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Matthew Taylor proposes design principles for marrying human and economic welfare

The UK economy is performing well in conventional terms, outperforming many rival economies. Whilst this success is welcome, deep-seated characteristics of our economy, such as entrenched inequality, low productivity, and unsustainable levels of consumption remain. Our economic debates continue to be narrow and technocratic, detached from broader considerations of human welfare. This gap between top line success and underlying problems highlights two aspects of misalignment: on the one hand, between economic progress and human welfare, on the other, between short-term growth and long term economic resilience.

I propose five design principles to help us work towards a more resilient human welfare economy. By going back to first principles, a number of policies currently deemed too radical for consideration might emerge as worthy of serious consideration.

1. Clarity of mission. In order to establish how well our economy is performing, we must identify the goals of economic progress. The RSA’s ‘Power to Create’ worldview provides one answer: substantive individual autonomy and an understanding of human wellbeing. A focus on enabling people to live what Robert Unger calls “the larger life” moves us beyond the restricted prevailing understandings of wellbeing.

2. Efficient and sustainable use of assets. This initially involves an identification of what constitutes an economic asset: everything from natural resources and people to institutions and reputation. While disagreement on key policy questions suggests it is unlikely that such a question will result in widespread agreement, it is important as a starting point for judging the degree to which our actions are depleting or enhancing our asset base.

3. Effective and strategic use of key policy instruments. One might think of tax here; as well as being very complicated, our current regime isn’t grounded in a set of consistent principles or ultimate goals. This design principle would demand that an economy oriented to long-term human flourishing would tax things likely to detract from that goal (profiteering, or intergenerational inequality) while incentivising behaviour likely to contribute (employment, socially useful innovation and enterprise). One policy that might seem attractive as a way of achieving these explicit aims is a land value tax, which would act as a barrier to inherited wealth, incentivise productive use of land, and would be difficult to avoid.

4. Empowering individuals as economic actors. Even within the sphere of consumer choice – where the criteria for conventional economic success is most compelling – concentrations of economic power curtail individual enterprise and collective choice. Thus, there is a strong case for a more robust competition regime. Beyond consumption, it is in the sphere of wider human development, particularly in relation to people with lower incomes, that the failure to enhance economic agency is more glaring. We might, for example, favour a citizens’ basic income, which provides all citizens with a modest annual living allowance. This proposal is grounded in a commitment to autonomy and dignity, and has been advanced by a diverse range of thinkers, including John Stuart Mill, Milton Friedman and Friedrich Hayek.

5. Fostering democratic and participative dimensions within existing economic institutions. Enabling public participation can mobilise collective intelligence, foster responsibility and trust; crucially it can give policy makers the space to act for the long term. In the workplace, this might demand structures which provide greater voice and autonomy to employees; more broadly, it might mean public deliberation on the aims of industrial strategy. After all, as Mariana Mazzucato has shown, public funding and policy have lain behind much commercial innovation.

To take these ideas further, the RSA has proposed that a Citizens’ Economic Council, made up of around 30 representative people, might explore the deeper strengths and weaknesses of our economy, develop core design principles for a resilient human welfare economy, and assess a set of ideas which might help to create that economy by 2030.

As the economy moves out of crisis and as living standards finally start rising, we need to reopen the substantive debate about the relationship between growth and human flourishing started by leaders ranging from David Cameron and Nicolas Sarkozy but cut short by the credit crunch. Liberal capitalism is the best system ever developed for solving human problems, but through debate, engagement and policy innovation we need to channel that creative force toward what must surely be the ultimate goal of politics – a larger life for all.

Matthew Taylor is the Chief Executive of the Royal Society of the Arts (RSA), he originally wrote this piece for The future of work edition of Bright Blue’s Centre Write magazine.