The Case for Fundamental Reform
Published: 15 January 2024
Commentary
In this piece, Professor Sayantan Ghosal from the Adam Smith Business School discusses the economic forecast for 2024 and makes the case for fundamental reform and a new ‘economic bill of rights’ in the UK and globally.
Professor Sayantan Ghosal states that The World Bank predicts a sharp global slowdown, worse than the 1970s, with painful recovery requiring steep interest rate hikes. This will hit high-income countries in recession and trigger debt crises in vulnerable developing nations, exacerbating existing inequalities, Ghosal and Thomas (2023).
Rising energy and food prices, fueled by ongoing crises, and limited productivity growth from recent innovations further complicate the picture. In the UK, this manifests as anti-globalisation backlash, democratic erosion, and waning interest in global cooperation, hindering efforts to combat climate change.
Historical perspectives offer grim insights: Broadberry and Wallis (2017) show economic prosperity relies on reducing periods of decline, Tainter (1988) warns of diminishing returns from increasing complexity, and Scheidel argues violence often levels inequality. All emphasise the vulnerability of the disadvantaged in the face of such challenges.
Both UK major parties broadly accept globalisation, technology, and deregulation, proposing managerial capitalism with market-funded public services and redistribution. However, this fails to address the concerns of voters experiencing stagnant incomes, job insecurity, and welfare restrictions.
Populists appeal to these disaffected groups, advocating national protectionism, restricted immigration, and cultural patriotism. They reject "special treatment" for minorities and see globalization and technology as threats.
To address these issues, we need an updated "Economic Bill of Rights" similar to Franklin D. Roosevelt's vision, but expanded to be global and include sustainability concerns. The current system's failures, despite decades of growth, necessitate fundamental institutional reform focusing on human dignity and freedom.
Time is limited, and entrenched interests will resist change. The potential for a better future exists, but only if we reconfigure the economic order's foundations to create a sustainable, equitable, and stable global economy.
Read Professor Sayantan Ghosal full forecast for 2024 on the Academy of Social Sciences webpage.
First published: 15 January 2024