power to demand not just economic concessions from major employers but also a seat at the table where business decisions are made. They can compel companies to involve them in core business decisions.
Governments will have to play a critical role in supporting this model, in part by establishing transparent contractual terms for personal corporations that get public investment and gain advantages. Countries deserve to ensure that subsidies and pledges are conditional on beneficiaries investing in green production. This is what the French government did during the COVID-19 pandemic, when it conditioned a loan to automaker Renault on the company’s investment in decarbonizing its operations, and what the German government did in recent years when the state-owned bank KfW lent to the metal sector on the condition that the sector dedicate itself to greening its supply chains. These situations can also be used to ensure that a population has affordable and equitable access to goods and services; aligning business practices with climate goals, fair labor practices, and other policy priorities; and identify profit-sharing and intellectual asset agreements between corporations that derive benefits from public investment, their workers, consumers, and the government itself.
These policies will be combined with others that inspire more productive behavior in the personal sector by restricting buyback percentages and incentivizing corporations to reinvest their profits in studies and progression and in the retraining of workers. In the United States, the Biden administration’s investment program already emphasizes such situations, adding the CHIPS and Science Act, which conditions obtaining government investments on the presence of operations in the country, the progression of workforce education systems, and the restriction of percentage buybacks. But the U. S. needs to be even more ambitious about the scale of its climate policy. related public investments, how those investments are actively directed, and how stringent the conditions placed on those investments are, adding hard work standards.
Many business leaders recognize the role they have to play in a time of accelerating climate change. And they expect governments to follow suit. One of the big surprises of Sunak’s retreat from his government’s electric vehicle mandate was the very negative reaction it received from British business, particularly from the country’s auto industry. As Lisa Brankin, the head of Ford’s British subsidiary, insisted, “Our business needs three things from the UK government: ambition, commitment, and consistency.” A relaxation of future climate targets “would undermine all three.” Instead of negotiating commitments that are too little, too late, an economy-wide transformation is needed—one that puts ambitious climate goals at the center and not the periphery of how economies are designed.
The UAW strike called into question the style of monetary equity capitalism that prevails today. The existing economic formula has not been able to respond well either to the risk of climate change or to the wishes of employees. Since the 1970s, the global economy has been governed through a form of capitalism in which power within corporations is exercised primarily through shareholders, corporate control responds to shareholder-oriented monetary parameters, and Capital allocation falls within a largely unregulated monetary system. sector. Markets were governed by short-term investors. This type of capitalism emerged in the 1980s, championed by leaders such as British Prime Minister Margaret Thatcher and US President Ronald Reagan, and has become common in business schools and idolized by politicians, academics and leaders. business in the years after the collapse of the Soviet regime. Union. Encourages share buybacks and treats employees as a burden rather than an asset: Companies focus on quarterly returns and praise their shareholders, but not employees, who play a central role in creating value.
The truth is that this percentage capitalism — which has resulted in $6. 3 trillion in percentage buybacks over the past decade in an effort to increase stock prices, stock characteristics, and executive reimbursement — will not be able to direct the investments needed to combat climate change. Rather, countries want to build structures of cooperation and mutual benefits between business, workers, and government. Stakeholder capitalism, unlike percentage capitalism, demands that the public of private corporations be subject to strict conditions: transparent goals that corporations must meet; world-class labour, social and environmental standards; and gain shared advantages with the public. The U. S. deserves to never repeat what happened with Tesla, where public money, coupled with a $465 million loan from the Department of Energy in 2010 and more than $3 billion in subsidies, according to Quartz, helped create huge personal fortunes.
Stakeholder capitalism is explained as a balance of forces between the stakeholders of an economy: adding up businesses, staff, and government. The institutional mechanisms that govern these relations are diverse and will continue to be encompassed in countries with other histories (German co-determination at the time). At the enterprise level, where the elected representatives of the staff, for example, on the boards of directors of companies, it is very different, even from the most forceful form of North American collective bargaining or the evolving Brazilian industrial relations system. But what characterizes this shift toward financialized shareholder capitalism is the insistence that workers be included in corporate governance and that any profit for companies is conditional on making investments that benefit other people and the planet.
Stakeholder capitalism does not mean the end of personal ownership of corporations, nor does it mean the abandonment of the concept of the corporation as a compatible entity for all. Rather, it seeks to determine how corporations are governed, what their incentives and limitations are. , and how they are compatible within the broader framework of social governance as they pursue their project of generating long-term professional compatibilities. This means that shareholders, who retain a disproportionate role in the governance of personal corporations in all of the world’s primary economies, will have to act as stewards of the firm in the context of markets actively shaped through states in the service of a common good.
The UAW strike suggests the option of a shift to participatory capitalism. Without such a change, there is a threat that fossil fuel interests and other conflicting parties to decarbonization will argue that transitioning to a green economy endangers staff, blocking any options companies have to control climate change. and impede further progress towards economies that are just and equitable. and environmentally friendly. But the strike showed that an economy can be more sustainable and more inclusive. The world doesn’t want to choose between smart jobs and a green economy.