I spent many hours researching online, read articles and books looking for a new economics suitable for application for the 21st century. Current economics as taught to students of economics in universities seems woefully out of touch with the global crisis.
Through extensive reading, taking notes and much reflection, I drew upon the insights of various economists world-wide, who recognise the urgent need for change.
LIST OF THEMES
Britain’s Major Economists
Too Big to Succeed
Government at Home
Work, Production and Environmental Impact
Cuts in the Rate of Income Tax
Best Minds to Work Together
Summary and Conclusion
This critique offers a general overview and naming specific priorities needed for what some eminent economics refer to as a Steady-State Economy to put an end to the addiction to economic growth, which is rapidly reducing the quality of life for billions, diminishing natural resources and intensifying an overheated Earth at huge expense to all forms of life.
I have assembled potential areas for major change which contribute to moving on from the conflicts of left, right and centre in politics. Far too many wise people in party politics never get the opportunity to offer their knowledge and expertise because they do not have a position in the government. Sophisticated computers, artificial intelligence and statistics have failed to provide reliable and trustworthy economics. We need wise minds to come together.
We have endured for a century or more two worn out economic debates between capitalism for the private sector and state socialism for the public sector. They have both led us into economic cycles of growth, recession, stagnation, inflation, deflation, spiralling costs, rise and fall of unemployment and more.
I also focussed on the application of current economics in the English-speaking world under the influence of founders of contemporary economics.
Britain’s Major Economists
Influential economists in the 19th and 20th century lived in the UK. Some shared similar thoughtful conclusions about endless economic growth.
Adam Smith (1723-1790), father of economics, pointed to economic stability. He said, “Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains.”
“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
John Maynard Keynes (1883-1946) said: “The difficulty lies not so much in developing new ideas as in escaping from old ones.”
On another occasion, he remarked: “Markets can remain irrational longer than you can remain solvent.”
Keynes also commented, “When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals.”
Karl Marx (1818-1883, German), who lived in London, wrote: “Capital is money, capital is commodities. By virtue of it being value, it has acquired the occult ability to add value to itself.”
He commented, “The will of the capitalist is certainly to take as much as possible. What we have to do is not to talk about his will, but to enquire about his power, the limits of that power, and the character of those limits.”
Victorian liberal philosopher, John Stuart Mill, (1806 – 1873), also a student of economics, said: “The increase of wealth is not boundless: that at the end of what they term the progressive state lies the stationary state, that all progress in wealth is but a postponement of this.”
Ernst Schumacher (1911-1977) was a German statistician and economist for UK government, who advocated human scale economics through decentralisation. The Times Literary Supplement ranked his 1973 book Small Is Beautiful: A Study of Economics as If People Mattered as one of the 100 most influential books published since World War II. He adopted the approach of Buddhist economics with its emphasis on non-violence, development of the quality of life and acts to support the welfare of others.
He lived in Burma (Myanmar) in the 1955 where he discovered the integration of Buddhist economics, culture and spirituality. A decade later he started speaking and writing about Buddhist Economics. His experience inspired Small is Beautiful. (I will write an essay for the blog on Buddhist Economics and the Noble Path in upcoming weeks).
Too Big to Succeed
We were told in the crash of 2007-2008 the banks were “too big to fail.” Central government and central banks have become too big to continue.
Both must shrink significantly in size. A small government with small banks in various regions of the country would include direct democratic participation of residents. This approach would include regular voter participation in major decisions employing features of the Swiss model of democracy.
Contemporary politicians, bankers and economists never stop talking about economic growth, even though it leads to greater environmental degradation and greater increases in wealth inequality, such as in the USA, along with cycles of inflation and recession. We need to establish a Steady-State Economy starting with decentralisation of the economy and taxation.
In the current scheme of things, we witness a consequence of economic growth and decline. It used to be referred to as boom and bust. We witness poverty, food banks, hungry children and personal debt in households.
The gap between rich and poor has reached the highest levels in the UK since the late 19th century despite decades of economic growth and sudden crashes. Economic growth shows the top 10% finished 2018 with 45% of national wealth, while the poorest 10% held just 2%
Big government and big business/banks must take responsibility for promoting greed and encouraging debt. A steady state economy shrinks the size of big government and big corporations. Such corporation resist competition, swallow up the smaller businesses and use an army of lawyers to avoid taxation. Governments develop antitrust laws to ensure fair competition for the benefit of consumers to ensure lower prices and better products but anti-trust laws rarely get applied to powerful corporations.
These laws seem weak. The government seems unwilling to challenge the corporate domination of the market, predatory business practices and big businesses who divide the market up between themselves. Examples of questionable corporations include Facebook, Google, Microsoft and Apple who have immense market dominance Such corporations quickly snap up potential competitors to maintain their control over the market.
