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The Progressive Policy Think Tank

Changing the economic system: the longer-term project

Anna Laycock considers the longer run implications of the election for efforts to changing the economic policy and thinking, arguing that the landscape is starting to shift as new movements and ideas come to the fore.

Minutes after the exit polls, the analysis began. Within 24 hours, the commentariat was buzzing with insights into why we’d seen a very different result to the one most of them had been predicting for the past seven weeks. Our rapidly accelerating news cycles encourage instant wisdom, which to me is a contradiction in terms. To understand any sort of political change, it’s important to take a step back and see the shifts in the wider socioeconomic system.

The economy is a human system: it’s complex, chaotic and interdependent. The ossification of relationships and power structures within our economy can make the system seem impossible to shift. But if humans create a system, they can change it, and they often do in ways that defy expectations. If we understand the results of the 2017 election as a symptom of economic systems transition, we can start to explore its meaning in a wider context.

1. The landscape is shifting

The landscape is the terrain the game is played on: the worldview, social values and cultural norms which frame the overall system. The landscape shapes and perpetuates what we accept as reality and normality. When it shifts, the whole system shifts.

It’s clear that the dominant narrative around the economy has begun to shift. It’s now acceptable to challenge the economic orthodoxy that sees markets as value-free, error-free mechanisms for the ultimate, unquestionable purpose of economic growth. That both the goal and the mechanism can be questioned by left and right suggests that the Overton window – the range of policies that are deemed acceptable – has shifted, at least on the economy.

2. The regime is struggling to respond to niches of innovation

Within this overall landscape, niches of innovation are challenging the regime that holds the current system in place, the dominant institutions and power structures of the economy. Businesses are increasingly combining profit and purpose. People are organising in decentralised ways, along lines of identity and common cause as much as political tribe. Information is no longer controlled by the media elite, but is generated, shared and contested by the many.  

The regime is struggling to adapt to this new reality. The media faces an unprecedented challenge to its status and its business model; political parties fail to understand and accommodate the fluidity of non-tribal political activists; both have tended to focus on belittling grassroots movements rather than understanding their meaning. The institutions that survive the shift will be those that focus on understanding and nurturing new ways of doing things, not resisting or ignoring them.

3. Systems change is first and foremost people-powered

From citizens to policymakers, consumers to business chiefs, every change first occurs within an individual. It’s the only possible starting point for wider systemic change.

The people-powered campaigning we’ve seen in the referendum, US and UK elections is reflective of this. While not every grassroots mobilisation is effective in changing hearts and minds, it’s very hard to do so without person-to-person work at some point in the process. To take this to scale requires a strong infrastructure, from intangible know-how to sophisticated digital capacity, all focussed on powerful moments of interaction that help people connect with their deepest values.

4. Prepare to be confused again

None of this has happened in a linear or consistent way. Tactics that were dismissed as ill-founded are now celebrated as political genius, and vice versa. Parties and movements that seemed to be heading for disaster are now seen as building their power, and vice versa. The idea that sometimes things can get worse before they get better – and vice versa – seems to be lost on many thought leaders.

The bigger picture of our economic system is one of a powerful, entrenched system slowly losing vitality and relevance, while political, economic and social innovators struggle to break through and consolidate (the two loops model encapsulates this concept). We’re past the peak of today’s system, but our new system is yet to take root and flourish.  

Those who see a new opportunity to work for a more human, sustainable economy are not hopeless romantics, but they will need to add a strong measure of resilience to their hope. As we move through this critical period of instability and transition, do not expect a smooth journey.  

Anna Laycock is Executive Director at the Finance Innovation Lab, an incubator building communities of innovators and advocates who are creating a better financial system. She tweets @anna_luise