Posts

By Aima Ahmed

People are the economy, so let’s put them at its heart

Increasing the wellbeing of people is a more worthwhile goal to pursue than economic growth. To truly move towards a wellbeing economy, we need to fundamentally change the way we think about people and the economy.

We live in a fast-paced, interconnected and sophisticated era with information available in real time at our fingertips, access to markets unbounded by geography and technology that has exponentially improved our lives.

This is the peak of civilisation and the productivity puzzle is indicative of that- we just don’t know what more to do to increase economic growth, so in a way, this is a success.

And yet the virus has brought everything to a halt and frenzy. Something that isn’t even visible to the eye has forced us to stay at home to reduce the spread of the virus.

It looks like the universe is trying to humble us and make us question our illusion of strength and blind reliance on current capitalist systems that increase inequality at unprecedented rates. Or maybe it’s just a reminder of the national and global socioeconomic inequalities that have exacerbated the way that people are able to cope with the consequences of the virus.

Why worry about the economy when people are dying?

Amidst this health crisis, people are worried about the economy and what its downturn means for them- it’s not an unfounded fear as interest rates are lower than they’ve been for a while (fiscal stimulus that predicts less public spending which is what happens during a recession), small businesses are at the brink of collapse (or have already) and a staggering number of people have applied for welfare in the UK compounded by the perils of being an indebted nation borrowing to consume.

So, fears of economic prospects aren’t much different in principal from fears of the pandemic effecting the health and wellbeing of people.

This is the case particularly for the socio-economically marginalised such as people belonging to Black, Asian and minority ethnic (BAME) communities, women and those that live in poverty as these are the people that are already disadvantaged by health, housing and labour market inequalities. Striking evidence of the disproportionate impact on BAME communities has called for the government in the UK to launch a review to investigate, which is welcome but it’s a shame that these inequalities have gotten to this point in the first place.

In developing countries, there is fear that hunger fuelled by poverty will cause further deaths as a result of social distancing and lockdown for example in Pakistan where the Prime Minister has called for support from global leaders to create a fiscal response.

This pandemic has brought the dark side of free markets to the forefront.

Now that the economy wheel has nearly stopped turning, we can see who actually keeps it moving- it’s the underpaid and undervalued ‘key workers’ that hold up society, not the workers in the finance sector that make up a greater proportion of GDP than the value they give to society.

This is the problem that emerges when we lose sight of what is important — in this case we’ve become obsessed with economic growth when we should be more focused on creating an economy that increases wellbeing.  After all, economic growth should only be seen as a means to achieve wellbeing. There has been an improvement in measuring wellbeing, but GDP is still the dominant measure of success, which can be misleading.

This misguided obsession has got us thinking of the economy as separate from people.

Now that austerity has been shamed and we know that Thatcherism was driven more by ideology than good economics, it’s time to shift the narrative from economic growth to an economy centred around the wellbeing of people as argued by Nobel prize winning economists Banerjee and Duflo in their book Good Economics for Hard Times.

We should aim for a wellbeing economy, no matter how messy and uncomfortable, as supported by the Wellbeing Economy Alliance. The Alliance defines it as an economy where ‘humanity should determine economics, not the other way around’ and calls for the economy to deliver ‘an equitable distribution of wealth, health and wellbeing, while protecting the planet’s resources for future generation and other species.’

Economic growth may have been a good short-term goal post war in terms of rebuilding damaged economies, but times are different now and goals should evolve and follow Iceland, Scotland and New Zealand in creating a wellbeing economy.

The economy is the people.

It is the doctors and nurses on the frontline, it is the delivery drivers that distribute resources to where they are needed (more tangible than the invisible hand), it is the teachers that educate the next generation and it is the carers that provide childcare and elderly care.

But thanking these people is not enough, we need to do right by people by paying people for their work in proportion to the value that they add in society and in doing so, acknowledging how much good they do for our wellbeing.

The economy is also the people who are not key workers and are sitting at home unable to work given the lockdown, likely causing an inevitable contraction in GDP to stop the spread of the virus – so, we can see clearly than ever before that the economy is the people and that population health cannot and should not be separated from that.

The economy is also global.

Global inequalities mean that developing countries are more likely to suffer the consequences of this pandemic, even though the epicentre of the outbreak is the developed world. According to Oxfam, ‘More than half a billion more people could be pushed into poverty unless urgent action is taken to bail out poor countries affected by the economic fallout from the Covid19 pandemic’.

This pandemic has revealed that we are interdependent as countries and institutions have come together to help each other mitigate the effects of this pandemic, which started in just one corner of the world.

The Home Office extending visas for medical staff  is an example that we as a human race are dependent on one another and that when one faction of society suffers, we all suffer.

Given the interconnection and interdependency, it is in the interest of the wellbeing of nations to work together to solve problems and this should not be forgotten when it is time to deal with the aftermath of this pandemic.