The new economy requires healthy competition in the business world free from huge takeovers to reduce competition. Small is beautiful.
Meanwhile people, creatures and natural world suffer through corporate exploitation of habitats and resources to maximise power and profit.
We live in times of radical upheaval – pandemics, an over-heating Earth, wars, over-population, powerful political tyrants, elected and unelected, unaccountable, narcissistic billionaires spending on wasteful vanity projects and more.
A shift from 19th– 20th century economic growth, and Keynesian/neo-Keynesian economics, to 21st century Eco-nomics:
- A Steady-State Economics, Eco-nomics and Post-Economic Growth points the way to a new kind of economics requiring international co-operation and national change.
- A Steady-State Economy moves away from maximisation of production/selling of goods for profit to development of quality of life for people, animals and support for the natural world.
- A Steady-State Economy offers an alternative to economic growth and economic decline. We could also call it a 21st Century Eco-nomy, Reconomy or Equa-nomy – a radical alternative to economic growth.
This is also a shift from the exploitive model of globalisation serving the rich nations at the expense of the rest of the world to international co-operation.
UK is the fifth largest global economy in the world after China, USA, Japan and Germany. Many low paid workers in the public and private sector in the UK live in debt, anxiety and increasing numbers rely on food banks.
A willingness to downsize the excessive demands of the rich nations will contribute to reduction of exploitation of workers in poor nations, alongside the destruction of the natural world and mining of resources.
Rich nations cancel debt burden of poor nations.
Block oligarchs and the superrich from overseas buying large properties for occasional use and football clubs etc for their personal enjoyment.
Current global market prices/profitability fail to reflect the rapidly declining resources and the low income/working/environments/indoors/outdoors of citizens in poor nations who support the lifestyle of the rich nations. Rich and poor nations must develop a new model of trade.
Free movement of people worldwide for work. Citizens in any country can live/work/retire in any other country.
Recognises support required for global citizens to have opportunity for education, health, medicine, a clean environment and protection of habitats for people and creatures.
Set ceiling on number of kilometres for flying per year for holidays and business trip to reduce carbon emissions.
Government at home
Four UK countries, England, Northern Ireland, Scotland and Wales, can vote for independence or inter-connection.
Economics shifts from large, central government to regional governments with co-operation of private/public sector who know the needs of the region.
A small national government would focus on decentralization of power, finance and cultivate expertise around the country.
All taxes set by regional governments not by central government.
Small central government and regional government guards against inflationary pressures when prices rise due to production costs, usually due to raw materials and excessive increases in wages. Inflation reduces purchasing power so available money has less value. A Steady-State Economy can guard against swings in the economy.
Encouragement of job sharing for those with similar skills.
A breakup of monopolies, huge corporations, powerful businesses and social media empires. This creates a wide range of small businesses to offer greater choice and greater diversity to consumers. Small regional government would support entrepreneurial initiatives and small business to benefit the local economy.
Stable-State Economics can work for: Small government. Small banks. Small businesses. Small Families. Small is Beautiful, wroteE.F. Schumacher, the German economist.
A shift away from current model of democracy of the two-party state. Using proportional representation, voters elect a small Government of Unity to decentralise power and regionalise fiscal policy throughout the country. (Fiscal policy: Use of government revenue and expenditure to influence a country’s economy).
Voters elect the Ministers in the Government of Unity rather than Prime Ministers choosing his/her Ministers, often out of loyalty and friendship rather than expertise.
Develop fiscal policy for a healthy eco-system of land, water, air and farmland. Enable widespread use of land for allotments to help establish self-sufficiency in food production. This would reduce reliance on big supermarkets and the environmental impact of overseas food.
Work, Production and Environmental Impact
Production measures environmental impact with use/prices adjusted accordingly. Benign production takes priority.
Licenses for mining/factories etc not provided for wasteful production of consumer goods, packaging and transportation.
Production must serve needs of people, animals and environment rather than personal and collective greed.
Redress the imbalance with work to cut back on working 50 or 60 hours a week while others remain unemployed.
Legislation to reduce the gap between rich and poor in the country. There would be a maximum of 20 times difference in annual income between highest paid in the public/private sector and the lowest paid. This would mean a minimum and maximum income.
In 2020, CEOs in the UK were paid more than 200 times the wages of most workers. In the 1950s, average CEO was paid about 20 times more than the typical worker’s pay.
A worker who earns £25,000 per year enables the boss or board members to earn £500,000 per year. When salaries for the executives increase so do wages for the workers. A similar principle applied with bonuses.
Citizens of all ages learn to reflect develop moderation, healthy diet, complementary medicine, community. People would spend more time outdoors, exercise, gym, mindfulness, well-being, and group sharing.
