Do we need to change our economic model?

In the first part of this personal political manifesto I referred to what I termed our world view: a way of understanding the way we experience the world and our position in it; a way of making sense of what we do on a daily basis; and a way justifying, to ourselves and others, our actions and behaviour. Whether we are aware of it or not we all have such a world view. It is what we use to supply meaning and purpose to our lives, and is usually so embedded in our being that we just regard it as common sense. Traditionally this world view was provided by religion. For some of us it is derived from a political ideology. For most people, however, those who have not got strong religious or ideological adherences, this world view is provided by our economic model. In saying this I’m not suggesting that we are all familiar with economics, far from it. Merely that our dominant economic model, some version of capitalism, has so invaded our view of life as to provide this life with meaning and purpose. We measure the success of our lives according to the amount of wealth we have acquired; earning money is our primary goal in life.

“So what?” you ask. Well, in short, this dominant economic model is not only deeply flawed, it is unsustainable. It is driving to us exploit our natural environment through our relentless consumption of natural resources and to poison this environment through our relentless disposal of waste. On a national scale we measure the success of our economy through the GDP (gross domestic product) figure. This figure, which by a long way is the main measure of our national success, is the sum total of everything produced in a country. Or, to be more precise, every item or service produced that has a monetary value attached. It does not take into account unpaid work (looking after our children or an elderly relative at home for example) and it does not take into account money given for no work (through state benefits for example), though it does include work done to clear up after an environmental disaster. So, rather bizarrely, clearing up after a major oil spill contributes to our ‘national success’ whilst parents devoting time bringing up their children does not.

But even worse, this measure of success demands constant growth. And constant growth requires, in some form or another, the constant supply of raw materials – whether this is carbon-based fuel to drive industry, the raw materials to produce clothes and food, or the rare minerals and metals required for modern ICT equipment. However, no form of growth can continue ad infinitum. There is a limit to the resources we can extract from our natural environment, and there is a limit to the amount of waste we can dump into our atmosphere, oceans and land. For these reasons alone we need to think about economics in a completely different way. We need a different way to model our economy and a different way to model our individual success in life.

In a way I think that the main problem with the capitalist economic model is that it puts the cart before the horse. We are constantly told that we need to produce wealth in order to spend that wealth achieving what we need and want. We are constantly told that it’s good that a small minority people, through their financial expertise and entrepreneurship, appear to be accumulating most of this wealth because this wealth will ‘trickle down’ to all of us. This ‘trickle-down effect’ is one of the biggest fallacies of our current economic model. It simply doesn’t happen. The rich continue to get richer and the poor, in relative terms, get poorer. Inequality in most countries, the relative gap between those who are at the top of the financial hierarchy and those who are at the bottom, continues to grow – causing major social and health related problems (for an excellent explanation of this problem read the classic The Spirit Level by Richard Wilkinson & Kate Pickett). Moreover, in a very obvious sense, wealth, in itself, cannot sustain human life. You cannot eat it, drink it or breath it. You cannot take shelter in it. You can use to buy those things, but those things only require money because of the economic system. Wealth is the means to an end, not the end in itself.

So how about reversing this situation by placing the horse in its correct, and most effective position? How about measuring the end rather than the means as an indicator of our economic success? How about the transition to a ‘wellbeing economy’? I strongly believe that we need to redesign our economic model and that the first task should be to agree what are the measures of human wellbeing. The degree to which any economy meets these measures should be the measure of its success. Wealth or money, as a straight forward means of exchange, should simply be the means to achieve this end, not the end in itself. And to start off the debate, could I suggest that we could do an awful lot worse than adopt Kate Raworth’s Doughnut Economics as a model. This has a number of social foundations (such as water, food, health, education, work, housing, social and gender equality, energy, a political voice, peace and justice) and an ecological ceiling composed of a range of environmental factors. The aim of this model is to steer the economy such that it delivers the social foundations without exceeding the ecological ceiling.

For most of us this would not be an easy transition. But just try and imagine what life would be like if each national government, supported by some form of international structure, focussed on delivering these social foundations whilst avoiding the potentially devastating ecological ceilings. Imagine what the world would be like if the dominant world view, the way each of us gave our lives meaning and purpose, was based on such a model rather than the pursuit of wealth? You may say I’m a dreamer, but I’m not the only one.

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