Build back better: time for a new economic model

Posted by Katherine Trebeck Global Research Policy Adviser

1st Apr 2014

Office Workers on the Bridge. Credit: Dave Collier

When politicians talk of economic recovery, how are they measuring success? Recovering the old economic model is not good enough says Katherine Trebeck, the economy needs to serve the people.

When a humanitarian disaster hits, once the initial stages of rescue and recovery have passed, the longer term objective is to support people to re-build their lives. In doing so, the aim is to reduce future vulnerability, 'build back better' is often the mantra.

This should be a guiding principle as we seek to rebuild our economy after the recent recession.  Most of our politicians seem to be talking of economic 'recovery' (epitomised in GDP growth), but simply 'recovering' the old economic model is not good enough. In fact, it might actually be counter-productive. Recently Oxfam reported that the richest 5 families in Britain are wealthier than the bottom 20 % of the population (12.6 million people). 

'Recovering' the old economic model is not good enough. In fact, it might actually be counter-productive.A recovery that serves the richest people, on the backs of the poorest, is hardly worth resuscitating. That is, an economy built on rising house prices, bankers' bonuses (with little connection to performance), increased contracting out and superficial employment relations, growing numbers of zero-hour contracts and self-employment, and record numbers of people working on poverty wages. 

Even prior to the recession, we saw other important aspects of life and the economy tracking in the wrong direction (such as the number of people unemployed or otherwise wanting work, levels of unemployment among 16 to 24 year olds, and the number of people living in low-income households). 

Instead of recovering the old economic model, building back better requires a pretty substantial shift in how we understand the function of the state and the operation of the economy. 

The Humankind index

We should be looking for communities and economic processes that keep people healthy

For example, Oxfam's Humankind Index in Scotland revealed one of people's top priorities for their lives was being mentally and physically healthy. A hefty proportion of the Scottish budget is spent on health, but that does not mean that the spending allocation is in alignment with people's priorities. What we should really be looking for is communities and economic processes that keep people healthy, rather than requiring expensive 'downstream' spending. The 2011 'Christie Review' (a Scottish Government commission into the Future of Public Services) reported that 40% of Government spending was down to failure demand

"demand which could have been avoided by earlier preventative measures. But it is a reactive spending - targeting the consequences not the causes of inequalities...[and] dealing with...negative outcomes retrospectively"

If we really are serious about building back better, we need to reduce the inequalities that cause poor health, broken communities, and disheartened individuals rather than treating them once the damage is done. Doing so will prevent people becoming lost, giving up, and becoming alienated. 

Lessons from elsewhere

The good news is that if we just think laterally there are lessons in many fields about what a better economy needs to encompass. 

For example: 

• Evidence about the social determinants of health - the 'causes of the causes' - reveals that health is impacted by quality of people's work, levels of control over one's life, the security of their circumstances, and sense of status (and anxiety about this). 

• A lot of the science behind this (epidemiology) suggests that when people experience stress and a loss of control their mental and physical health is harmed.

• Other thinking (such as theories of self-determination) similarly emphasise the need for conditions which foster people's sense of autonomy, competence and relatedness. 

What does the economy have to do with this? 

We need jobs that deliver control, autonomy, relatedness, esteem, and so on.Clearly, an economy in which individuals are construed as 'just in time inventory' - on demand when businesses require, disposable when not needed is one that runs counter to these conditions. Such work is more about drudgery, offers little autonomy, and positions individuals at the whim of their employer's demands and the perceived needs of the business. This leaves people feeling insecure in the adequacy of the employment they will be able to access, anxious that the remuneration they receive is not enough to live on, and - consciously or subconsciously - aware that they have little scope to manage their tasks or exercise control over how and what they do at work. 

There are some stark implications for the nature of work in this thinking - that we need jobs that deliver control, autonomy, relatedness, esteem and so on. Instead of recovering the old, broken economic model we should be looking to create an economy that serves the people, rather than the other way around. 

We should be looking to build back better, creating an economy that delivers healthy communities, promotes equality, and nurtures the planet.

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Image 'Office workers on the bridge'. Credit: Dave Collier/flickr 

Blog post written by Katherine Trebeck

Global Research Policy Adviser

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Katherine Trebeck