The Commission for Economic Justice published its report this week, calling for a national debate on how the economy works. The Commission was cross-party and included academics and civil society people. West Somerset Together conversations include economics as well as our more mainstream environmental and social justice topics, and, of course, most decisions are based on economics irrespective of their impact on the planet or people. For all these reasons this subject should be seen as important to us.
The Commission's seven key messages are reproduced below, together with the summary of the environmental sustainability section. I would be very interested to hear ideas on how these recommendations could be applied in the local, West Somerset, context.
The UK economy is not working. It is no longer delivering rising living
standards for a majority of the population. Average earnings have stagnated
for more than a decade – even while economic growth has occurred. Too many
people are in insecure jobs; young people are set to be poorer than their
parents; the nations and regions of the UK are diverging further. As more and
more people feel economically disenfranchised, the political consequences
are being felt across society.
2. The economy needs fundamental reform. Many of the causes of the UK’s poor
economic performance – particularly its weaknesses in productivity, investment
and trade – go back 30 years or more. They will not be addressed by incremental
change or trying to ‘muddle through’. Fundamental reform has happened
twice before in the last century following periods of crisis – with the Attlee
government’s Keynesian reforms in the 1940s and the Thatcher government’s
free market reforms in the 1980s. Ten years after the financial crash, change of
this magnitude is needed again.
3. A fair economy is a strong economy. It used to be thought that prosperity and
economic justice were in conflict; we had to choose one or other but could not
have both. The international evidence now points in precisely the opposite
direction. A more equal economy generates stronger and more stable growth,
lower social costs and greater wellbeing. Both economics and morality argue
for an economy which achieves prosperity and justice together.
4. Economic justice needs to be ‘hard-wired’ into the way the economy works.
It is not sufficient to seek to redress injustices and inequalities simply by
redistribution through the tax and benefit system. They need to be tackled at
source, in the structures of the economy in which they arise. These include the
labour market and wage bargaining, the ownership of capital and wealth, the
governance of firms, the operation of the financial system and the rules that
govern markets. Economic justice cannot be an afterthought; it must be built
in to the economy.
5. Achieving prosperity and justice together requires a comprehensive and
integrated programme of reform across the economy. There is no ‘silver
bullet’. Our 10-part plan includes far-reaching but achievable measures to:
• promote ‘investment-led growth’ by raising public investment, holding down
house price inflation and reducing the incentives that currently favour
short-term shareholder returns over long-term productive investment
• rebalance the economy through ‘new industrialisation’, away from an
over-dependence on the finance sector towards a more diverse array of
manufacturing and other innovative, export-oriented industries, located
right across the country
• give workers greater bargaining power, making it easier for trade unions
to negotiate on their behalf to achieve higher productivity and to share its
rewards fairly through better wages and conditions and reduced working time
• pursue ‘managed automation’, accelerating the adoption of new
technologies across the economy and ensuring that workers share in the
productivity gains and are helped to retrain
• promote open markets which reduce the near-monopoly power of
dominant companies, particularly in the digital economy, and make data
available to promote innovation for social good
• spread wealth more widely in society, both by widening ownership of
capital and through fairer forms of wealth and corporate taxation.
6. Achieving change means redressing imbalances of economic power: from
corporate management towards workers and trade unions, from dominant
companies towards innovators and entrepreneurs, from short-term finance
towards long-term investors, from Whitehall towards the nations and regions
of the UK. We need a more active and purposeful state, acting to achieve
prosperity, justice and environmental sustainability on behalf of society as
a whole. It must be decentralised, with stronger powers for the nations and
regions of the UK. Managing economic change will require greater social
partnership, both within companies, and between businesses, trade unions,
government and civil society.
7. Change is possible, and urgent. Many other countries have economies that
are both fairer and more successful than ours. As we confront the challenges
of Brexit, of further globalisation, and of technological, demographic and
environmental change, doing nothing won’t keep things the same—it will
make things worse. The economy we have is a matter of choice, and changing
it is a matter of democracy. Fundamental reform can be achieved, if we have
the will to do so.
9: ENSURING ENVIRONMENTAL SUSTAINABILITY
Environmental sustainability must lie at the heart of economic policy. We cannot
sustain either prosperity or justice if climate change continues on its present course,
and if the world’s environmental resources and life support systems continue to be
degraded and depleted. Achieving a sustainable economy will require a transformation
in the productivity with which we use resources. Such a ‘green growth’ strategy
offers significant potential to create jobs and exports. But we are not currently on
track to meet our statutory climate targets and our global environmental footprint is
unsustainable. While the individual impacts of products and companies are widely
regulated, their aggregate environmental impacts are generally not. Meanwhile most
global impacts – such as plastics pollution – are barely subject to any controls.
To bring the whole UK economy within sustainable environmental limits we
9.1 The introduction of a Sustainable Economy Act mandating the adoption
of statutory short-term and long-term targets for a broad range of
environmental impacts. Modelled on the 2008 Climate Change Act, such
an Act would require governments to set out comprehensive plans and
policies to meet the targets, and would set up an independent Committee
on Sustainability to monitor progress.
To maximise the domestic economic advantages of holding the economy within
environmental limits we propose:
9.2 The adoption of a green industrial strategy. This would integrate demandside
policies on decarbonisation, achieving a zero-waste ‘circular’ economy
and sustaining natural capital with supply-side support for UK businesses
and innovation to meet these goals. Such a strategy should support a ‘just
transition’ for workers and communities affected by the process of change.