Ten years on from the collapse of Lehman Brothers, campaigners are demanding we finally learn the lessons of the global economic crisis — before climate change precipitates the next one.
This weekend, campaigners plan to hold demonstrations outside financial institutions across Europe and the United States. They say the world hasn't learned the lessons of the crash.
"We are using the 10th anniversary of the collapse of Lehman Brothers to remind people that the root causes of that crisis, and 30 years of a financialization of our economy, have not been addressed," Benoit Lallemand, secretary general of Finance Watch, told DW.
Finance Watch's Change Finance campaign is calling for change to safeguard future economic stability, fight ever-increasing wealth inequality, and — not least — protect the future of our planet.
"If you want to properly fight climate change, you need to change the financial system," Lallemand says. The current setup of the financial system, disconnected from the needs of society, just won't work, he adds.
The divestment movement, demanding institutions pull investment from the fossil fuel industry, is also growing in Germany
Finance Watch has teamed up with environmental groups such as 350.org, a major player in the international divestment campaign that's fighting the fossil fuel industry by putting pressure on public institutions like municipalities, universities and pension funds to withdraw their financial interests.
Deregulation and privatization of the financial sector have led to democratically controlled institutions no longer having the economic power to make decisions based on the public good, he and others argue.
Greater financial regulation could reverse this trend, and force investors to act responsibly. "You really need to re-inject purpose at the heart of the financial system," Lallemand says.
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A decade of upheaval
That a whole decade has lapsed since the financial crisis hit seems hard to fathom. Yet the world seems a very different place today.
It's not possible to say with certainty that recent political shocks like Brexit or the election of climate denier Donald Trump to the US presidency would not have happened if the crash hadn't. But there's no doubt as to the timeline: Economic hardship followed the eurozone crisis that came hot on the heels of the US subprime mortgage crisis, and saw the emergence of movements on the very fringes of the mainstream political spectrum. This would have been difficult to imagine in prosperous pre-2008.
Parties on the far right, like Alternative for Germany — now the biggest opposition party in the German parliament — have about as much sympathy for climate protection as they do for Muslim migrants.
But even where left-wing groups that profess to care about the climate have gained power, environmental concerns have at times been been overshadowed by what seem like far more pressing economic concerns. In Greece, for example, the Syriza government recently approved licenses for hydrocarbon extraction in the Ionian Sea, in a bid to bring money into its embattled economy.
"The crash did lead to a kind of prioritization of economic recovery, sometimes at the expense of worrying about the environment," says James K. Boyce, an environmental economist at the University of Massachusetts in Amherst.
"And if you then fast forward to the 2016 election in the United States … the crash may have contributed to bringing to power a group of people who are deeply antithetic to all spheres of regulation of the market and of private greed."
But Paavo Jarvensivu, a researcher at the interdisciplinary BIOS Research Unit in Finland, argues that the crash also shook our faith in the prevailing economic system, raising questions about what kind of economy we want. He believes more people are asking whether the drive for ever-increasing consumption is worth the risks to our future it entails.
Jarvensivu recently wrote a background paper for the UN Global Sustainable Development Report 2019 arguing that free market economics was incapable of tackling the climate crisis, and proposing measures across the sectors of energy, transport, food and agriculture for an ecologically sound transformation of our economies.
"I think one thing the crisis brought to the fore is that the free market paradigm is not bringing the things it used to promise people," he told DW. "It's not bringing employment, it's not bringing financial security, and now of course, it also seems incapable of guiding the economy or societies to these kind of transformations that need to be really quick and wide [-reaching]."
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Traditionally, prosperity has been tied to economic growth — but new thinking is challenging this paradigm
Jarvensivu says the transformation needed is profound. But like Lallemand, he sees the state as a key institution for change. "We need to abandon the idea of a state as something similar to a firm, and start seeing the state as the only institution with the capacity and legitimacy to fund and organize the kinds of societal transitions we need to dramatically lower emissions," Jarvensivu said.
And the crash hasn't just engendered doubts over the most rampant excesses of deregulated finance and free market economics — political economist Will Davies says it has cast doubt over capitalism itself.
"There's been a lot of interest in the reform of capitalism," says Davies, who authored a new book called Nervous States about the recent political upheavals. "The word capitalism was barely used outside of the academic left in 2007."
But now, the question is what to do about capitalism, if we can imagine post-capitalism, and so on, he told DW.
"The younger generations are looking for alternatives to capitalism, and I think the implications of that haven't yet been seen in terms of how that generation might actually start to develop a completely different set of policies," he adds.
With the financial sector continuing to invest in fossil fuels, activists say more regulation is needed
Jarvensivu stresses that his studies were in business administration and that he looks at economic issues from a cultural and sociological perspective, rather than that of an economist. But he draws on biophysical economics, an alternative to mainstream economic theory that connects abstract concepts like money to real material resources. And he believes such alternative approaches have gained ground in recent years.
But Boyce says that while the economics profession took on board some of its failings, those lessons have had less impact on public policymakers.
"I think the crash was a teachable moment — some people learned some lessons from that, and others didn't," he told DW. "And some people continue to remember those lessons, if they did learn them, and others forgot fairly quickly."
And as Change Finance demonstrators from Finance Watch are keen to point out, we forget those lessons at our own risk.
Read more: The price tag for climate change
Not just the financial system threatens the environment, also vice versa. Leading financial figures, including the former CEO of the Bank of England, have warned that the next big financial crisis could come down to climate change.
Political economist Davies says keeping global warming below 3 degrees Celsius (37.5 degrees Fahrenheit), let alone the Paris Agreement goal of 2 C, would require decarbonizing the economy over the next 20 to 25 years. Unless we manage the transformation of our economies in a way that free markets seem unequipped to do, the shockwaves of that change could be every bit as devastating as those that followed the Lehman collapse.
Such rapid action would avoid many of these worst case scenarios, he told DW. "But that would pose a serious threat to the stability of the global financial system."