Prosperity matters. A prosperous society is concerned not only with income and financial wealth, but also with the health and wellbeing of its citizens, with their access to good quality education, and with their prospects for decent and rewarding work. Prosperity enables basic individual rights and freedoms. But it must also deliver the ability for people to participate meaningfully in common projects. Ultimately, prosperity must offer society a credible and inclusive vision of social progress.
Prosperity has not always been interpreted so broadly. For the last half a century at least, it has been cashed out (almost literally) in terms of per capita income. Increasing the Gross Domestic Product (GDP) has been seen as synonymous with achieving a rising prosperity. Since the second world war, growth in the GDP has become the single most important indicator of economic success across the world. It has also been seen as the principal goal of government policy.
There are some persuasive reasons for this formula, as recent years have shown. When GDP falters, calamity beckons. Investment stalls, consumer spending declines, tax revenues plummet. Firms find themselves out of business. People find themselves out of jobs. Lives and livelihoods suffer. And a government which fails to respond appropriately may rather quickly find itself out of office.
The prevailing response to low growth is to try and stimulate private investment through monetary policy (low interest rates and quantitative easing), and to impose an often severe austerity on public spending. A sense of urgency inhabits the priority to get growth back as quickly as possible. But in the process there is a real risk that prosperity (in any meaningful sense of the word) is further eroded – particularly for the most vulnerable in society.
To make matters worse, this response is hindered by continuing fragilities in the global economy. Debt overhangs, volatile commodity prices and trade imbalances conspire with demographic change, declining productivity growth (in advanced nations) and structural change (in emerging economies) to deliver a variety of adverse conditions for prosperity. These economic headwinds suggest an ongoing risk of ‘secular stagnation’ and potentially catastrophic stock market collapses.
Climate change adds a particular twist to this near perfect storm. The scientific consensus suggests that global average temperatures need to be less than 2°C and ideally less than 1.5°C above the pre-industrial average. The Paris Agreement signed in December 2015, commits nations across the world to reducing carbon emissions in line with this target. But the transition to a low carbon world requires a massive and accelerated transformation in capital markets, a transformation which would be challenging at the best of times, and these are evidently not the best of times.
Climate change is already exacerbating the plight of some of the poorest people around the world, who have fewer means to defend themselves from its impacts. Eradicating poverty and reducing inequality must lie at the heart of a meaningful vision of prosperity. Particular attention is needed to improve the conditions under which the most vulnerable sectors of society live. Inequality itself erodes the basis for civility and undermines the prospects for living well, not just for the poor, but across society.
In short, it is becoming an increasingly urgent priority to build a vision for a more equitable, more sustainable prosperity and to work out what this might look like in a world where economic growth could be much harder to come by. This is the motivation and the challenge for our newly-awarded ESRC Centre for the Understanding of Sustainable Prosperity.
Over the next five years we’ll be exploring the meanings and moral framings of sustainable prosperity, examining the role of culture and the arts in contributing to it, establishing the political and institutional frameworks appropriate to it, unravelling its social and psychological dimensions, and analysing the macroeconomic and system dynamic implications of achieving it.
At the same time, we aim to convene a wide-ranging public dialogue on sustainable prosperity across business, government, academia and civil society. The broad aim of this dialogue is to ask the simple question: what kind of society do we want to live in; and how can we set about getting there?
Over the next five years we hope to engage with as many stakeholders as possible across our work programme. We’ll be posting news, events, publications, research findings, videos, podcasts, opinions and vacancies on this website. Stay tuned!
This blog first appeared on the website of the Centre for the Understanding of Sustainable Prosperity, Feb 2015.
:: Image (CC BY-NC 2.0) Geraint Rowland / Flickr