Now really isn’t the time for nationalistic responses to this global economic downturn, especially in terms of the support that poorer nations receive — global solidarity is needed to solve global problems. 

So, let this be a time of thinking and rethinking, learning and unlearning, designing and redesigning a society using economics that puts people at its heart.

An increased government role isn’t a bad thing, in fact it may be government failure to leave market forces to self-regulate through capitalism.

Current economic models facilitate inequality in ways that aren’t questioned enough in the mainstream. Government policy can build back better and nudge things in a better direction, one that includes people and questions the distribution of wealth and power through market forces, no matter how normalised they’ve become.

Build back better by calling greed what it is.

Financial services have been evolving over the decades and centuries with a profit maximising objective. A study shows, for example, that having a mortgage wasn’t always aspirational — it was seen as hanging a millstone around your neck with the debt being seen as a burden, regardless of the lifestyle that it facilitated.

The finance sector has facilitated private debt to sustain consumption even more today for example with car leasing and pay-day loans with interest rates that only feed the accumulation model of wealth generation.

Sure, this is a consumerism problem too. But making financial services more responsible through government intervention and rethinking the role of interest in the economy is a start to protecting people from the glorification of debt.

Build back better by adopting human centric business models.

Big businesses are talking more about social responsibility but according to Mariana Mazzucato, little seems to be changing in reality where only few companies put social responsibility at the core of the way they function.

Tick box exercises are not enough. Fundamental changes are needed in business models that aren’t afraid of an anti-accumulation of capital philosophy of business and an increased involvement of workers at every level.

Greater government control may actually be the answer, after all, corporate greed can’t be curtailed by mere good will.

Build back better by creating better narratives.

Underlining the failings of capitalism are the surrounding narratives that keep leaving people behind. For example, it is a government failure that people keep falling through the cracks of welfare so we should stop blaming people for being stuck in the poverty trap designed by giving too much power to market forces and arguably the welfare system itself.

A move towards a wellbeing economy should involve exploring a Universal Basic Income as is being done in Scotland. A study by the RSA shows that people receiving welfare are likely to benefit from a Basic Income by enabling them to have more power over their lives and to build a better and more self-reliant future for themselves.

Build back better globally, with compassion, responsibility and humility.

In the spirit of creating a wellbeing economy that puts people at its heart, there is hope that the fear, desperation and anxiety caused by this pandemic will make people understand what it’s like to live with economic insecurity, lack of opportunities and a constant feeling of uncertainty.

It is paramount to build back better through policy and narratives that are more compassionate towards refugees and economic migrants by acknowledging that people do not leave what they know for uncertainty without sufficient cause, desperation and hope of a better future in terms of wellbeing and finances.

If compassion is not enough to build back better globally then I hope that the studies that show that history matters in that countries are still suffering economic and political consequences of post-colonialism make a case for exercising humility in the global policy sphere along with the failing of the IMF.

So, let’s build back better by mitigating the socio-economic consequences of history in the face of colonial amnesia.

Capitalism can do better.

What does it really mean to reach the peak of civilisation when haven’t paid enough attention to how such progress for the few has left so many behind? And what are we building the economy for if it’s not for the people that actually make up the economy in the first place?

This pandemic is a chance for us to revaluate capitalism and rebuild a more inclusive world where we channel energy towards collaboration, socialism and understanding.

Let’s build back better.

 

 

 

‘If we share what we already have more fairly, we can improve people’s lives right now without having to plunder the Earth for more. Fairness is an antidote to the growth imperative.’   Jon Hicks[1]

Most consumers have heard of the term ‘Fair Trade’ even if they don’t fully understand what it means[2].During the noughties the Fairtrade label became increasing prominent on our supermarket shelves, with brands such as Café Direct and Divine Chocolate– companies founded on fair trade principles – offering a range of premium, ethical hot beverages and confectionery. At the same time big global corporations such as Mondolez (Cadburys) adopted the Fairtrade certification scheme, whilst major high street retailers – Sainsbury’s, Tesco’s, M&S and even low costs names such as Lidl and Aldi – also joined the independently audited labelling initiative. It seemed that the consumer had easy access to and was choosing to make ethical purchasing decisions that put people and planet before profit margin.

Then things seemed to change. Alongside ‘ethical consumerism’ came low cost price wars between food brands and retailers as margins were squeezed. In this environment, the Fairtrade certification scheme was ditched by several significant brands and retailers in favour of cheaper ‘ethical labelling’ initiatives, including in-house labels such as Cadbury’s ‘Cocoa Life’.  Whilst arguably better than nothing, many such schemes are not independently or as vigorously audited, particularly in relation to human rights issues. In 2017 several large chains withdrew from licensing their own brands as Fairtrade due to the costs of the scheme. Overall, Fairtrade sales in the UK do (still) continue to grow and at the end of 2019 the UK household groceries sales of Fairtrade labelled products stood at nearly £798 million[3]. However, this figure represents a 5% decrease since 2017, whilst in Scotland the decrease on shopping basket sales of Fairtrade goods was 9%.  Consumer choice and visibility of ethical brands has been significantly diminished.

