Policy-making at all levels needs to be more inclusive and less dominated by the powerful and wealthy, while there is a need for a paradigm shift in problem solving at the global and national levels.
Policy-making at all levels needs to be more inclusive and less dominated by the powerful and wealthy, while there is a need for a paradigm shift in problem solving at the global and national levels.
Economic science has dominated public policy since the 20th century. Debate has broken out between “Keynesian” economists and “Friedman” economists: between “welfareists” who see the need for a government hand in the economy and “monetarians” who want governments to let private entrepreneurs loose and be “invisible”. “Give hands” yields good results for all. Both sides agree that growth in GDP – the size of the economy as measured in currency terms – is essential.
shift needed
Visionary systems thinkers in the Club of Rome called for an awakening in 1972. He showed that the pursuit of GDP growth was destroying the Earth’s ability to renew itself and provide resources for unbridled economic growth. He introduced the health of the planet in the calculation of profit and growth. Meanwhile, economists consider the natural environment external to the economy. Arguments by communities to protect it have been dismissed as “ease of doing business” and barriers to GDP growth.
By the turn of the millennium, advocates of unbridled private enterprise had prevailed. Wherever the “Thatcher-Reagan-Chicago” model of neo-liberal economics prevailed, the needs of citizens earning their livelihood from work, not investment of money, were included in national economic policies. The 2008 global financial crisis exposed the fragility of inadequately regulated markets. The governments of the G7 (later G20) collaborated to stabilize the financial system. They salvaged “hugely failed” institutions, while millions of ordinary citizens, who lost homes and livelihoods, were barely compensated. In fact, some solutions to stabilize the global financial system, such as the austerity package imposed on Greece, have hurt ordinary citizens even more.
While the ideology of “minimum government” with a balanced budget and low inflation continues, there have been waves of protests around the world. Citizens complain that the global financial system is unfair. It protects the interests of the big corporations and the wealthiest while ordinary citizens are left behind. There is a growing demand to include the needs of the ‘people’ in economic policy. The “3P” slogan – People, Planet and Profit – calls for a paradigm shift in economics.
out-of-box economics
Provides an outline of five systemic solutions to improve people, planet and benefit together Earth for All: A Survival Guide for Humanity, The guide has been collaboratively prepared by economists, ecologists and social scientists. They do not model the economy as a closed system as macro-economists do. Following the Club of Rome, their ‘whole systems’ model includes feedback loops between the economy, the natural environment and social systems. In addition, it incorporates empirical data from diverse sources.
There are five tracks for their solution: ending poverty; addressing gross inequality; women empowerment; Making food systems healthier for people and ecosystems; and transition to clean energy.
If the current form of the solution continues, report projects result in this century. It compares them to an alternative approach that would accelerate systemic change. The current path is called “Too Little Too Late”; Second, the “Big Leap”. Business as usual for the current profit, with lots of talk of “goodness” but insufficient systemic change, is making the world miserable for the next generation. The model suggests that it will lead to environmental and social collapse at the end of this century.
The “Big Leap”, on the other hand, could avert a catastrophe. This does not require the success of new technology. In fact, both, “Too Little Too Late” and “Big Leap”, are based largely on the use of known techniques. The difference in the two scenarios lies in equal access to technologies, and the way technologies are incorporated by local actors into solutions tailored to their own contexts.
“Too Little Too Late” preserves the current unequal distribution of wealth and power. (The model predicts that by 2050, on its current trajectory, India will be the world’s most unequal society.) On the other hand, the “Big Leap” develops a more equitable distribution of economic wealth and social power; It avoids the need for disruptive political revolutions.
mistrust in institutions
Two innovations in the model are the Social Stress Index and the Average Well-being Index. These, the authors say, “allowed us to hypothesize that policies related to income redistribution may cause social tensions to rise or fall. We believe that if social tensions escalate too far, society may be in a vicious circle.” where a decline in confidence causes political instability, economies stagnate, and welfare declines. In that case, governments will struggle to deal with rolling shocks, let alone long-term existential challenges such as pandemic risks. , climate change, or the ecological challenge”.
India will host the G20 in a very chaotic world. Global governance is broken. The powerful fix the rules of the game at the world level and at the national level. They also control the conduct of deliberations: the agenda, which will be included, and retain their power to veto.
Social tensions are already very high in many countries. Their governments are unable to find appropriate solutions through traditional “democratic” processes, through elected legislatures, competing political parties, even public referendums. There is growing disenchantment with democratic institutions, even in democratic America and Europe. Authoritarian governments are coming to power in many countries, often supported by citizens as an alternative. “The socio-political world will break into more pieces before the Earth gets too hot,” the report suggests. “Because the ways to solve global problems are considered unfair. The voices of the less powerful are not heard.”
People are not just numbers, nor are they the only resources for the economy. Policy making needs to be more inclusive and less dominated by the powerful and wealthy at the top. On the economic front, linking monetary policy with fiscal policy is necessary but insufficient. GDP should also be linked with nature and society.
There is a need for a paradigm shift in the process of problem solving at the global and national level. From a vertical process of experts at the top trying to understand complex systems through numbers and then imposing solutions on people, to a lateral process of problem solving through discussions between different disciplines and dialogue between experts and citizens.
Arun Mara is President of HelpAge International and author of ‘Transforming Systems: Why the World Needs a New Ethical Toolkit’.