Creating a new kind of economy is crucial if we want to tackle climate change and avoid the mounting social problems associated with the rise of economic inequality. The Great Transition by New Economics Foundation provides the first comprehensive blueprint for building an economy based on stability, sustainability and equality.
This report argues that nothing short of a Great Transition to a new economy is necessary and desirable, and also possible. Business as usual has failed. Yet prime ministers, finance ministers and governors of central banks are still running around – perhaps a little less frantically than they were – trying to allay fears and convince us that this is not the case.
The financial crisis exposed deep flaws in the approach to economics that has dominated policy-making for a generation. It turns out that letting markets rip does not always lead to the best outcomes for societies. Government intervention, far from being inherently inefficient, turned out to be essential to prevent system-wide collapse. A return to blind faith in markets to deliver a future of endless, rapid growth is impossible to imagine now.
Essentially, orthodox economic theory assumes the infinite consumption of finite resources. Growth, in the sense of using more and more stuff, is obviously impossible when there is only a certain amount of stuff. We can use what we have more efficiently of course, but this, too, has hard limits.
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