All the issues for the world we want to live in exist within the wider system of the economy and the governments that try to manage it. Many of the potential changes raised imply the need to rethink current ways of working and economic policies. This chapter asks whether we need more engagement of governments in the management of investment and other economic activities. This question has been thrown into stark relief by the sudden and rapid switch of economic policies seen in many countries following the onset of the COVID-19 pandemic.
Could we build an economic system that brings out the best in people, not the worst? Some aspects of such a system are clear:
- Recognition that the economy needs to support wider society and public good
- Recognition of the social and environmental costs of economic actions
- Community involvement in shaping local economies
- Regulation and intervention to redress imbalances in power, information and opportunities
- More emphasis on ‘real’ activities rather than finance transactions
- Support for those who need help to change – at every level from the individual to nations.
As with the costs of dealing with climate change, opponents of such changes often stress that it is too hard, will take too long, would cost a trillion dollars, could not gain public support without much prior preparation. These arguments tended to hold sway, but have been shown to be illusory by the events of early 2020, when economic responses to the COVID-19 pandemic costing trillions of dollars could be enacted in a matter of weeks, given the political will.
When we outsource civic virtue to pay third party providers, we narrow the
scope of society and encourage people to withdraw from it.
Mark Carney, The Reith Lectures 2020, Lecture 1 – From Moral to Market Sentiments
Abhijit Banerjee & Esther Duflo’s Nobel Prize lectures (2019):
Abhijit Banerjee: Field experiments and the practice of economics
Esther Duflo: Field experiments and the practice of policy
Joseph Stiglitz, Jean-Paul Fitoussi & Martine Durand discuss Measuring what counts for Economic and Social Performance
Guy Standing discusses The Plunder of the Commons: A Manifesto for Sharing Public Wealth at an LSE event.
Nicola Sturgeon (2019) Why governments should prioritise wellbeing. TED talk.
- Mark Carney (2020) How we get what we value. BBC: The Reith Lectures 2020.
Download transcripts of the lectures:
- John Kay & Mervyn King discuss Radical Uncertainty: Decision-making for an unknowable future at an LSE event.
- New Economics Foundation (NEF)
- Institute for New Economic Thinking (USA – referred to in the book)
- Institute for New Economic Thinking (UK – a different one, at Oxford University)
- Institute for Public Policy Research (IPPR)
- All Party Parliamentary Group on Wellbeing Economics (UK)
- Network of Wellbeing Economy Governments
- The Rapid Transition Alliance – although this is a site mostly devoted to climate change, there are a number of good economic transition ideas here too
- 99percent – UK “volunteer movement of people who want to end mass impoverishment using peaceful means”.
- Most websites that offer advice on ethical investing are part of the site of a broker or someone else who is trying to sell you their services for financial advice or fund management: some of the better ones have actually spotted that this is more likely to work if they’ve given their advice in an ethical and unbiased way: this is just one example picked at random from a search:
AJ Bell YouInvest: Responsible Investing
For a comprehensive examination of some of the issues here – and an interesting analysis of how conservative, liberal and socialist thinkers view these ideas – see:
Frank Stilwell (2019) The Political Economy of Inequality. Polity Press
There are a number of good writers on alternative ways to think about economics. These are just a few.
- Mark Carney (2021) Value(s): Building a Better World for All. HarperCollins.
- Abhijit Banerjee & Esther Duflo:
- Good Economics for Hard Times: Better Answers to Our Biggest Problems (2019) Perseus Books.
- Poor Economics: Rethinking Poverty and the Ways to End It (2013) Random House.
- Joseph Stiglitz:
- People, Power, and Profits: Progressive Capitalism for an Age of Discontent. (2019) W.W. Norton
- Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump. (2017) W.W. Norton.
- IPPR Commission on Economic Justice (2018) Prosperity & Justice: A Plan for the New Economy. Institute for Public Policy Research.
- New Economics Foundation (2019) Change the Rules: New Rules for the Economy. NEF.
- Matt Hawkins & Jennifer Nadel (Eds.) (2021) How Compassion can Transform our Politics, Economy, and Society. Routledge.
