Last week the IPPR, a progressive policy think tank, published a new report, ‘A time for change: A new vision for the British Economy’, which argues that “the economy we have today is creating neither prosperity nor justice. This is not inevitable, but the consequence of decisions made in recent decades…we can choose to change it, if we have the ambition and determination to do so”.
The commission responsible for this report includes representatives from business, civil society, trade unions, academia and the Archbishop of Canterbury and the report got some good media coverage as a result. At 122 pages and with loads of charts, it’s a great summary of all the major economic trends in the UK. A few snippets to whet your appetite:
- Since the global financial crisis, economic growth as measured by a sustained increase in GDP per capita is no longer associated with an increase in wages, with real weekly earning still well below pre crisis levels. (see figure below).
- Almost a million people in the UK were working on zero hours contracts in 2016
- The report shows that UK productivity (output per worker) has stalled, and is one of the lowest compared with other advanced economies, but not for all firms, the difference between the most productive and least productive firms is the highest of the sample countries.
I think this report makes a good contribution. It summarises a bunch of economic trends and uses this evidence to show not just that the economy needs to work better than it currently does for the majority of people, vulnerable people in particular, but also that because so many indicators are showing such ominous trends, there is a powerful case for a radical re-visioning of our whole economy and its policies, not just policy ‘whac a mole’.
It’s an interim report and the idea is that the debate it generates will shape the proposals for the way forward which are due in a report out next year. So with that in mind, I wanted to appreciate the work so far, but also flag three important blind spots from the report that really should be central to the vision going forwards.
- The rest of the world matters too. The report presents UK data alongside, or ‘versus’ other advanced economies and talks about the UK’s competitiveness for exports and investment. But the vision for the UK must also appreciate the importance of rights, economic justice and safety and security for people in other countries and those people moving between them. The UK exporting arms to Saudi Arabia for example doesn’t just affect the UK’s current account balance, but can also be lethal to citizens in Yemen. The commission should also recognise the need for global collaboration (rather than competition) on issues like climate change and tax dodging.
- Gender inequalities are not just about the gender pay gap. Despite messaging on the need to close the gender pay gap, the difference between men and women in terms of wealth, income and quality of work and wages is not well documented in the report. Moreover, to achieve what they call a good economy, which ‘allows each of us to flourish’ the commission needs to go further to explore gender based inequalities throughout society, including for example violence and responsibilities for care work, recognising that all public policies can have a differentiated impact on men and women.
- Productivity of what for what? The trends around stagnating productivity are quite compelling and get a lot of attention in the report. However seeking an increase in productivity in and of itself, must be qualified by defining productivity appropriately, particularly the output side of the input-output equation. The report says that we need a clearer understanding of the goals of economic policy and that GDP is an insufficient measure. This appreciation as to the importance of what we measure and what it means for people and planet should also be applied to the ambition for increasing productivity, particularly as it is something that the UK Treasury has already endorsed in its response to this report.
Overall, this is a very welcome report at a time when we need momentum to push for a constructive and inclusive vision for our economies all over the world. And it’s great to see an influential think tank and opinion leaders contributing to this conversation. With momentum in mind though, I would challenge the title of the report, which suggests we need a vision that is new. In fact, there are lots of ideas and principles that already exist that we should build on. In the report An Economy for the 99%, which I authored in January promoting a Human Economy, I suggest that:
“Far from being radical or brand new, this vision for a human economy is rooted in principles and values that have long been central for people, communities and movements all over the world. From feminist economics, which recognizes that justice, sustainability and care are of central importance, to ecological economics, which has long recognized the interdependence of human economic and natural eco-systems and the need to value natural capital, to the ground-breaking work of Amartya Sen, there are many established principles and concrete examples of success on which the concept of a human economy is based. We can also see these principles echoed in most of the world’s religions, in what neuroscience tells us makes our brains light up, in what psychology tells us people really need to live well and in what most people, when they have the chance to stop and think, believe really matters.”
So given that this is not new – let’s get on with taking it to the next level…