We have a once-in-a-generation opportunity to redefine our economy and our generation must not let this slip.
None of us needs reminding that we live in politically turbulent times. But in the last decade, the greatest political failing of all has been the inability to get to the bottom of what is fuelling this restlessness. As a result we have paid the price: disillusionment with the system has shaken society and in recent years has risen to centre-stage in our elections, the media and ultimately around our kitchen tables.
In this current political climate, it is critical we ask two questions: ‘what is driving society apart?’; and following this, ‘what are the big ideas that can bring society back together?’ I take the view, the first and most important place to begin is our economy. And like it or not it is relevant to us all.
In an attempt to shed light on these two questions, I am writing a five-part series investigating the causes of this restlessness alongside the ideas that can leave us hopeful for our future. This will run in tandem with Economics for Change’s campaign #Time4Change that seeks to engage young people in this very conversation.
But why is this an important conversation? Well, I believe ‘economic disenfranchisement’–the feeling that the economy is no longer working for you–is currently this country’s greatest divider. The IPPR Commission on Economic Justice provides compelling evidence as to why this feeling is so widespread. In the UK, the majority of people are no better off than they were a decade ago. In fact, the 2010s are forecasted to be the weakest decade for average real earnings in 200 years. But economic issues go back further than the 2008 crash: over the last 40 years, only 10 percent of national income growth went to the bottom half of the income distribution. The UK is the fifth most unequal country in Europe in terms of income. With respect to wealth inequality we are even worse. Productivity in the UK is 13 percent below the G7 average. Chronic low pay means the majority of people living in poverty are from working households. A decade of austerity has left our public services in constant crisis management. No wonder there is such a palpable sense that this is a broken system.
Yet, if these weaknesses in the UK economy were not pronounced enough, they are only set to worsen as the intertwining forces that shape our world get stronger: from globalisation and unprecedented corporate power to technological, environmental and demographic change. However, instead of standing dazed by the sheer scale of the challenges facing our world, we must acknowledge the enormous opportunity that lies before us.
This is the once-in-a-generation opportunity to redesign how our economy operates. We cannot afford to let this slip.
Today, capitalism has reached a crossroad—the economic consensus has fractured. And this is being acknowledged on the left and the right of UK politics. An economic fracture of this magnitude is a spectacle only seen twice in the last century, during Atlee’s and Thatcher’s governments. Both times this gave rise to a dramatic change in economic policy. But right now, we are not embracing this opportunity: on one side too many fear change as they defend the current system, looking back on its success in globally lifting billions out of poverty. While on the other side, there’s a growing appetite to abolish all economic order and abandon competitive markets. These views miss the point; economic change must and can happen, but progress can and will happen under a redefined capitalist framework.
That is why, in this series, I want to move the debate beyond ‘capitalism’ vs ‘socialism’ to an explicit discussion of what a ‘modern capitalism’ would look like. Drawing from the Commission, I want to centre the idea of an ‘modern capitalism’ fit for the 21st century around how it can excel in delivering prosperity and justice. Challenging the politically and economically dated view that they do not go hand-in-hand. I will consider the umbrella subjects of inequality, sustainability and a braver government. The aim of the series is to kick start a fruitful discussion on both the diagnosis of our problem and the big ideas looking to solve them. As a robust debate on the future of capitalism could provide us with a cure to unite our deeply divided society.
Sam is the President of Economics for Change.