Category Archives: political economy

Industrial Strategies and a Stakeholder Economy [SESSION SLIDES]

Earlier this week I spoke at on Industrial Strategies and a Stakeholder Economy at an event on ‘Redesigning Capitalism: From shareholder to stakeholder capitalism’.

The event was run by Promoting Economic Pluralism, which is creating and supporting spaces for diverse voices, perspectives and approaches to understanding our economies to help co-create truly sustainable, resilient and inclusive ones. PEP is run by the inimitable Henry Leveson-Gower, who deserves great praise for pushing for requisite variety in economics.

Some people from the session were asking for the slides. Here they are. In a perfect world I would write a blog post of my talk, but the perfect is the enemy of the good. So, better than nothing, here are the key points from the talk:

  • We’re in a profound mess.
  • Industrial strategy is ‘back’ because new approaches are needed.
  • There is a spectrum of industrial strategies, reflecting different political preferences.
  • Addressing transformation failure probably requires a ‘participative’ approach.
  • That makes a ‘stakeholder economy’ both a means and an end.
  • Orientating everything in an economy to address the profound mess means we have to experiment everywhere.
  • There are hints of an emerging practice of transformative, participatory industrial strategy.
  • We need many global ‘social learning cycles’ to get better at using participative approaches in industrial strategies to deliver a sustainable footing.
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[QUICK TAKE] Michael Gove and Green Brexit: without commitment devices, even the right words are just words.

Yesterday I was at the Prosperity UK event ‘GREEN BREXIT: A New Era for Farming, Fishing & the Environment?’. Gove was impressive, and the event much needed. Below are my seven headlines. In essence, a Green Brexit is possible with competent negotiations, other Conservatives sharing Gove’s new-found environmentalism, commitment devices which force us all to act for the future, and a shift from ‘market fixing’ to ‘market shaping’. We urgently need to do the hard graft now of thinking and acting for the future.

My reflections in seven headlines:

1.’Act for the future, not re-fight the referendum’
2.Gove the conciliator: Leavers have responsibility to address the fears of Remain voters.
3.Gove the environmentalist: our economy depends on nature; stewardship is Conservative.
4.If only Gove the environmentalist had convinced Cameron and Osborne in 2010.
5.Without commitment devices, even the right words are just words.
6.Once again, senior conservative thinks its either fully free markets or full-on communism.
7.’Market fixing’ will not be enough. We will need ‘market shaping’.

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Let’s have ESG ratings as well as credit ratings when issuing bonds

A short post to salute an initiative of Vigeo Eiris (where I am a non-executive director), which I hope will have a big contribution to shifting the finance system by making ESG information the norm in investment decisions.

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Reform vs Revolution vs Restoration approaches to sustainability

What do we mean when we talk of ‘sustainability leadership’? This is addressed by Jem Bendell et al in a new paper, who use critical theory to unpack both ‘leadership’ and ’sustainability’. After reading it, I find myself framing sustainability as about shared dilemmas (not problems), regretting managerialist capture, and pursing a restoration approach (rather than reform or revolution). I also suspect we need to find a pragmatic, fundamental approach to change, though I’m not sure what that will be.

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QUICK TAKE @IPPR #EconomicJustice launch: great content; worry about impact

Earlier today IPPR launched the interim report of the Commission for Economic Justice. Here’s my quick take on the report and the discussion around the launch.

The basic description of the ‘British economic muddle’ is familiar

While there are no surprises, IPPR and Michael Jacobs have all done us a favour by articulating things so clearly. In a nutshell:

– The economy is no longer raising living standards for a majority of people.

– That poor performance arises from deep, long-term weaknesses, especially:

  • World-lagging productivity in many businesses.
  • Low investment rate compared to peers, even adjusting for our service bias and even with as a world-leading financial sector.
  • Largest percentage current account trade deficit in G7, despite a surplus in trading services.
  • Current activity fuelled by growing consumer debt, in part driven by government refusing to borrow even though interest rates are at all-time lows.
  • We want public services but we’re not willing to pay for them.

– We face profound challenges and opportunities:

  • Brexit – a momentous change in our governance and trading.
  • Globalisation – challenge those trade imbalances.
  • Older population – proportionately fewer workers to finance pensions and healthcare.
  • Technological change – will the gains from automation go to owners, to consumers, to workers?
  • Environmental degradation – including the impacts of climate change.

All of this is supported by many graphs and much discussion. Fantastic.

My further sense from the discussion was just how strong the system archetype of ‘success to the successful’ is in the UK. If you own your home (as I do) then your wealth has gone up, and the ladder to join in has been pulled away from the rest. If you’re a productive business then you get the profits to reinvest further – something the weaker companies don’t do. London enjoys the positive feedback loops of being a world-leader, as does Cambridge and Oxford. Rest of the country? Not so much. Well paid or got a cushion of wealth? Then you can take risks with your career by moving or starting your own business. Don’t have that, then you, relatively, fall further back.

 

Recommendations: too technocratic to be a policy sea change akin to 1940s and 1980s

The report is right that fundamental reforms of this scale have happened twice in the last century: the Attlee government bringing in the Welfare State in 1945; and the Thatcher government overcoming stagflation by pushing free markets and so on.

Both of those were political earthquakes which profoundly realigned what was considered orthodox for the following generation. The recommendations, as they stand, are all good technocratic things to do. But, do they ignite and demonstrate an utter shift in the political economy?

  1. Put economy on stronger institutional foundations, driving more investment through greater certainty.
  2. More competitive through industrial strategy, supporting entrepreneurs and shifting financial and corporate governance.
  3. Wiring the economy for justice, promoting ‘good jobs’, a reformed tax system and spreading wealth more fairly.

