Fresh thinking required

As global climate concerns underscore capitalism’s flaws, who will lead the transformation of economics?

“A toxic combination of 15 years of low economic growth, and four decades of expanding inequalities, leaves the UK poorer and falling behind its peers” – not my analysis but that of the highly respected Resolution Foundation. And they go further, ‘Productivity growth is weak. Public investment is low. Wages today are no higher than they were before the financial crisis.’.

The view from the doorstep concurs, “We now pay far more for much less to enable wealth to be extracted by the few.”. That general despondency contributed massively to the anti-Tory sentiment that yielded so many LibDem Council seats earlier this merry month of May. But few local campaigners could confidently answer the question that will be asked time and again before the General Election. What do your lot think they can do about it?

Our parochial economic despair is symptomatic of a far larger malaise – an existential climate crisis. Mass migration is inevitable as large parts of our world are laid to waste, as nature is depleted, as societies collapse, wars rage, and coastal habitats shrink.

On top of a self-inflicted Poverty Pandemic and global unrest, we seem stuck – fresh out of imagination. We need to tackle the climate crisis and reverse societal decline. Fortunately, there is no shortage of guidance, but there is a political vacuum where none of the main Parties dare tread – rethinking our economic foundations. There is near zero confidence that anything can be done.

Consider the significant learnings of the past 35 years – starting with the ground-breaking work of Nobel Prize-winning political economist Elinor Ostrom. Her 1990 work ‘Governing the Commons’ disproved the conventional (and convenient) ‘tragedy’ assumption that humans will always overuse any asset that is freely available. Elinor’s studies mostly carried out in the 1970’s debunked the neo-liberal ‘free-market’ script and reasserted the role of society. “Far from tragic”, a later disciple wrote, “she realised that the commons can turn out to be a triumph, outperforming both state and market in sustainably stewarding and equitably harvesting Earth’s resources.”

What started as rare but rigorous academic study has now evolved into a flood of fresh thinking – from Ellen MacArthur’s ‘Full Circle’ to Tim Jackson’s ‘Post Growth: life after capitalism’ via Kate Raworth’s ‘Doughnut Economics’, Mariana Mazzucato’s ‘Mission Economy’ and Jason Hickel’s ‘Less is More’.

Rebellions gather fuel in untended spaces. Despite an abundance of potent advice, signs of anyone reshaping the economic landscape are not yet apparent. The dramatic news pictures of a German street clogged with wrecked cars, broken trees, and assorted flood debris, earned the alternative title – “The last time this road was blocked you blamed XR Climate Protesters”. The body politic is unmoved.

Why are the odds stacked so formidably against such a major rethink? The true costs of climate change are only just dawning on leaders, but that persistent doorstep question, ‘What do your lot think they can do about it?’, will not go away.

Largely unreported by UK media, and with few UK delegates, the Global Solutions Summit in Berlin featured a paper, ‘Rethinking the Theoretical Foundation of Economics’ and it will feature again at an education conference in the USA in early June. These are early academic days but worth noting because the authors have respect for the apparent (but illusory) strengths of capitalism and the need to evolve a truly robust framework for transition to a solid foundation – but they also realise that tinkering within the prevailing ‘neo-classical’ religion is a hopeless cause.

This search for pro-social economics is much influenced by Darwin’s theory of evolution: deeply disturbing in its time and still not accepted by fundamentalists. Close observations of nature and evolutionary biology are not a million miles away from the heap of evidence now challenging capitalist conventions. It is too early to be sure that the research will bear fruit in time to stave off global climatic collapse, but we must still answer the doorstep question, “What do your lot think they can do about it?”.

Amid the prevailing malaise, expanding inequalities, and climate concerns, how can our Party not take on leadership, ask the questions, build global alliances, and work collaboratively with the brightest minds, to engender the fresh thinking so urgently required?

* David Brunnen is media liaison officer for Fareham Liberal Democrats. He writes on Municipal Autonomy, Intelligent Communities, Sustainability & Digital Challenges.

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22 Comments

  • Jenny Barnes 27th May '24 - 4:02pm

    It’s clear that the human population is in overshoot. Well over the carrying capacity of the Earth. However, there is some goodish news. Fertility rates are dropping. Most richer countries now have fertility rates well under the replacement rate of 2.1 per woman China is at 1.1, US 1.6, South Korea 0.8. With these rates, although some countries still have higher rates (nigeria 5.2) World population will start to drop – I suspect a population of around a tenth of what we have now moght be supportable.
    On climate change, fossil fuel usage will reduce as it becomes more and more expensive to obtain, and therefore less useful. Whether that will help much as we head for increases of 3 to 5 degrees over the century is moot, but at least it’s in the right direction.
    Apart from that, the planet will be just fine, eventually.