- Lorenzo Fioramonti, Luca Coscieme, Robert Costanza, Ida Kubiszewski, Katherine Trebeck, Stewart Wallis, Debra Roberts, Lars Mortensen, Kate Pickett, Richard Wilkinson, Kristín Vala Ragnarsdottír, Jacqueline McGlade, Hunter Lovins & Roberto De Vogli (2022) Wellbeing economy: An effective paradigm to mainstream post-growth policies? Ecological Economics, 192
- RAND Corporation & Metropolitan Group (2021) What if progress meant wellbeing for all? US innovators use global insights to shif the narrative and surface opportunities ahead
- Katherine Trebeck & Jeremy Williams (2019) The Economics of Arrival: Ideas for a Grown-Up Economy. Policy Press.
- – a blog about this book: What does progress look like if we stop pursuing economic growth?
- Ha-Joon Chang:
- Kate Raworth (2018) Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist. Random House Business.
Richard Wilkinson & Kate Pickett:
- The Spirit Level: Why Equality is Better for Everyone. (2009) Allen Lane / Penguin.
- The Inner Level: How More Equal Societies Reduce Stress, Restore Sanity and Improve Everyone’s Well-being. (2019) Penguin.
- Amartya Sen (1999) Development as Freedom. Oxford University Press. – an older title than those above, but still has resonance and worth a read.
IPPR Commission on Economic Justice (2018) Prosperity & Justice: A Plan for the New Economy. IPPR.
Economics and wellbeing
- Richard Thaler’s Nobel Prize citation – having looked at that, I guess we also have to point you to:
Richard Thaler & Cass Sunstein (2009) Nudge: Improving Decisions About Health, Wealth and Happiness. Penguin.
- John Kay (2004) The Truth About Markets: Why Some Nations are Rich But Most Remain Poor. Penguin.
- Guy Standing (2019) The Plunder of the Commons: A Manifesto for Sharing Public Wealth. Pelican. – an excellent analysis of how the drive to individualism has undermined the common wealth, sadly combined with a manifesto of blue-sky ideas for new taxes with no thought of how to get there from here.
- Neoliberal economists like to trace their views back to to Adam Smith’s The Wealth of Nations (1776) and its ‘invisible hand’ (p.456), preferring not to note that Smith coined the term in his earlier Theory of Moral Sentiments, where it is clear that he sees that hand as operating in the light of a moral code that values the good of others, not at all the ‘Greed is good’ mantra prevalent since the 1980s. For more discussion in this point, see Mark Carney’s Reith Lectures 2020 under Podcasts
“They are led by an invisible hand to share out life’s necessities in just about the same way that they would have been shared out if the earth been divided into equal portions among all its inhabitants. And so without intending it, without knowing it, they advance the interests of the society, and provide means for the survival of the species.” Adam Smith (1759) The Theory of Moral Sentiments, p.264
- Ross Gittins (2010) The Happy Economist: Happiness for the Hard-headed. Allen & Unwin.
- Robert MacCulloch (2018) How political systems and social welfare policies affect wellbeing: A literature review. In Ed Diener, Shigehiro Oishi, & Louis Tay (Eds.), Handbook of wellbeing. DEF Publishers.
Wealth and wellbeing
- Elizabeth Dunn, Lara Aknin & Michael Norton (2008) Spending money on others promotes happiness. Science, 319, 1687-1688.
- Jeffrey Froh, Robert Emmons, Noel Card, Giacomo Bono & Jennifer Wilson (2010) Gratitude and the reduced costs of materialism in adolescents. Journal of Happiness Studies, 12,289-302.
- Richard Wilkinson & Kate Pickett (2009) The Spirit Level: Why Equality is Better for Everyone. Allen Lane / Penguin.
- Joseph Stiglitz (2013) The Price of Inequality. Penguin.
- Michael Marmot (2016) The Health Gap: The Challenge of an Unequal World. Bloomsbury.
- Shigehiro Oishi & Ed Diener (2014) Can and should happiness be a policy goal? Policy Insights from the Behavioral and Brain Sciences, 1, 195-203.
- Martine Durand (2018) Countries’ experiences with well-being and happiness metrics. OECD
- Karma Ura, Sabina Alkire & Tshoki Zangmo (2008) A Short Guide to Gross National Happiness Index. The Centre for Bhutan Studies.
