What the Queen touched upon was a more fundamental question: is economics fit for purpose? Up to 2007, we would have said 'yes'. The free-market neo-classical economics had delivered decades of rising prosperity and improved living standards. It was only when that particular strain of economics was tested that it was found wanting. It was found that the fundamental principles of the free-market neo-classical economics had a significant flaw - the theory was too divorced from reality. It represented a fiction of human behaviour that was overly influenced by one narrow political stripe. Under pressure, the fiction evaporated.
One response to this was to argue that the theory was right, but that it had not been followed properly. This view doesn't have many supporters now. Another view was that the theory was wrong, and that a new economics was needed, one that gave as much prominence to social contribution as was formerly given to personal enrichment. This is a theme that the Occupy movement has taken up, where social justice is seen as just as important as rising prosperity. Added to that is the growing agenda of sustainability - a world in which there is little economic growth - which helps to form the shape of the new economics.
This indicates two things. First, a growing belief that the days of relentless economic growth are numbered. If we are to see slow, or no, growth, then the issue of the distribution of income - the social justice agenda - is likely to rise in importance. Second, whereas the free-market neo-classical economics had a very restricted role for government, collective social action takes a more prominent role in defining and delivering an outcome that is more socially just. To that extend, the Occupiers are right. And they need a new economics to help them deliver that outcome.
© The European Futures Observatory 2013
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