Rethinking a New Economy

“Financial deregulation has markedly increased the frequency and magnitude of banking crises, entrenching instability as a structural feature of the global economy and, in the case of 2007-08, leading to systemic breakdown.  Economic growth has been based on an unprecedented expansion of household and private sector debt, accompanied by a fall in private sector investment, with an increasing percentage of corporate profits being used for dividend payments and share buybacks rather than reinvestment in productive capacity and innovation.  The decline in investment has led to productivity growth falling below historic trends.”

Writing in 2017, in Moving Beyond Neoliberalism, Laurie Laybourn-Langton and Michael Jacobs give a succinct summary of some of the concerns about our current financial systems.

We are a group of Quakers who are all members of the Quaker North London New Economy Reading Group. There are over forty such Quaker New Economy Reading Groups throughout the UK. Quaker Peace and Social Witness, QPSW, part of Quakers in Britain, have published a series of seven booklets about different aspects of building a rightly ordered economic system that works for the common good, supporting appropriate elements already in place and promoting relevant reforms. Using these booklets, we quickly developed a strong interest in taking action, in addition to building our understanding about a New Economy. Our approach is based on our Quaker Testimonies to peace, equality, simplicity, truth and sustainability.

We believe that building an economic system in the UK that is fairer, more sustainable and resilient, is critically dependent on addressing the shortcomings of our current banking and financial system. In Britain and worldwide the interest in financial reform among experts and among the public continues to grow and with it will come demands for political action. However, we would add our concern that the unbalanced distribution between dividend and wages has depressed living standards and led to the public purse subsidising low wages through benefit.

We were surprised that there was no APPG in the current Parliament to address this specific topic as the previous APPG on Economics, Money and Banking, appears no longer active. Yet reform is still needed, there is a danger that public debate will lapse as ring-fencing is being introduced, with deeper systemic issues allowed to continue. It is a technical area of policy and open political debate will both inform Parliamentarians and the public and also maintain the interest and pressure to keep reform of banks and financial institutions under active consideration.

Without greater transparency and public understanding overall positive change in our economic performance, achievement of climate change goals and fairer distribution of the benefits of economic performance will be difficult. Holding banks and financial players accountable to government, Parliament and the public is essential. In his speech on 12^th September, about the final report of the IPPR’s Commission on Economic Justice, Liam Byrne referred to, “a blueprint reconnecting wealth creation and social justice. This is of course a moral mission.” And of the aims of the report being to, “kindle a peace-match, an adult conversation that might one day grow into a cross-party consensus.” Quakers could make a spiritual and ethical contribution to this debate, along with other faith groups.

Greater understanding of the role and impact of banks and the financial system is critically important for us all.  In June London Quakers held a full day conference at Friends House: Young Quakers New Economy NOW!  Andy Haldane, Chief Economist at the Bank of England was a guest speaker. On 29^th November we held a follow up evening meeting at Friends House, facilitated by Joe Earle from Economy, ecnmy.org, entitled Doing Economics Differently!  Let’s democratise economics!

More than ten years on after the financial crash, international finance appears just as powerful as it was then. Not enough reform has been achieved in our banking industry. The “too big to fail” problem appears little better and the overall reduction in the level of risk present in the system does not appear to have been fully addressed. It might help to revisit the concepts of trust, responsibility and duty of care towards small businesses and clients in the banking sector. Maybe we need to return to the core purposes of the financial system and start from there.

As the Economics, Sustainability and Peace subcommittee of Quaker Peace and Social Witness stated in July 2015,

“We recognise that we need to speak out for a rightly ordered economic system that works for the common good, supporting appropriate elements already in place and promoting relevant reforms.  Through local action and democratic process, we will seek to move towards an economy that reflects our fundamental beliefs regarding the value of humanity and the natural world.”