  • Mary Fulton 27th May '24 - 5:39pm

    An interesting article and, I confess, not one I would expect to be published on a Liberal Democrat website. Socialism is often criticised for coming in so many varieties, from Marxist-Leninist state planning, to the Maoist system of communes (though more akin to local government units, such were their size and scope), to the socialism of the Co-operative movement. With Labour having abandoned any pretence of being a socialist party, there is a desperate need for some party to offer an alternative to the capitalist model currently supported by the three main parties (ignoring the SNP). Is the Liberal Democrat party willing to seize that ground and become a force for radical change? I doubt it – especially as it it attempting to mainly capture Tory seats in under 6 weeks – but I welcome this article as starting an important conversation.

  • Steve Trevethan 27th May '24 - 6:52pm

    Thank you for an outstanding article promoting deep and true Liberal Democracy!
    You have lit a marvellous match!
    May we hope that H. Q. will use it to light a pro-world and truly prosocial fire!

  • David Brunnen 27th May '24 - 7:31pm

    Thanks, Mary, for your positive, if surprised, welcome to this topic. The underlying theme is hardly original – but there is a deeply embedded reluctance to admit that Economics, as practiced, is far from a science and more akin to a religion.

    That is why I find the parallels with Darwin so compelling – and for many that is truly shocking. The anger that was unleashed in Darwin’s time is still rumbling on amongst fundamentalists, and who would dare point out that we have almost all been led astray?

    The challenge to find some way to transition to a firmer foundation is beyond calculation but there are a host of clues for those prepared to study.

  • David Brunnen 27th May '24 - 9:46pm

    Jenny – ‘the planet will be just fine – eventually’. The mass of the globe may be fine, but it’s all forms of life that’s under threat.

  • Mark Frankel 28th May '24 - 8:19am

    How does this translate into concrete policies? One might be to re-join the EU, to reduce fruitless, emissions-generating frictions such as the new fingerprint travel rules.

  • Chris Platts 28th May '24 - 9:23am

    Agreed this worth further discussion. We are over consuming on the basis we must keep commerce going. This damaging the environment and leading to the problems we face. We in the wealthy part of the world need to stop talking about growth and what GDP figures are doing and more to see we can live with certain things.

  • David Garlick 28th May '24 - 10:58am

    It’s now or never for the planet and for us. Population predicted to peak at the end of the century by which time …

  • William Wallace 28th May '24 - 12:36pm

    Thanks for this excellent article. After the election Liberal Democrats need to engage in an active debate on the economics of transition, drawing on the extensive debate among academic economists and other social scientists that has not yet filtered through to the political world. We’ve got much better as a party at campaigning, but have been neglecting broader analysis of why we are campaigning!

  • David Brunnen 28th May '24 - 2:07pm

    Thanks Steve ‘marvellous match’ Trevethan – making a monetary bonfire will require a good many sparks and the patience to keep the fire going! Right now the key is to demand better – to be the only party to openly recognise the deep flaws in conventional economic thinking and reject the overly religious, faith-based, addiction to self-destruction.

    And, Chris, ‘let’s discuss’ Platts: the debate has been decades in the making but the learnings have still been lost on the body politic and the vast majority of people. Collectively we have let go of things we have failed to grasp! There is an audience for our rejection of the capitalist creed. It will be shocking and bewildering, just as religious zealots were dumbfounded when Darwin observed evolutionary adaptation. Sadly it has taken current and impending climate disasters to blow away the myth-takes. Meanwhile the growth addicts need to know that growth must be purposeful for all and not just those who choose to be competing for 1st place. Go, tell it on the mountain.

  • Jenny Barnes 28th May '24 - 4:35pm

    “growth” will solve all these problems. Unfortunately, it relies on an ever increasing consumption of fossil fuels, which is bumping up against both reducing availability and increasing cost and the climatic implications. We have had only minimal growth in GDP per capita since 2008- when pundits were predicting 200$/bbl oil soon. It didn’t happen because the economy cannot support energy at that price. Wind and solar will require the expenditure of very large quantities of fossil fuels to make the cement, steel, glass, copper and other materials to produce the solar panels and windmills.

