Towards an economy that works for people

The election is nearly upon us but few people feel inspired by the choices on offer. There are differences between the traditional major parties but questions of leadership and basic competence seem to matter more than contrasting visions for the future. Even if we do see a substantive choice, we are sceptical about the capacity of any party to take the country in a different direction.

Yet outside the realm of conventional political news, an important debate is taking shape. In essence this is about what kind of economy we want in the medium to long term (2030 seems to be the most popular focal point).

There are several reasons why this is happening:

• We in Britain have emerged from the 2008 recession. The talk is no longer about how to escape crisis but how to avoid future crises and how to lay the foundations for future prosperity.

• Despite a healthy current growth rate, the UK economy is unlikely to prosper in the long term without addressing a number of structural weaknesses (business investment, productivity and balance of trade being the most obvious).

• Regardless of whether the economy performs well according to measures such as growth and employment, the externalities of the current economy in relation to low living standards and high inequality infringe important values such as fairness and responsibility and are, arguably, politically unsustainable.

• Predicted trends, in relation to the impact of ageing, globalisation, climate change and, particularly, technology, threaten to exacerbate poverty, inequality and instability. 

• The tendentious neo-liberal dogma that it would be dangerous or futile to guide the economy in any direction other than where it is led by the hidden hand of the free market is at last starting to lose its grip on our imagination  

• Finally, and this point relates more directly to the RSA’s Power to Create mission, the current economy, even if it makes incremental progress, will continue to deny many, if not most, people the chance to live fulfilling and creative working lives.    

Here, plucked at random from things I have read over the last two weeks, are four quotes that capture this questing for a more substantive debate about our economic future:

John Lanchester on the second machine age:

'It says a lot about the current moment that as we stand facing a future which might resemble either a hyper-capitalist dystopia or a socialist paradise, the second option doesn’t get a mention.'

Matt Sleat on the future of liberalism:

‘And maybe, most importantly, renewing the liberal commitment to resisting all forms of superior power – political, social or economic – might allow for a political discussion about the relationship between economics and politics that doesn’t quickly descend into sterile debates about whether a party seeks more or less business regulation, as if it were a good or bad in itself but instead focusses on the bigger question of what sort of economies 21^st century liberal societies require’

The Fabian Society in its report Inequality 2030:

'...in 2030 living standards and the extent of inequality will be determined by political choices rather than by unstoppable economic forces’

Charlie Leadbeater on the ‘whirlpool economy’

'Stagnation and innovation will often come together as we try to combine the apparently impossible. We will feel as if we are richer (in free and low-cost technology), and yet poorer (in terms of disposable income) at the same time. The organisations we work for become increasingly fluid, flexible and provisional, while the social structure of our society becomes more stubbornly stuck…..Society will become more cautious and more reckless at the same time. What hope is there that we might break out of this cycle?'

So I have decided to make an economy of human flourishing the focus of my annual lecture in July. My thinking is at an early stage and I am writing this post partly to elicit some suggestions for readings and directions of thought.

My initial sense is that the speech needs to address three barriers to believing we can create – to adapt Matt Sleat’s phrase – the sort of economy a 21^st century liberal society requires.

First we need to assert the primacy of politics in determining the shape of our economy. Democratic choice cannot defy gravity nor can one nation hope entirely to control its destiny in a shrinking world, nevertheless we can and should make choices. There are different ideas of progress, of the relationship between economic growth and social advance, and there are radically different routes to prosperity. It may be that none of the major parties have gone anywhere near articulating an engaging and coherent vision of the UK economy in 2030 but this should be just the kind of question that politics is there to explore.

Second, we need to define what would comprise a successful 2030 economy. What are the key measures of human welfare that would tell us that we had made progress? Social justice, well-being, human flourishing, giving care the status it deserves, environmental sustainability; these might all be areas where we would want to define minimum success criteria.

Third, we need a high level strategy for how we get from here to there. Broadly this is about the kinds of governance, the kinds of (market based) economic systems and the kind of civic values and norms we need to interlock to enable a step change in human welfare. I suspect I will return here to the ideas about what makes societies resilient and dynamic which I laid out in my 2013 annual lecture.

The debate over the kind of economy we can and should build for 2030 is still too nascent and abstract to be influencing the General Election but it is growing. Over the coming years or so I want the RSA to play an important role in opening up that debate and making it real to anyone interested in our country’s future.