The Good Economy: A Vision for the UK

Snowed under as I am, my thoughts turn back to the vision we adopted for our company eight years ago: ‘To create a Good Economy’ in the UK. We have mission statements from all sides (apologies for the alliteration) – stop the boats, top the G7, pop the cost of living bubble, etc, etc, etc – but what us everyday people and everyday businesses truly need but lack is a coherent vision of the country’s future.

Why not ‘The Good Economy’ as a national vision that works across geographies and sectors. It’s not our invention, it’s out there in the public domain. It comes from two influential economists, namely Edmund Phelps (Mass Flourishing, 2014) and JK Galbraith (The Good Society, 1996). Drawing on their ideas and ours, we constructed the 4-pillar model of The Good Economy shown in this article. Take note of the 4th Pillar – True democracy is essential to The Good Economy (Galbraith) – and indeed to a bona fide definition of ‘social value’ (Schumpeter, Quarterly Journal of Economics, 1908).

Best communicated directly, here is what Phelps and Galbraith had to say on The Good Economy.

“A just society requires the good economy; the good economy requires high dynamism and wide inclusion; and these qualities require a well-chosen mix of economic policies: some aimed at dynamism, some at inclusion. Dynamism and inclusion are largely non-competing. Dynamism boosts inclusion. The reason is that dynamism creates jobs and raises wages in the process, which benefits everyone – including the marginalized and the disadvantaged. I have also come to see that inclusion can boost dynamism. The entry of the marginalized and the disadvantaged into the economy increases the diversity of the participants, thus opening up added sources of new commercial ideas.”

“There is no serious doubt as to the economic basis of the good society. As sufficiently noted, there must be employment opportunity for all willing members. A strong and stable economy and the opportunity it provides are thus central to the good society. There is a further basic requirement. Under the best of circumstances, there are some men and women who cannot or do not participate. In the good society no one can be left outside without income – be assigned to starvation, homelessness, untreated illness or like deprivation. This, the good and affluent economy and polity cannot allow.”

I like these ideas for many reasons. For example, it reminds us that economy and society are two sides of the same coin, and that economic development – not economic growth – is a social process. We are all involved, we all contribute, and so we all deserve to enjoy a decent material and spiritual life. Phelps believes that a ‘high dynamism, wide inclusion’ Good Economy requires a landscape of ‘mass flourishing’, something that existed in the UK (and in Western Europe and North America) at the end of the 19th century. Here’s how he describes this economic culture of grassroots innovation:

“What made innovating so powerful in these economies was that it was not limited to elites. It permeated society from the less advantaged parts of the population on up. People of ordinary background might be involved in innovations, large and small. Stephenson was illiterate, Deere a blacksmith, Singer a machinist, Edison of humble origins. People of ordinary ability could also have innovative ideas. Even people with few and modest talents…were given the experience of using their minds: to seize an opportunity, to solve a problem, and think of a new way or a new thing.”

Mass flourishing is what it takes to create a Good Economy in the UK. I will leave you with that thought. The snow here in Bath is still thick on the ground.

All good things, Mark