- Shigehiro Oishi, Selin Kesebir, & Ed Diener (2011) Income inequality and happiness. Psychological Science, 22, 1095- 1100.
- Shigehiro Oishi, Ulrich Schimmack & Ed Diener (2012) Progressive taxation and the subjective well-being of nations. Psychological science, 23(1), 86-92.
What can be done to promote change?
- Robert Kennedy quote: jfklibrary.org/learn/about-jfk/the-kennedy-family/robert-f-kennedy/robert-fkennedy-speeches/remarks-at-the-university-of-kansas-march-18-1968
- Joseph Stiglitz, Amartya Sen & Jean-Paul Fitoussi (2010) Mis-measuring Our Lives: Why GDP Doesn’t Add Up. The New Press.
- Joseph Stiglitz, Jean-Paul Fitoussi & Martine Durand (2019) Measuring What Counts: The Global Movement for Well-Being. The New Press.
- Martine Durand (2018) Countries’ experiences with well-being and happiness metrics. OECD
- OECD statistics website: oecd.org/statistics/measuring-well-being-and-progress.htm
- UK All Party Parliamentary Group on Wellbeing Economics: wellbeingeconomics.co.uk
- Institute for New Economic Thinking: ineteconomics.org
- Network of Wellbeing Economy Governments: wellbeingeconomy.org/wego-new
- Nicola Sturgeon (2019) Why governments should prioritise wellbeing. TED talk.
- New Zealand Government (2019) New Zealand Budget Policy Statement.
- Abhijit Banerjee & Esther Duflo (2013) Poor Economics: Rethinking Poverty and the Ways to End it. Random House.
- Hetan Shah & Nic Marks (2004) A wellbeing manifesto for a flourishing society. New Economics Foundation.
Paying for change
- Abhijit Banerjee & Esther Duflo. (2019) Good Economics for Hard Times: Better Answers to Our Biggest Problems. Perseus Books.
- Fintan O’Toole (2020) theguardian.com/commentisfree/2020/feb/16/even-as-ireland-economy-booms-sinn-fein-win-is-bitter-cry-for-equality
- Melvin Lerner (1980) The Belief in a Just World: A Fundamental Delusion. Springer.
- John Helliwell, Richard Layard & Jeffrey Sachs (2019) World Happiness Report 2019. Sustainable Development Solutions Network.
How do we get there?
- Joseph Stiglitz (2019) People, Power, and Profits: Progressive Capitalism for an Age of Discontent. W.W. Norton (p.141)
- IPPR Commission on Economic Justice (2018) Prosperity & Justice: A Plan for the New Economy. IPPR.
- IPPR (2019) Just Tax: Reforming the Taxation of Income from Wealth and Work. IPPR.
- New Economics Foundation (2019) Change the Rules: New Rules for the Economy.
Good practice and hope
- John Lewis Partnership (2019) Employee Ownership: How to Get Started
- The Guardian (2019) Richer Sounds founder hands over control of hi-fi and TV firm to staff: Chain joins John Lewis in employee ownership as staff get £1,000 for each year they have worked.
- Mondragon: en.wikipedia.org/wiki/Mondragon_Corporation; mondragon-corporation.com/en/about-us/economic-and-financial-indicators/
- International Cooperative Alliance: ica.coop/en
Ethical banking and social investment
- Reliance Bank: author interview with the bank’s COO; reliancebankltd.com/about-us
- Triodos Bank NV: en.wikipedia.org/wiki/Triodos_Bank; triodos.com
- Bendigo Bank: bendigobank.com.au/about-us/
- Grameen Bank: grameen.com/introduction/; grameen.com/monthly-report-2019-07-issue-475-in-usd/
Most websites that offer advice on ethical investing are part of the site of a broker or someone else who is trying to sell you their services for financial advice or fund management: some of the better ones have actually spotted that this is more likely to work if they’ve given their advice in an ethical and unbiased way: this is just one example picked at random from a search:
- AJ Bell YouInvest: Responsible Investing
- Abhijit Banerjee & Esther Duflo (2019) Good Economics for Hard Times: Better Answers to Our Biggest Problems. Perseus Books.
- John Kay & Mervyn King (2020) Radical Uncertainty: Decision-making for an unknowable future. Bridge Street Press.