A new economic settlement – the progressive pillar of the economy

Individuals do not have equal status in our economic system and states do not represent humanity; they govern it. States are too arbitrary in their action, and the private sector is regressive.

Legacy and rights
Our history is familiar, we know it well, share and live its legacy. We have inherited a
privatised market economy, counter-balanced by the State. An enterprise economy
constructed around the joint-venture of those with pre-existing capital wealth, to exploit
resources, of land, people and societies worldwide, to share out the profits of colonialism,
then industrialisation and now advanced technology.

Those without property rights and wider society have always been denied an economy
primarily purposed to meet their needs and achieve a fair distribution of wealth. Those
without voting rights, including women in the UK until 1928, were, as many remain today,
unable to influence the other bipolar pillar of our economy, the state, through the election of
a government of their choice.

The link between the privatised market economy and the pre-existing capital wealth which
funds it, still disempowers younger generations, and those marginalised by race, gender and
social class. It is universally impactful because the well-being of the general population is not
directly attached to the market economy. We are a society of diverse values and outlooks,
but the economy is not plural and has not adapted as our modern society has evolved.
The United Nations has 193 members and 2 observer states. Although there is no single
recognised number of societal groups, estimates using criteria such as language, ethnicity or
culture, range from 10,900 ethnolinguistic groups to as many as 24,000 using more complex
classifications. Individuals do not have equal status in our economic system and states do
not represent humanity; they govern it.

The systemic root of economic inequality, disempowerment and social group discrimination
is the same as that which diminishes our appreciation of collective human rights. The failure
to look beyond individualism and the state.

We experience life as human individuals, bound collectively to the many, overlapping
familial, local, and national communities of which we are part. Humanity exists as a global
society too. Yet economically we conceive of the state, and the state alone, to be the
collective entity around which to build progressive change. We rely on the state to deliver
fairness through macro-economic management, regulation, policymaking and redistribution.
But the state fails in this regard. So, although 82% desire a fairer society with greater
equality, 72% do not trust politicians to deliver it.

Progressive economics lays beyond the Private Sector and the State, there is a third
pillar
The private sector was never designed to meet social need. Extractive capitalism is
structured to serve a narrow class of owners and investors, not the public at large. An
innovative, wealth-producing private sector will always be an essential part of a flourishing
economy. But the monopoly it currently enjoys over economic value creation is neither
inevitable nor justifiable.

In democracies governments change, so redistributive tax and spend through the state is too
impermanent to bring about systemic, progressive reform. The same applies to socialist
orthodoxy and nationalisation, especially in our post-socialist age. It is impermanent,
unaffordable, suppresses personal rights of choice and is too often disconnected from any
sense of shared ownership or accountability. If we want lasting change, we must organically
create institutions that outlive individual administrations and embed democratic control into
the fabric of the economy. An economy which has a deliberative democratic framework built
into it. Authoritarians, on the other hand, suppress plurality and rights of personal and societal
difference. To reform the economy, we must look beyond both the private sector and the state.

Values and purpose – the third pillar – society: the market economy
The market economy simply provides the tracks along which the economy trundles. The
ethics and purpose of those serving it, determine for whose best interest, its activity and
wealth is generated.

The neo-‘liberalist’ demand that markets should be freer so that private shareholders can
build increasing personal wealth, has a challenging counterpart, that markets should be
systemically more competitive, freer to serve non-shareholder self-interest.
Liberalist and centrist values have never been attached to the distributive economy in the
way shareholder self-interest has. Impacting the values imbued in society. The economics of
personal divergence, particularly combined with the politics of social difference, fracture the
bonds that build a healthy society, rather than cohering it around shared purpose.

If we are serious about building a fairer society, we must broaden our economic imagination
and start designing institutions that permanently embed fairness at source, rather than patch
it up after the fact.

This is not fantasy. Around the world there are a growing number of purpose-driven firms,
steward-owned, public-benefit corporations and community wealth-building initiatives that
operate on a different logic to the private sector. What binds them together is a simple but
powerful principle, that enterprise, as should the state, serve society, not the other way
around. Society is the third pillar.

Societal best-interest is served when our personal self-interest, including as consumers,
converges with our collective self-interest, that of the general population and collective
groups within it. Our economy is built on the capital which attaches producer ownership interest to the market economy. But consumers have power, once their buying choices are linked to a sector which gives them affordable, best deals and in which profit is not abolished but repurposed, to
serve their interests as part of wider society. Wealth belongs to us all. Ethics shape
decisions. Purpose determines outcomes. When the economic rights of consumers are adhered to the economy through purpose-driven enterprise, the link between pre-existing wealth, opportunity and outcome is broken. This non-capitalist reshaping of the economy would be a paradigm shift.

