books economics

The New Economics, by David Boyle and Andrew Simms

This is a book I’ve been looking forward to for some time – something that brings together the various strands of thinking that make up the rather nebulous field of ‘new economics’, and presents them all in one place. It doesn’t disappoint, providing a useful introduction to the uninitiated, and a re-cap for those who have been following along.

New economics is an approach that “values real, rather than illusory wealth, and puts people and planet first.” It is concerned with the health of communities and individuals, with equality and opportunity – the things that make our lives worth living – rather than economic activity and the increase thereof. It is highly critical of GDP and growth, adamant that “everything follows from the central discovery that money and wealth are not the same, that money is a means to an end.”

David Boyle and Andrew Simms have based the chapters of The New Economics: A Bigger Picture around some of the conundrums of modern life. ‘Why did China pay for the Iraq war?’ explores the problem of how new money is created through debt mechanisms. ‘Why are Cuban mechanics the best in the world?’ looks at our consumption of natural resources and the fact that traditional economics makes it more expensive to fix things than to replace them. ‘Why do fewer people vote when there is a Wal-Mart nearby?’ investigates big business and the erosion of community, something Simms has covered before in his book Tescopoly. That chapter also mentions Luton, which I’m proud to say is home to one of the new economics case studies, the deprived but innovating Marsh Farm estate.

Each chapter begins with the intriguing question of the title and then expounds the problem, which usually boils down to the same basic underlying flaw: society is broken in such a way as to maximise profit. If people are stressed, work hours are long, marriages are failing, small shops closing, it is often because economics says it should be so. People say otherwise: “Downshifting,” for example, “is incoherent in conventional economics terms, where people are assumed to maximise their income at all times.” Fairtrade goods or free-range eggs are similarly countercultural. We all know that life is about more than wealth, but our economy doesn’t seem to recognise it, and this “ancient mistake” turns our priorities upside down. “The economy is supposed to serve the needs of people and planet, but the reverse is increasingly true.”

Thankfully, the book is full of solutions. Each chapter presents some new economics responses, often several of them, and they range from quite simple and obvious reforms to much more radical answers. There’s plenty here that I fully expect to see in the due course of time, such as bankruptcy measures for countries, the re-establishing of exchange controls, and even, eventually, the closure of tax havens. Tradeable Energy Quotas, the citizen’s income, or the ‘Terra’ global currency are good ideas that may be sadly distant. And it isn’t all theory either. There are plenty of new economics solutions that are tried and tested and underway, from community land trusts to social return on investment schemes. In fact, the conditions are perfect, with “the emerging crisis is, in its own way, speeding the adoption of new economics solutions.”

If there’s a weakness to the book, it’s the timing of it. Publishing lead-in times are such that it was written in the latter half of 2008, right after the collapse of the financial system. At the time of writing it would have appeared that all the king’s horses and all the king’s men wouldn’t be able to put banking back together again. But they did put it back together, with tape and string and gigantic amounts of public money. Being inherently unsustainable, it will inevitably fall off the wall again, but the authors may have been slightly premature in declaring the American model of economics to have “failed as finally and spectacularly as the Soviet model did in 1989.”

New economics has been ticking over since E F Schumacher and long before, but it feels to me like it is rapidly shifting from a field of study to a movement. Although the think tanks have never been short of practical projects, it seems to be hitting the streets a little more, edging towards the mainstream. The Transition Towns have picked up and run with ideas such as local lending and complementary currencies. The importance of inequality has reached the highest levels of government, the leader of the opposition talks a good game on welbeing. Even Tobin, the tax that dare not speak its name, is whispered in the corridors of power. The financial crisis may not have toppled the ivory tower of old economics, but it certainly blew down the door. If you haven’t caught up with what comes next, this book is the place to get on board. As the authors say, “the struggle for the soul of economics is gathering pace.”

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