The economy isn't working - for people or the planet. It's time for a new narrative.
//Summary - Level-B2//
Our current economic model prioritizes financial growth over human and environmental well-being, leading to inequality, resource depletion, and social harm. Businesses focus on profit and externalizing costs while ignoring sustainability. Oligopolies dominate markets, shaping society through consumerism and political influence. True well-being depends on internal goods—health, relationships, and purpose—rather than material wealth. A well-being economy would redefine success, shaping markets to serve human and environmental needs. Emerging ideas, such as mission-driven economies and participatory democracy, offer alternatives. Leaders must embrace a new narrative that values sustainability and well-being over endless financial expansion.
1)
28 June 2024 - Predictably, economic growth is at the heart of the election campaign. However, few politicians question what kind of growth we want, how much, or what the purpose of the economy is.
2)
But could our current undesirable outcomes for people and nature be rooted in our economic model and its narrative?
If so, don't our politicians need a new vision and purpose for business? CISL's Director of Corporate Strategy, Ben Kellard, discusses.
3)
The flaws in the current economic narrative:
"How quickly nature revolts
When gold is made her object!"
by Shakespeare
4)
The dominant stories we tell ourselves about the economy's 'point' or purpose tend to focus on making money. Heavily influenced by neo-liberal or free-market thinking, we use financial income as a proxy for success.
5)
The story goes that financial income should be maximised through efficient economic (GDP) and corporate (profit) markets. At the same time, rational, self-interested individuals express their preferences through consumer choices and maximise their income in the process.
The government maximises the private sphere of choice, leaving individuals to choose their ends and intervening only to correct market failures.
6)
So what's the problem? Firstly, because the state doesn't define the common good for society or the private sector's contribution, businesses can easily drift away from meeting society's needs.
Since a servant can't serve two masters, companies are incentivised to prioritise their financial returns over society's needs.
Financial institutions, the owners and managers of capital, reinforce business incentives to maximise economic returns.
7)
Second, as usual, businesses ignore external social and environmental costs, such as pollution, to remain competitive and increase financial returns. Nature and society are assumed to be infinite and stable.
8)
All of this would be bad enough, but it is made worse by increasing patterns of industry consolidation. These consolidations have led to powerful oligopolies that can shape markets and society through political lobbying, labour market structuring, and marketing.
9)
Brands are becoming tools for maximising financial returns by maximising sales volumes.
$647 billion is spent annually on marketing designed to increase demand for 'external goods', such as products and property, that are marketed as critical to well-being.
Life is saturated with the pervasive message that if you don't buy this product (whatever it is), your life will be poorer and more limited.
10)
We are ending up with a high waste, high carbon form of growth where wealth is unequally distributed. Putting the determination of ends into the private domain (individual and market) creates a void that gives oligopolies near impunity.
11)
They shape society's structure and dominant values in their interests, pursuing the insatiable acquisition of external goods and the externalisation of costs to maximise financial returns.
12)
The relationship between means (the market) and ends well-being, at best, is blurred and arguably reversed. The free market narrative shapes the role of economic actors, who shape dominant values and deliver sub-optimal well-being.
13)
Based on dominant values that promote external goods, sustainability is seen as deprivation. We have to give up acquiring things that would otherwise make us happy. But is this true?
14)
Well-being evidence:
'The true perfection of man lies, not in what man has, but in what man is'.
by Oscar Wilde
15)
There is considerable evidence about what makes human flourishing or well-being possible. The components typically focus on 'internal goods' such as health, relationships, good character, education and the arts. External goods enable internal goods.
17)
Empirical research attempts to identify the components of well-being, such as Harvard's Human Flourishing Program, Gallup, or the Skidelskys' book. They identify components such as a sense of purpose, health, good character, strong relationships and security.
18)
The Needs Theory, led by Max Neef, identifies basic human needs. These are classifiable and consistent across cultures and time. Finally, the Wise's historical writings include indigenous cultures, religions, and philosophies.
19)
They emphasise internal goods, such as good character, as central to the best human life and point out how focusing on external goods, such as wealth and power, distracts us from this.
There is growing evidence of our dependence on nature and its benefits for our well-being.
20)
The idea that well-being equals accumulating financial and material wealth is neither actual nor possible for nine billion people. The risk is that nobody wins.
21)
The supposed billionaire 'winners' lose because financial wealth alone doesn't make them happy.
The rest of us lose because we burn out in a materialistic rat race that doesn't deliver well-being either. Nature loses because it is liquidated for financial returns. Is there an alternative economic model that could provide well-being?
22)
The emerging well-being economy:
A well-being economy engages society in defining well-being outcomes (the ends) based on the everyday goods needed for flourishing. Then, it shapes the market (the means) to deliver them.
While there isn't space here to fully explore the complexity of the role of economic actors and policy in this financial model, it is worth highlighting the significant progress that has already been made.
23)
Mariana Mazzucato describes a mission economy in which the government identifies public goods and shapes markets to deliver them innovatively across the public and private sectors.
Jon Alexander outlines how to engage citizens in identifying their priorities and how to deliver them. Kate Raworth proposes an alternative to the GDP model within safe social and natural parameters.
24)
Participatory democracy can complement representative democracies at national and local levels. It can define common goods through plural, transparent, and contested dialogue, drawing on the best of civilisations' heritage and research.
25)
These would shape society's prevailing values, inform effective government policies that shape markets, and encourage organisations to be purpose-driven, delivering products and services that meet society's needs and create meaningful work.
26)
The need for a new narrative:
While there are many areas of progress, like the pieces of a jigsaw puzzle, we lack a compelling, positive alternative story, like the picture on the front of the jigsaw box, that makes sense of all the pieces and our role.
27)
There is an opportunity for a well-being narrative that captures how we are all connected. We are interdependent and depend on nature to thrive. We want to ensure human and natural flourishing; abundant internal goods enable this.
28)
People are purposeful, social, caring, creative, and rational, and they find a sense of personal agency and purpose, informed by societal debates about flourishing, which they achieve through competition and cooperation.
29)
A well-being economy that emphasises internal goods has the potential to enable all to flourish, not just the rich few. Unlike finite external goods, internal goods are abundant and less materially intensive.
30)
In the face of rising regional tensions and the poly-crisis, basing international policy on identifying standard components of well-being - based on evidence and our heritage - and the means to achieve them could provide a common cause.
Will our leaders seize this opportunity for a new economy or settle for more of the same?
The economy isn't working - for people or the planet. It's time for a new narrative.
https://www.cisl.cam.ac.uk/news/blog/economy-isnt-working-people-or-planet-its-time-new-narrative
"The Economy" Isn't What You Think
https://www.youtube.com/watch?v=sEmGFNKWLlw
