Our Economy as Enabler of a Good Society

In case you hadn’t noticed, prosperity has returned to Britain once again. Growth is up, the unemployment rate is falling and far from slipping into a triple dip recession, as some were predicting, it turns out we never even experienced a double dip. Listen to certain commentators and this represents a Fukuyamaesque end of debate type moment. Austerity has triumphed and Osborne is vindicated. Job done.

But any cursory reading of history warns against triumphalism in the face of growth- Gordon Brown, ironically a doctor of history, found this out the hard way- and the recovery we are now presented with, far from the systemic and sustainable change the financial crisis demanded, is one built on foundations of sand. Or, as Vince Cable somewhat mildly put it, the recovery is “not what it could have been”.

Of course the real difference is where the surplus goes – new schools and Sure Start or tax cuts for the rich.

The fact that to revive anything like pre-recession levels of growth Osborne has had to rather discreetly implement what Roberto Unger would label “vulgar Keynesianism”, if nothing else should discredit the austerity narrative were being offered.  That this vulgar Keynesianism has taken the form of billions of pounds worth of QE being pumped into the financial sector, the beginnings of another housing bubble through the right to buy scheme along with government subsidies for corporations and banks that have a stranglehold on the economy, shows just how little has changed since 2008. Note to self: of course the real difference is where the surplus goes – new schools and Sure Start or tax cuts for the rich.

Even if we measure Osborne on his own targets: eliminating the deficit, maintaining Britains triple A credit rating and rebalancing the economy, “theres no success like failure” comes to mind when Tories boast about their record.

However, whether or not they ever do meet these targets is largely beside the point.The current economic model is no longer fit for purpose.  Regardless of whether Britains deficit falls in line with Osbornes target in the remainder of this Parliament (it wont), we will not have an economy which works for us, our society or our planet. It will still be systemically rigged against entire demographic groups and remain unsustainable in a planet of finite resources. To change this requires a fundamental change in what is being aimed for and how our economy functions. The economy has to be an enabler for a good society, rather than the ultimate end in and of itself. 

Much of this comes down to prevention over reaction. On inequality, rather than being an afterthought, dealt with in hindsight through minor forms of redistributive taxation, policy should be focused on making the factors which lead to todays levels of inequality impossible. This means a properly enforced living wage, democracy at an economic level as well as a political level and a social security system which provides a decent standard of living for the unemployed or those unable to work. All of this should be based on the not insignificant moral basis that we are all born with an equal right to make the most of the unique talents we have. The lucky – those born rich or with a big brain – have a moral duty to help those born to brute bad luck.

The lucky – those born rich or with a big brain – have a moral duty to help those born to brute bad luck.

Another major factor in preventative measures to tackle inequality is focusing on gender inequality. We have to start recognising the core economy is the economy. Capitalism isnt going to perform well if no one brings up healthy, educated and well adjusted children. Publicly available childcare is a start, but more fundamental change in regards to a shorter working week and much stronger maternity and paternity laws are needed in the long term. These kinds of structural changes which stop inequality before it happens have to take precedent over policies designed in reaction to it.

There also has to be recognition that our current model is entirely unsustainable. The banking sector continues its same reckless practices as if 2008 never happened and is still too big to fail according to the IMF, that bastion of communism.  Meanwhile the recent flooding brought home the reality of a burning planet.  These problems are however more related than one might imagine in regards to solutions.  A financial transaction tax on the banks could raise billions of pounds to help fight climate change, amongst other things. Rather than pumping billions into the banking sector in a failed attempt to get banks lending again we could instead use this money to fund a green new deal, creating millions of new green jobs in every constituency across the UK. 

These are just a few of the ideas needed to provide the radical alternative to perpetual austerity and neo-liberalism currently on offer.  Inaction will inevitably lead to a rupture, as climate change, the banks and rampant inequality are fundamentally unsustainable forces in society today.  As has historically so often been the case, the public is ahead of those making decisions on their behalf on all these issues. The lasting and fundamental equality we seek will only arise when people have more power to decide and do things for themselves.  The stakes are high but with the right ideas and the new forms of organisation and outlets to have our voices heard, this is a challenge we can and must win.  

Photo by Julian Partridge

Prosperity corner

Read more of Lacuna’s series of Perspectives on Prosperity