The funding exists to develop a non-shareholder purposed sector, but we must reimagine
the nature and purpose of private capital, public capital and debt, and channel hybrid capital
models, including pension fund investment, towards a purposeful sector. One benefitting the
members whose investment funds they hold. If funding was directed to companies with
social missions, we could begin to expand a sector within the economy that counters the
excesses of financialised capitalism, through the purpose of those committed to affordability,
sustainability and long-term public benefit. Our thinking needs to look through the non-producer end of the economic lens. There are many reasons why we accept deceits arising from legacy-thinking, but to achieve change we must challenge our basic understanding of how the economy can function and for whose benefit. We pay more for goods and services because shareholders seek to maximise profit. Often essentials are unaffordable. So to give one example, people should have a right of choice, to buy their energy from companies rewarding entrepreneurship, but purposed to deliver affordable prices, using profit to subsidise social tariffs.

We think in binary terms of “profit” and “not-for-profit”, which relates to the politics of “right”
and “left”, but profit is spectrum. A purpose-driven sector stretches from “not-for-profit” at one
end, through to the point where shareholder self-interest determines purpose. This societal
economic spectrum is of political significance because its purpose connects the self-interest
of the general population to the economy. Through radicalising universal, centrist political
and economic rights.

Profit in the private sector is generally maximised, a driver of resource consumption and
allocation, which has had existential environmental consequences for humankind. But profit
and the economy it fosters, need only be sufficient; to sustain a company’s operation and
fund its non-shareholder, societal purpose. A reflection of our macro aims for sustainability.
It is consumers who bear the cost of production capital. All consumption pays a producer
‘tax’; which funds the rate of return demanded by investors. Consumption turnover builds the
profits which companies retain to fund investment and build corporate capital growth, or
which is extracted to build personal wealth. This is justifiable, but only if the enterprise
economy also includes a sector which unifies producer and consumer purpose and also
builds wealth for the nation as its primary function.

Consumers and wider society bear the costs associated with the private sector’s
deleveraging of risk onto the public finances. In the case of tobacco, private profits
depended on wider society’s willingness to pay for the cost of health services mitigating the
pain suffered, and early death arising from tobacco related illness. So, today, the cannabis
industry could be societised, to include a producer of medicinal cannabis, with the NHS,
pension funds and government as stakeholders, alongside commercial investors. Able to
buy product at a cost price and using the profit from non-NHS sales to fund our health
services. The same applies when consumers pay increased charges to pay for utility infrastructure – they deserve the status of stakeholders in a purpose-driven enterprise, which does not foul
up our waterways, and which builds affordability into its remit. The utilities could be operated
to benefit society as their principal purpose.

Beyond consumption, once we identify the existing housing market as a societal asset, we
can societise the dysfunctional rental market and develop policy to build affordability into the
sector. Through types of tenure making use of the existing housing stock and incentivising the private sector to offer affordable tariffs. First, we must challenge the conceit that private
markets always lead to lowest prices, they do not and second, devise ways to make them
work for the good of society.

The limits of redistribution and the state – the third pillar – society: an economic
entity
We talk of stakeholder interest without connecting that interest to the economy, relying
instead on morally compassing the private sector or on the patronage of the state. But the
state fails because redistribution alone will not deliver a fair society, and the private sector
will not release sufficient wealth to fund the needs of the state.

Society funds the state, through the taxes its general population pays, the sovereign debt it
underwrites, as lender of last resort to the private sector when over-speculation leads to
collapse or business practice adversely impacts communities. Also, when redistribution fails,
through austerity imposed unmet social need. Redistribution fails because it is too
dependent on the willingness of governments to act and too vulnerable to reversal when
power changes hands.

None of this removes the need for progressive taxation. But even the most well-designed tax
system cannot compensate for an economy that concentrates ownership, power and
opportunity. States are too arbitrary in their action, and the market economy is regressive.
If not just the private sector, or state, then what? It is society. Once we deem society to be a
unique and independent economic entity, we can design and attach economic rights and a
purpose-driven sector to it. Creating a fairer economy, politics and society. An economy to
which social and political values adhere. Whose function is determined by consumers and
the general population.