Businesses and government would cooperate to develop communities and basic homes for one person, two people and families. Regional government would apply rent control in private/public sector and ensure health and safety application for tenants.
Develop a society of skilled citizens knowing how to make things last. Renewal, recycling, regeneration would take priority instead of constant production of imported goods in a world of diminishing resources.
Maximisation of the benefits of constructive production rather than making wasteful luxuries and temporary fashions as if the Earth held infinite capital to exploit.
Cost of consumer goods would include costs of impact on natural resources – land, water, air and climate.
Education to shift to developing tools for life and away from exam orientation to wise co-existence with each other and the natural world.
Communities work together for social accord with the natural world.
Carbon emissions from fossil fuels for heavy industry, such as for steel production and methane gas from agriculture, create two of the biggest causes for an overheating Earth. The fashion industry causes around 10% of carbon emissions. A plant-based diet using substitutes for meat saves 11 times more carbon dioxide than electric cars. New buildings and all forms of public and private vehicles, ships and planes require maximum energy efficiency and be ecofriendly before authorisation. All current forms of transport need an upgrade for energy efficiency and for endurance.
The government must issue and apply legislation for low carbon emissions, conservation of energy and application of a green levy. Offshore wind and use of tidal power provide a cheap form of energy Such green forms of energy reduce dependency on foreign fuel, such as oil and gas, as well as nuclear plants.
We need a national street-by-street home, office and factor insulation scheme to reduce emissions and fuel bills. Our cities and towns need more ‘green’ – small parks, gardens, trees in streets, allotments and more for additional oxygen and to cool the cities in hot weather. A green economy will reduce the growing impact of the overheating Earth, the growing financial costs from fires, floods and droughts and the consequences on the quality of life. The new economy will provide millions of jobs in the public/private sector for small businesses and the self-employed.
A green economy alongside changes in lifestyle offer support for present and future generations – assuming it is not already too late.
Cuts in the Rate of Income Tax
Swathes of powerful people and businesses regularly want a right-wing conservative government to reduce the income tax rate to fire up yet again economic growth. They cannot think outside economic growth.
The Market/central government often sees giving tax cuts extra to provide disposable income to citizens. A few will put this extra money aside to save for a rainy day. The vast majority will spend this extra money on consumer items, which will increase the production of goods until the next economic slump.
Will income tax cuts and corporate tax reductions increase state borrowing to pay for the loss of incoming revenue for the government? Taxpayers will have to pay back borrowed money to those who make the loan – banks and large institutions. The government goes into more debt with interest on the debt increasing every year. Central government borrows money to pay back debts.
All taxation becomes regional not national.
To develop alongside a steady state economy a steady-state human population.
People develop interests not tied up with consumerism and addiction to endless desires and craving
Education and work give emphasis to ethics, communication, right action.
Children/parents decided whether they have aptitude for maths and science.
Spirituality, culture and collective well-being would support social harmony and diversity.
Best Minds to Work Together
In the 1972, King Jigme Singye Wangchuck of Bhutan, a small Buddhist kingdom in the Himalayas, devised the Gross National Happiness (GNH) Index employing 33 indicators. The GNH Index is based upon a robust multidimensional methodology. Other countries have drawn on the model or features of it.
GNH has four primary pillars – wise government, sustainable socio-economic development, cultural preservation and environmental conservation. A 21st century economy develops the relationship between economics, psychology, wellbeing and spirituality. Old economics regard income, profit, and market share as the priority.
Gross National Happiness Index (GNH) take a holistic approach giving equal importance to non-economic aspects of wellbeing.
The best minds provide a blueprint for a trustworthy and stable economy.
The best minds work together in the national and international interest to establish an eco-nomy fit for purpose.
We need a bold, creative and dedicated vision for the 21st century with right livelihood, compassion and wisdom getting priority in economics instead of economic growth for the sake of economic growth.
Summary and Conclusion
In summary, 21st century economics requires a new kind of democracy, decentralisation of power/taxation from the capital city, with small government/small businesses/small banks in the regions to meet needs of citizens in the region – to replace big government/big banks/big corporations. Small is beautiful.
Calm, Wise and Steady-States of Mind provide the best support for a Steady-State Economics.
Every proposal in this critique has the potential to contribute to develop trust in the present and future through development of intimacy with the social-economic-natural world.
We need a radical change in the economic system to reflect the needs to support life on Earth.
The bigger the economic growth in exploitation of people and resources, then the bigger the decline.
The current political/financial/corporation form of governance/control has become woefully out of touch with life on Earth.
We witness corruption of the mind through greed, narcissism and consumerism.
We need a non-violent revolution to dissolve this inept order we live under
The Buddha said nothing causes as much suffering in the world as the mind. That sums it up.
We can’t go on living like this.
Christopher Titmuss is the author of
The Political Buddha and The Green Buddha