Meanwhile B Corps like Divine Chocolate, which turns over £16 million in sales and is 45% owned by a Ghanian farmers’ co-operative, now find the majority of its sales come from the non-UK market. Such Fair Trade Organisations have found it hard to maintain their UK market share, with major retailers ‘choice editing’ to reduce the premium offers on shelf, in anticipation of consumer demand for lower pricesAnd whilst it is commendable that low cost retailers have maintained the Fairtrade label on own brand coffee and chocolate, it’s worrying that these same companies score abysmally in independent reviews of their human rights and environmental practices, as revealed by Oxfam’s latest findings[4] .

How is this relevant to the Wellbeing Economy movement?

In an independent review of Fair Trade in Scotland carried out for the Scottish Government’s International Development division in 2019, we found  compelling arguments for closer alignment of the Fair Trade movement with WEAll’s goals. Just as the Wellbeing Economy Alliance advocates transitioning to economic models where ‘humanity defines economics not the other way round[5], so fairness and equity in trade aims to address the inequality of the world’s most marginalised communities directly suffering the consequences of richer countries’ consumption.  Fair Trade argues for an equitable trading model where social impacts take precedence over economic indicators such as GDP growth.   It is a “a multifaceted political and economic phenomenon, driving and catalysing change in the way business is done, how consumers consume and how producers produce’[6].

For those seeking to influence the conversation on more equitable economic models, efforts to achieve sustainable livelihoods for the world’s most marginalised producers, often women, cannot take second place to domestic concerns. It means advocating for wellbeing policies and fair business practices at national level and informing the way we relate to our trading neighbours internationally. Wellbeing in relation to trade has to impact on much more than governments’  international aid efforts and rather focus on the manner in which our public and private agencies procure, the rules of engagement for doing business with social enterprise (such as B Corporations and FTOs) and the prioritisation of dignified  and equitable trading relationships through EU and global trade rules.  It is not enough to use the Global Goals to interrogate a country’s domestic approach to inclusive economy, though this is a good start.

Scotland’s National Performance Framework

Scotland’s National Performance Framework[7] (NPF), has developed wellbeing indicators alongside more traditional GDP based growth measures, but it needs to view each indicator through a global lens in order to achieve real economic change. The Scottish Government’s Fair Work policy, for example, is reflected in the NPF and incorporated within a ‘Scottish Business Pledge’ to which Scottish business can subscribe.  It could be reflecting a global perspective in the way Scottish business interact with international labour markets, if it were to incorporate Fair Trade principles such as fair payment, good working conditions, no discrimination, gender equity and freedom of association into the way business is done internationally. All of these are Fair Trade principles, as can be seen in the figure below.

Graphic from International Fair Trade Charter, 2018

Using Fair Trade Principles as their ‘SDG+’ benchmark, governments aspiring to the Wellbeing Economy vision, including Scotland, can be more ambitious in challenging how their own statements about wellbeing translate into practice globally; it is not enough to speak of putting wellbeing first domestically, whilst championing business growth predicated on export and import practices which perpetrate environmental and human rights abuses.   Disrupting the status quo on the way we do business as nations requires a multi-pronged approach across education and upskilling of our workforce in public, private and third sectors; it requires serious support for ethical business models, and a recognition that as electorates we are increasingly aware of the complexities and ethical challenges of our purchasing choices and those which our Governments make on our behalf.

Pauline Radcliffe was the lead author of the Independent Review on the Future of Fair Trade in Scotland for the Scottish Government International Development division, published February 2020. This review included an interview with WEAll Scotland trustee Sarah Deas.

Header image: Comfort Kumeah, a Ghanian cocoa farmer from the Kuapa Kokoo co-operative which owns 44% share of Divine Chocolate and is led by women.  Credit to: Olivier Asselin on behalf of Divine Chocolate Ltd

 

 

[1] Hicks,J; Should we pursue boundless economic growth? Prospect magazine, 12.06.19.

[2] In Scotland 90% of those surveyed in 2016 had heard of Fair Trade; across the UK, 83% consumers stated that they would trust the Fairtrade Mark; .

[3] Kantar Worldpanel: consumer Fairtrade sales in UK and Scotland 2017 and 2019, week beginning 05.11.

[4] https://oxfamapps.org/behindthebarcodes/

[5]WEAll Scotland home page

[6] Tiffen, P. Who cares about Fair Trade? Journal of Fair Trade 1:1, 2018.

