The election result is leading to a debate among progressively minded social reformers. But creating a new set of policy ideas is difficult on many levels. It requires a concerted process of asking new questions, developing new answers and engaging and persuading a sceptical and generally uninterested public (for without public support political ideas are of very limited value).
What might a project with this ambition sound like? Here’s one I prepared earlier based on the question ‘what kind of economy do we want in 2030?’
The point is not so much whether the specifics are right but to highlight how broad a genuinely radical debate might be, and to highlight the timidity of what is currently being debated.
Over the last twenty years examination of the goals of economic policy has been largely crowded out by two contrasting narratives. Between the mid-1990’s and 2008 the story, in essence, was that economic growth, portrayed as permanent, would enable us in time to solve all problems. Towards the end of the period there was more questioning of this orthodoxy. The Sarkozy Commission on alternatives to GDP was one example, as was David Cameron’s enthusiasm for wellbeing. Added to this was a growing environmentalist critique of growth. But just as the ‘growth solves all problems’ discourse was starting to be seriously questioned we faced the credit crunch.
As a result, since 2008, the dominant story has been that unless we give the economy what it needs it will pack up on us and plunge us into crisis.
The economy of 1995 to 2008 was portrayed as bountiful, the economy of 2008 onwards vengeful and fickle; we didn’t need to question the first and couldn’t afford to question the second. This incuriosity about the goals of economic policy has been reinforced by neo-classical economy theory which argues that human welfare is naturally maximised through the actions of perfectly informed rational agents working in a free market.
Now as Britain moves from crisis to some kind of economic stability, and as fewer and fewer people seek to defend the myths of perfect self-regulating markets and perfectly informed rational actors, is it possible to have a different, richer conversation about the economy?
Remember that while GDP is rising and the fiscal deficit and unemployment falling our national economy has a number of deep seated characteristics which are far from benign – the millions of people struggling to get by, the scale of inequality, the sluggishness of productivity, the poor alignment between social contribution and economic reward, the unsustainability of our patterns of consumption.
Lying behind this gap between the criteria of economic success and of social and environmental flourishing lies an even more fundamental issue. At its most basic ‘the economy’ is simply the term to give to a set of processes that turn various assets – financial, natural and human – into long term human welfare. If so, how can we understand what a successful economy is without an account of what long term human welfare comprises?
The question we need to ask is how would we judge the economy to be successful in 2030 based on the criteria of long term human welfare and flourishing?
A benign (intentional) consequence of asking big questions about the criteria for economic success is that it encourages us to take radical reform seriously as long as that reform might offer credible ways to meet those criteria. Here is an initial short list of ideas which would be politically controversial and tough to implement but which, on the face of it, offer the prospect of better aligning economic progress with long term human welfare.
A smaller, more strategic central state: encouraging enterprise, fostering social innovation, using democratic legitimacy to break up overbearing institutional power wherever it lies
A comprehensive land tax: taxing unproductive wealth rather than productive investment and labour, releasing land for housebuilding
Radically decentralise energy production: enhancing sustainability and civic engagement, developing new income streams for households and communities
A universal citizen income: respecting human dignity and care, reducing state intrusion, incentivising work and boosting productivity
Fundamental reform of corporate governance: aligning business strategy with public interest, tackling work based inequalities in rewards and power
A new anti-oligopolistic competition regime: diffusing economic power, weakening the blackmail power of big business
Building a community asset fund: taxing concentrated assets to massively increase citizen access to investment funds
A local income tax and local welfare regime: devolving power, incentivising work, encouraging greater local policy diversity and innovation
All these ideas have downsides, all are complex and most involve losers (some of them powerful interests) as well as winners. Politicians generally lack the authority or legitimacy to undertake reform of such magnitude. If parties try to impose big ideas which will disrupt people’s lives without showing they have been properly tested by informed citizens, they only have themselves to blame if the public assumes the worst.
So new mechanisms of public engagement need to be developed enabling a group of representative citizens (but not formal representatives) to become lay experts who can openly assess ideas and whose judgement is more likely to be trusted than professional politicians.
A Citizen Economic Council might meet regularly and in public over a two year period between 2016 and 2018 to explore goals for economic policy and identify the most promising major policy initiatives which could help achieve those goals. It would then be up to political parties to decide whether to take these ideas further.
As I say, the point of this post is not to advocate these specific ideas – I will leave that to my annual lecture in July – but to give a sense of what radical new progressive thinking might actually look like.
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Thanks Matthew. These are the right questions to raise and you've presented a lot of the right policy options that need to be debated. The extremely narrow economic debate in the election campaign showed how impoverished our discourse has become in relation to the values and goals we have for 'the economy'; and also how 'the economy' is discussed as if it were an entity that transcends society and environment - whereas in fact it is embedded in both and dependent on both.
My colleague Prof. Tim Jackson will be leading a new ESRC-funded programme from January, the Centre for Understanding Sustainable Prosperity (CUSP). The new programme will be coordinated by the University of Surrey and involves a wide range of partners from other universities, business and civil society. CUSP will be exploring the values, policies, business models and resources of an economic system that can generate wellbeing and prosperity within the Earth's ecological boundaries. There'll be many connections to be made between our work and the issues you're raising here and in your annual lecture.
Thanks Matthew. These are the right challenges to highlight and you raise a lot of the right proposals that should be up for debate. Many taken-for-granted features of modern economic policy have to exposed to much more imaginative and far-reaching examination and public argument - especially the biggest issue of all, namely the question of whether we can have indefinite growth as we have known it, in the face of ecological limits?
From January 2016 my colleague Tim Jackson will be directing a new network of university researchers, progressive businesses and civil society organisations in an ESRC-funded programme to understand the nature of an economy that can promote 'sustainable prosperity'. The Centre for Understanding Sustainable Prosperity (CUSP) will begin to explore many of the issues you've raised. See www.cusp.ac.uk for more information. There'll be much in the CUSP agenda that chimes with what you are thinking about and doing at RSA.
In the seventies, I began teaching in secondary school and asked the question- 'What do we really need to learn to achieve a healthy, happy, successful life?'. By the end of the nineties, I was able to answer this (helped greatly by the internet). Surely by 2030 our society will be focused on developing the 8 skills we need to achieve good health and well-being. Surely by 2030 our government will have an economic system that prioritises -production, distribution, trade, consumption and services to encourage as many people as possible to have the skill development to achieve good health and well-being.