Imagine the chant:

“What do we want?”
“Stronger institutions!”
“What do we want?”
“A strategic approach to industry!”
“What do we want?”
“Justice for All (the weaker of the early Metallic albums)!”

Perhaps I’m being unfair on an interim report for a think tank, rather than the conference speech of the opposition leader. But if your lead-off recommendation is stronger institutions, you know you have an economist writing your report.

IPPR’s Director was very clear at the start that, if you don’t have a vision then change becomes directionless. One the first page of the summary there is a paragraph with a description of the economy we’re aiming for: dynamic, people flourish; better jobs; geographically balanced; economics rewards distributed fairly; decent house; within environmental limits; partnership between business, trade union and government sectors.

That’s quite a laundry list of Guardian-friendly desires. Who can say no to motherhood and apple pie? But also, who is compelled to act with a broad vision with such a technocratic way forward?

 

What alignment of social forces is realistically available to make this happen?

Which takes us to the substantive problem. I agree with the analysis. I imagine I will agree with the final recommendations. But, what will happen as a result?

I’ve no idea if Director of the Commission, Michael Jacobs, remembers but about a decade ago he gave a talk at the RSA on what made the reform of the 1940s possible (he was speaking about the need for something similar on climate change). His four preconditions:

  1. intellectual case (back then, Keynes)
  2. crisis (the aftermath of the WWII)
  3. public mandate (the Labour landslide)
  4. elite buy-in (apparently businesses liked the demand support of the Welfare State compared to the free market Great Depression)

Today, the IPPR report (and the work of the Resolution Foundation, plus Tim Jackson’s Prosperity Without Growth  and Kate Raworth’s Doughnut Economics) all make for the intellectual case. in the UK, Brexit will upend everything. That provides us with the crisis to take advantage of.

But the public mandate: Is the UK populace for economic justice, or do they want cultural security? It was striking that the two politicians on the stage couldn’t bring themselves to be pro-immigration. Even though more young workers makes us better off, many fear immigration. They blame it for lower wages and weaker public services (rather than, say, global labour markets for the former and austerity for the latter).

The opinion polls imply people are willing to take a financial hit to take back control of the borders. One thing is: we’ll see if that’s true when people take the hit (there’s often a survey gap in, say, willingness to pay extra for ethical products). Another thing: perhaps this is good news. It means n one can argue that economic cost-benefit is the true measure of a decision.

And on elite buy-in: are leading government and business figures One Nation Tories or do they wanting to complete Thatcher’s revolution? The General Election undermined the One Nation Tories on domestic economic policy. Many of the leading Brexiteers seem to want to use leaving the EU to deregulate and open up for more free trade. (The irony is that this reduces people’s control and will quite likely leave many people even further behind. But hey.)

Also, while there are many business people who are for economic regeneration and so on, how many are willing to voluntarily raise wages? Or give up the negotiating advantage of zero hours contracts? The rhetoric is strong but the business case – and evidence of business action – is weak.

Final thoughts

So, great content, worry about the theory of change. That worry is something I have with all sustainability and progressive activity – including my own. So, I’m far from having got all that solved. And I’d love to bring my insights on industrial strategy in, and to see if there are ways to move forward without relying on government buy-in.

Could some citizen activity or people-power initiatives start us off. So that, come the next election or the one after that, the social forces are aligned?

Let’s hope. And let’s hope by making that happen.

 

 

 

DRAFT CHAPTER: A path to sustainable 2050: positioned to thrive, and unprepared to struggle (a work-in-progress)

Below is the current draft of a chapter for Fast Future’s ’50:50 – Scenarios for the Next 50 Years’. They’ve given me permission to test my thinking so far. I’d love your thoughts – positive or negative – and connections to other, better thinking.

It is an attempt to imagine the world in 2050 as if what we do now matters. The speculative vision below will be wrong, but hopefully it will be useful. It is one path I can imagine to a sustainable footing. I don’t like all of it, and I don’t necessarily think it’s the most likely future. There’s so much more I’d like to add (links to culture or knowledge production, for instance) – but I’m already twice the word count! It applies some of the analysis from my work on industrial strategy, which you can watch here or see a rough cut here.

Please do let me know what reactions, comments below or via email!

Introduction

Here in 2050 we ask: given how uncertain the world looked in 2020, how is it that most people are thriving? How did we deliberately and rapidly reduce our impacts on the Earth so nature to thrive? (Gaffney and Steffen, 2017) And, how did that lead to us becoming a two-speed world?

The short answer: back in the 2020s one group of countries tried ‘good growth’ as an open and future-facing strategy – and were able to renew as crises happened. These countries are now the Primary World, where people are thriving in ways that work in synergy with nature. Another group wanted security by preserving the past – and, when the crises came, weren’t able to adapt. This Secondary World is not in sync with nature, but at a much reduced pace and scale that nature can cope with.

Now for the long answer.

  • Late 2010s: Many eras ending
  • Early 2020s: ‘Good Growth’ vs ‘Security For Us’
  • Late 2020s: ‘Renew For Climate Safety’ vs ‘Protect What We Have’
  • 2050: the thriving Primary World and the struggling Secondary World

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People-powered knowledge production and ‘Transformations 2017’

 

Last week I was at Transformations 2017, the biennial academic conference on transformations towards sustainability, hosted by Centre for Environmental Change and Human Resilience (CECHR), University of Dundee. I had an excellent time, including presenting my paper on industrial strategy (rough cut here). In this post, I reflect on the importance of people power in knowledge production that is in the service of transformation to a just and sustainable world.

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