[7] Scotland’s Wellbeing – Delivering the National Outcome: Scottish Government, May 19. P.14

First published on Bella Caledonia

By Katherine Trebeck

History is being made by the hour. The current crisis is era-defining to that extent that we are soon likely to talk in terms of “pre-covid” and “post-covid”. The decisions being made now by those in power will ripple through the years and determine what kind of society we go on to live in.

The spread of covid-19 shines a light on our economy – its inequalities, power structures and absurdities. The opportunity is to address some of the cleavages between parts of our society by building a wellbeing economy instead of reverting to the same old structures: building back better rather than returning to business as usual.

Covid-19 means that the reality is setting in that ours is an economic system which depends on an army of low paid workers. These are the workers Guy Standing described as the ‘precariat’: without decent security in their work, let alone sufficient pay. Those on zero hour contracts in the gig economy or eking out a living as self-employed, but with little command over the rates or regularity of that work. These are the front-line staff of our hyper-flexible economy where humans are treated as just-in-time inventory just as much as oat milk for the salariat’s flat whites is. The precariat are already the first losing their hours and their jobs as business dwindles – as bars close, as people delay haircuts and as events are cancelled. Without savings, they will be amongst the hardest hit and thus compelled to go into work if the work is there – a form of economic conscription if there ever was one.

It is the precariat who drive the delivery vans keeping the salariat stocked with avocados and hand wipes, who keep the Amazon-orders flowing in, and the Uber-Eats sushi on the table. It is the precariat tending to the frail in nursing homes or stocking the shelves in supermarkets so the rest of society can fill up on necessities while self-isolating.

In contrast, many of the ‘salariat’ (or the ‘proficians’ in Standing’s lexicon) have the relative luxury of moving their work from pot-plant filled offices to online conference calls at home. Lonely? Perhaps, but without the risk of bailiffs chasing unpaid bills so long as salaries are still paid.

Covid-19 is putting into sharp relief the contrast between those with sufficient resources and ‘human capital’ to command a toe-hold in the economy and those who are simply knocked about by taps on an app and the ‘Free Next Day Delivery’ obsession.

Precarious work shouldn’t exist – work should be a route to economic security and sense of purpose. Workers shouldn’t be compelled by economic necessity to work when sick and possibly contagious. Government should do all it can to ensure workers don’t face the choice between spreading covid-19 and being kicked out of their house because they can’t pay the monthly rent or mortgage.

There is a serious risk that, with eyes firmly fixed on a return to ‘business as usual’ beyond the current situation, the first queuing up for bailouts are the very entities which should be powered down in the face of the climate emergency. Meanwhile, those that most need it are left to make do with the already frayed social safety net that masquerades as social protection in the UK these days. Around the world governments are recognising the needs of vulnerable workers – not just the vulnerable elderly. For example, Ireland is paying 203 euros a week to those who lose their job or income or who are self-employed and losing contracts for the next six weeks. The Swedish government is also paying sick pay, rather than putting it at the feet of employers and increasing the amount of cover it provides to short-time workers. Even in Australia – one of the toughest welfare regimes in the OECD – the government is paying $AUD750 tax free to those on benefits and to all pensioners.

Yet these are the sort of measures that are short term amelioration – they help take the edge off an economy that doesn’t do enough to support everyone.

They are also a sign of how far away the current scenario is from a wellbeing economy – one purposed for and hence designed in a way to deliver good lives for people first time around.

Fortunately, just as covid-19 is showing us the stark divides in our economy – between those who can readily work from their kitchen tables and those forced to deliver to them – it also is showing us the outline of a better economy – a wellbeing economy.

The economic activities most needed at times like these are not the glittering cocktail bars and massive concert venues. They are the unglamorous but necessary pillars of the foundational economy – the schools, supermarkets and hospitals that can’t threaten to up and run at the lightest change in the tax system, entities which require considerable labour input and hence offer local jobs. The places prioritising those who need them most, profit or no profit (the supermarket Morrisons’ recent effort being a good example).

Local supply chains are coming into their own as global ones are disrupted by border closures and plane groundings.

And, perhaps most beautifully, covid-19 is showing the importance of community ties and informal support – none of which will do much to boost the usual measures of economic ‘success’ in the form of Gross Domestic Product, but which undeniably will be vital in helping individuals and families survive.

Local supply chains, the foundational economy, and community support in the care economy are three of the pillars we’ll all need to get through it. They are also three pieces of the jigsaw of a wellbeing economy weall need beyond covid-19.

Communities and individuals are stepping up to the challenges presented by covid-19, recognising that we all need each other and prioritising togetherness even as we are forced to be physically apart. As the inequalities in our economic system are laid bare by this crisis, rather than returning to business as usual, countries such as the UK would be well-served to instead build back better by creating a wellbeing economy.