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The financial crash provided a powerful wake-up call: all is not well in our economy. In this programme we are drawing together the latest economic and progressive thinking to provide a vision for a new economic era.

Programme context

The 2008 financial crisis powerfully and devastatingly demonstrated serious flaws in the UK’s economic model. This alone demands a profound reconsideration of the principles that have guided our economic policymaking. The crisis has also, however, shed light on a wider set of problems, changes and questions regarding our economy.

First, our economic environment is changing in fundamental ways with, for example, the shifting of global economic power eastwards and the emergence of new patterns of innovation, production and consumption. Second, our understanding of how capitalist economies work is being challenged by new strands of thinking, for instance, in evolutionary and complexity economics. Finally, progressives have begun to question what economic policy is – or should be – for. There is a strong and growing feeling that the economic goals we have been aiming towards – broadly, increased income for all, with some special emphasis on trying to help those at the bottom – may have been too narrow, or even misguided.

New Era Economics is an ambitious project that seeks to tackle these big issues head on. Aided by our New Era Economics panel, a group of wise men and women working at the cutting edge of economic and progressive thought, we are attempting to construct a new economic model for the UK by:

  1. Provoking new, progressive thinking on the economy
  2. Understanding the role policy should play to move us towards a more successful, progressive economy, and 
  3. Building a constituency to drive change.

The NEE programme

We believe that this programme of work is particularly vital because there is little evidence that a radical new economic agenda is emerging elsewhere. Perhaps understandably, given that the financial crisis led to recession and deficit, politicians of all hues have been focused on how to return Britain to fiscal sustainability and growth as soon as possible. But the danger is that, as a result, the bigger, bolder policy thinking gets shelved.

In summer 2009, ippr began work on New Era Economics, implementing the first phase of the programme.  This has involved publishing the programme’s first major output – Creative Destruction? Placing Innovation at the Heart of Progressive Economics  – and holding high-profile events at Labour and Conservative party conferences in 2009.

We are now launching the second phase of the programme, which will comprise three core elements.

1. Producing high-profile strategy papers. The first of these will interrogate on what goals and principles should be at the centre of a 21st century progressive economy. This will be followed by a second paper that will explore how paradigmatic change takes place and how we can hasten the arrival of a new economic era.

2. Undertaking new policy thinking: We will deliver a series of policy seminars, tentatively titled ‘Beyond Nudge: New approaches to economic policy challenges’. Drawing heavily on emerging schools of economic thought – including behavioural, complexity and evolutionary economics – these seminars will provide digested lessons for policymakers, presented in the form of concise policy papers that reflect and build on the seminar discussions.

Some of the policy issues we plan to examine through this series include:

  • Finance policy – What do emerging schools of economic thought have to say about the causes of the financial crisis, and the lessons that emerge for policy going forward? What strategic role should finance play in the UK economy? Should financial regulation be part of the macroeconomic policy framework?
  • Employment policy – What sort of employment standards and rights are appropriate in a new era economy? How should ‘flexibility’ (temporary work, self-employment) fit into new era economy working practices? And how can we ensure that the needs of different sectors and minimum standards for workers are taken into account?
  • Industrial policy –  Is there a place for industrial policy in a new era economics and, if so, what would it look like? What are the key trends in contemporary capitalism (in production, consumption and innovation)? How are they affecting different sectors, and what do they imply for a successful industrial policy?
  • Macroeconomic policy – Should macroeconomic policy have one target – inflation – achieved through one instrument – the short-term interest rate; or should there be a broader range of targets and policy instruments? Has the financial crisis and recession shown that there is a role for fiscal policy in achieving macroeconomic aims; or should it be guided purely by accounting rules? How can policymakers identify when an asset price bubble might be developing?
  • Rebalancing – What should the focus of rebalancing be? Should it be sectoral, geographical, or centred on promoting different drivers of growth (ie moving away from debt-funded consumption to savings, investment and export-driven approaches)? What are the inter-linkages between these different elements of rebalancing? How can rebalancing be achieved?

3. Creating the change we want to see. Our objective is not to see a new economic model emerge within the timeframe of this programme. Rather we are striving to change the framing and terms of economic policy debate in the UK, planting the seeds of a different way of thinking.

We will seek to achieve change through a programme of advocacy that will engage policymakers, media leaders, the business community and other key stakeholders in the New Era Economics programme. Our new era thinking will be communicated via an array of medium: including at private dinners, conferences, in the media and on these webpages.

Supporters

The first phase of the New Era Economics programme has been generously funded by:

If you are interested in supporting the work of New Era Economics or hearing more please contact David Nash at d.nash@ippr.org