    “all forms of life that’s under threat.” I don’t think so. How about the life around hydrothermal vents on places where the tectonic plates are moving apart? I think that once humanity has disappeared, most life will recover perfectly well. There are bound to be a large number of extinctions, like after the chixculub asteroid. Much material for future archaeologists, one feels.

  • Nonconformistradical 28th May '24 - 5:03pm

    ““all forms of life that’s under threat.” I don’t think so.”
    It’s fair comment that Planet Earth has continued each time after several mass extinctions, but the life forms which have developed after each mass extinction have mostly been very different.

    “I think that once humanity has disappeared, most life will recover perfectly well.”
    Are you expecting humanity to disappear quietly?

  • As far as I see it, the prevailing problem with ‘solving’ capitalism is how we go about doing so while maintaining a strong, principled protection for individualism and individual rights – including the rights of property – on which the very foundation of liberalism rests. Embracing socialist positions on ‘the commons’ and a large role for the state in redistribution is not only counter to the basic tenets of our tradition, but worse in a pragmatic sense, it makes us indistinguishable from Labour to the electorate. Why have socialism-lite when one can go full-blown authoritarian socialist instead?

  • Denis Mollison 29th May '24 - 7:53pm

    @Liam Birch
    “full blown authoritarian socialism” ??
    Labour under Starmer are certainly authoritarian, but equally certainly no longer socialist.
    And the ideas of Beveridge and Keynes are hardly socialist, nor Mazzucato’s ‘The Entrepreneurial State’ or Raworth’s ‘Doughnut Economics’. 🙂

  • Peter Martin 30th May '24 - 11:41am

    @ Liam,

    “…..maintaining a strong, principled protection for individualism and individual rights – including the rights of property – on which the very foundation of liberalism rests.”

    This sounds superficially plausible until we start to think about it.

    If we are in a job and earning an income we’ll likely be paying income tax. We might think what we earn is our property but the State takes a different view. Lib Dems, and even the Tories , side with the State on this one.

    If the State can take a percentage of what we earn why can’t it take a percentage of what we own? Many would advocate a wealth tax.

    70% of our land’s current ownership can be traced back to the re-distribution of land and wealth after the Norman conquest?

    Another significant source of historical wealth would include the ill-gotten gains of the slave trade

    Is this fair or “liberal”? It’s really a matter of opinion.

  • Nonconformistradical 30th May '24 - 12:03pm

    “If the State can take a percentage of what we earn why can’t it take a percentage of what we own? Many would advocate a wealth tax. ”
    Provided the burden is distributed according to ability to cope with it.

    The freeze in tax thresholds and rates is dragging more people into paying tax at the lower income end – while the really well off and high earners are let off.

  • To my mind, one ethical issue with a wealth tax is that, if your wealth was acquired legally, then you probably already paid tax on it when you first acquired it (either as income tax, or as inheritance tax or capital gains tax etc., depending how you acquired that wealth). I’m not convinced that paying tax on something that you’ve already paid tax on is reasonable.

  • Peter Davies 30th May '24 - 4:46pm

    @simon R. You probably haven’t paid Inheritance Tax (unless you’re dead). You probably won’t even inherit from someone who has unless they were quite rich. There’s a very good chance you’ve never paid Capital Gains Tax either as it has a separate allowance and more holes than Blackburn.

  • Denis Mollison 31st May '24 - 8:47pm

    Richard Murphy has some well thought out ideas on how to tax wealth – see taxingwealth.uk

  • Peter Davies 31st May '24 - 11:43pm

    @Denis. Most of his points are not actually taxing wealth.
    6) Investing £1 billion in HMRC so that it might collect all tax owing by the UK’s 5 million or so companies when 30% of that sum goes unpaid at present might raise £12 billion per annum.
    Is very hard to attack from either left or right.

  • Denis Mollison 1st Jun '24 - 12:29am

    @Peter
    You’re quite right – Murphy starts by explaining why direct wealth taxes are not the best way to get the wealthy to pay their fair share of tax. Hence the emphasis on collecting taxes that are currently evaded, and on ‘leveling up’ so that the same tax is paid on dividends and caputal gains as on ordinary income.

  • Peter Hirst 8th Jun '24 - 12:52pm

    We need a rethink of how our economy operates going forward. Sustainable growth includes renewable energy, more locally grown low input food and encouraging more home grown tourism. For exports new technology, services and IT merit consideration. Everything imported requires a similar value to be exported just to remain in balance.

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