From Old Economics to New Economics- Radical ... - Bruce Nixon

Introduction
Today we face great dangers, but also tremendous opportunities. Climate change, ecosystem
collapse, growing inequality and injustice require an urgent response from us all and from our
governments. We need a new approach, one that tackles these global and national problems,
but also addresses another key problem: our lifestyles in the developed countries threaten the
future of the planet; yet they do not make us happy. So, as well as great danger, our present
circumstances also offer an unprecedented opportunity: we can reorder our economic
arrangements to make life more just and fulfilling for all within our environmental limits.
The economy we see around us is, in large part, the consequence of countless decisions taken
daily by individuals, families, communities, private sector firms, third sector organisations
and the various institutions of the state. The state in all its forms, at least in theory, is also a
manifestation of the collective will of society, charged with mediating between different
interest groups, taking decisions that reflect the outcome of this mediation and promoting the
‘common good’. We therefore have an economy and society that has been constructed and is
maintained by individual, group and collective decisions, all shaped by history, culture, the
prevailing institutional framework, society’s norms and values, as well as people’s different
circumstances in life and the varied priorities that may result from these.
We collectively create our own reality: there is nothing ‘natural’ about the mechanisms and
processes we have; our actions (and non-actions) serve to both create and sustain these.
However, it is also important to recognise that although we are the ultimate creators of the
economy we have, the broader system also shapes us in turn. That is, institutions – taken
broadly to mean the ‘rules of the game’ as well as the organisations that ‘play’ the game – are
powerful shapers of people’s motivations, wants and what they consider to be feasible or not.
The starting position for our approach therefore as follows: if this economy we have created,
and continue to ‘create’, is failing to perform the functions that most people would expect of
it, the option is open to us to create a different economy. To do so, however, will require
fundamental change.
Powerful factors reinforce the current system. For example, our institutional framework
encourages certain forms of behaviour and discourages others. In particular, at its heart the
economy is primarily structured to maximise profits and income growth, through ever
reducing costs and ever increasing revenues. The institutions we have, at all levels of society,
subtly – and sometimes not so subtly – encourage behaviour that is compatible with this goal
and discourage that which is not. Furthermore, institutions do not always have to directly
influence behaviour: they are powerful shapers of motivations and even values, which then
influence behaviour, whether consciously or unconsciously. So, environmental impacts are
not voluntarily taken into account by companies as this could reduce their competitiveness by
adding to costs. Similarly, work-life balance is heavily tilted towards the former, as
improving life quality does not add to income or GDP, and may do the very opposite. In both
instances, it may simply never have occurred to those taking the decisions that alternative
courses of action were even desirable, let alone possible.
Rather than focusing on perpetual and increasing income growth, we believe that the purpose
of the economy should be to enhance the well-being of the citizens of the country, in a
manner that is both socially just and environmentally sustainable. To achieve this, however,
will require a change in both the forces that influence behaviour (i.e. incentives) and, more
fundamentally, a change in the forces that shape values and motivations (i.e. institutions)
3