Tag Archives: economic policy

Our current economic models are not fit for purpose. They fail to tackle the social-ecological crisis. 

And people know this.

Since 2008, a pattern has emerged. From Brexit in 2016, to Boris’ victory in 2019, to Labour’s victory in 2024, the Greens and Reform’s ongoing political boom, all these political phenomena share one common thread. 

Frustration. Anger. Resentment towards the status quo.

And rightly so. 

Our political leaders, regardless of political party (excluding the Greens), all talk about “going for growth”. We blindly chase economic growth, but we never seem to ask the question: at what cost? Who does economic growth really serve? 

By following neoclassical economic theory, we create an economic system that can exist in a spectrum between two states: recession or growth. 

Our current economic system is designed so that when both extreme states occur, the most powerful benefit the most, and the poorest suffer the most whilst benefitting the least. 

We are sold the idea that anyone can invest in the stock market, invest successfully, and achieve monetary returns. But not everyone has the luxury to afford an investment portfolio, most people are barely scraping by. So when these companies grow, the returns mostly end up concentrated amongst those who have the largest and most diversified investment portfolios, disproportionately benefitting the richest and most powerful.

When there is a crash, we are told that “the big banks cannot fail”. Large corporations obfuscate by arguing they are the ‘engines’ of economic growth. Such power means they exert sizable influence over our political leaders, because they have the monetary power to  significantly influence a country’s economic outcomes. 

So we bail them out. More of our public money goes into private hands. 

What we are witnessing globally is a gradual, systemic transfer of wealth. Such an economic system is not inevitable. But when we choose to design our economies by following neoclassical, and more specifically neoliberal macroeconomic models, the system strongly reinforces the positions of the richest and most powerful. Such an economy denies the poorest and most vulnerable freedom, and is deeply illiberal.

It can be said that economic growth has taken people out of poverty. “There are millions who are no longer in poverty because of growth”, is a narrative frequently cheered by so-called “think tanks” such as the IEA. They would be right in some developing economies, but to what extent is this true in the UK? 

Certainly in our western, developed economies, there are many across the country who are yet to feel the benefits of economic growth. The Global Inequality Report 2026 paints a sobering picture of increasing global inequality. Trends clearly show increasing wealth inequality in the UK.

In neoclassical economic models, the Solow-Swan growth model shows how economies can theoretically deliver exponential economic growth. This is the dream scenario for our political leaders, because it means they can postpone making the much harder political choice of redistribution of wealth. 

However, the Solow-Swan model is incomplete. It does not account for the importance of exergy to growth, and largely omits the flows of material resources within an economy, which are subject to strict thermodynamic limits. Such a model suggests that economies can grow independently of material flows, with the economy being able to expand ex nihilo, which does not align with physical reality. 

Our economy is a physical, thermodynamic, non-equilibrium system that exists within the biosphere, transforming natural resources into useful products for human consumption. 

The steady-state economy offers a realistic and just alternative grounded in science. It does not reject markets, markets can allocate resources efficiently, albeit with some limitations. What the steady-state economy offers is stability. No booms, no busts. No “growth for growth’s sake”. Growth is only sought with evidence-based, scientific analysis to seek whether it is truly desirable.

We have clearly hit a stage where growth is no longer socially nor environmentally desirable. But we currently exist within an economic system in which growth is intrinsic to success. And this needs to change.

In order to reach a steady state economy, we require:

– The redistribution of wealth to the poorest in our society to have a socially just economy.
– A period of degrowth to have an economy within planetary limits.

Degrowth is a means to an end. It is not recession, nor is it austerity. Such analyses are based on the assumption that our economic system cannot be changed. That is not true. The need is clear, all we require is the political will. There are just and sensible policies which can be pursued to ensure that people’s social and material condition remains stable.