Economic System: What?

Economic System: What?

This year, a group of Oxford students, including many from Saïd Business School, have joined the team at Imperative21 to work on a very special research project with Skoll Centre Social Entrepreneur in Residence, Charmian Love. We call these students NERAs: New Economic Research Associates. The research project involved interviewing a range of global thought leaders and doers in the economic system change space, and the NERAs have recorded their reflections on what they learned in a series of blogs. We’re pleased to share the first in this series, authored by Leading for Impact participant Laura Chavez-Varela and Jillian Gedeon.

Raise your (virtual) hand if you too have joined the ‘working from home’ club, used the heightened convenience of online shopping/delivery, or had to overcome a myriad of logistical and financial challenges to keep your household afloat. Although our world has drastically shifted in the past couple of months, the expectations for us to adapt and bounce back to ‘business as usual’ remain the same. We are constantly urged to ‘do more’ and carry the differentiated weight of our role in our community and the economy.

We are all part of an economic system where we depend on and contribute to the flows of production, distribution, and consumption of goods and services, navigating the world leaning on existing financial and social infrastructures.The system we have lived in has brought us to where we are today, with undeniable advances in healthcare, technology, food systems, and transportation. But what did we compromise to get to where we are today?

A lot more than we think.

Cartoon style building with writing on the side 'RESET RESET RESET. Carbon -46%. Trust +12%. Living wages +100%. Wellbeing +21%. Biodiversity +15%. Inequality -26%'

The current economic system that we’ve come to rely on leans on a “profit-first” model. From a business perspective, this makes sense for survival as it boosts investor contributions, stimulates competition leading to increased efficiency, and contributes to the economy as we know it. But the human and environmental sacrifices that we’ve had to make as a society to uphold this status quo needs to be re-examined.

Prioritizing the shareholder’s insatiable need for growth and financial return has recurringly led companies to cut costs. Inadequate safety measures led BP to contribute to one of the world’s greatest oil spills in history and profit motive kept the Rana Plaza garment factory workers inside a knowingly dangerous building until the day it collapsed. The need to maximize profits has blurred many companies’ moral compasses in their pursuit of cheap labor and resources in the East. The environmental burden that we have invoked on our globe as we’ve cultivated a culture of excess cannot be overlooked. At the current rate, the annual extraction of fossil energy, minerals, metals, and biomass is 50% more than what is within our ‘planetary boundaries’, what the Oxford economist Dr. Kate Raworth has concluded are the environmental ceilings beyond which lie irreversible environmental degradation. Our current systems have left out so many populations with its extractive ethos to benefit the top elite, where the world’s richest 1% have more than twice as much wealth as 6.9 billion people.

‘ Our current system is steering us towards unequal and unsustainable outcomes, driving wealth and power to the very few, and extracting resources as if there were no tomorrow.’ - Imperative21 consultation remark

As we acknowledge that capitalism and democracy can be challenged, our world and the people inhabiting it can no longer tolerate the systems that are doing us harm.

But not all is lost. We are currently living in a time where people are open to change. The devastating economic impact of the pandemic and social movements such as Extinction Rebellion and Black Lives Matter have accelerated this discussion. There is a silver lining of opportunity to create a model that challenges pre-existing systemic issues to redesign an economic system with shared resources, wealth distribution, and space for people to develop relationships with the environment.

An economy that adds value in multiple ways is within reach

What does systems change mean? In recent years, a variety of actors across different sectors, from business and political leaders to civil society groups to academics have reinforced the need to focus and join efforts to shift our common narrative. Systemic change means approaching complex challenges by identifying and understanding how a range of stakeholders are interrelated within a greater network. From an economic perspective, this equates to: recognizing interdependence, rebalancing relationships, and dismantling inequality. These three design objectives are the substantive characteristics of the economic system we must move toward to provide for the wellbeing of all people and the viability of nature.

This is Imperative21’s vision.

Inspired by Arundhati Roy’s Financial Times article, “The pandemic is a portal”, Imperative21 began a consultation process with business and finance leaders, advocacy organizations, non-governmental organizations, academics, and media for their contribution and co-creation of “Draft Zero”, a roadmap for an economy redesigned for resilience and shared prosperity. A business-led network of allies to re-imagine economic systems change, Imperative21 is a movement to co-create a shared vision for what economic system change looks like, and seeks to support coordinated allied efforts to make the imperatives a reality.

Historically, dramatic shifts have sparked innovation and collaboration of what at times feel like “unlikely coalitions”, and 2020 will not be the exception. As the demand for systemic change continues to ignite around the world, we are ready to take on the challenge.