Economics

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.

1: From Moral to Market Sentiments
2. From Credit Crisis to Resilience
3. From Covid Crisis to Renaissance
4. From Climate Crisis to Real Prosperity

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.

IPPR Commission on Economic Justice (2018) Prosperity & Justice: A Plan for the New Economy. IPPR.

Economics and wellbeing

“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

Wealth and wellbeing

What can be done to promote change?

Paying for change

How do we get there?

Good practice and hope

Employee-owned businesses
Ethical banking and social investment

Taking action

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:

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