The Future Direction of Social and Economic Policy

John Maynard Keynes expressed the view that a civil society should combine economic efficiency, social justice and individual liberty. Society today is full of promise and opportunity as world leaders consider the future direction of social and economic policy in a post-pandemic environment. Today’s global civil society has many excellent universities, groundbreaking scientists and inventors, successful entrepreneurs, creative artists, and intellectual thought-leaders. However there are many social and economic challenges to be addressed, including inequality and poverty, the existential threat of climate change, the effect of technology on the work environment, and the need to improve general health and well-being conditions, as well as providing adequate financial support for the elderly. These issues are of a global nature and can usefully be researched at the global level with a view to formulating policy objectives and remedies by the relevant United Nations Agencies, such as World Health Organization, International Labour Organization, World Meteorological Organization, International Monetary Fund, International Bank for Reconstruction and Development, and World Trade Organization. Global initiatives can then be evaluated and transformed into policies at the national level with due consideration for local conditions. However, public finances will be under pressure particularly as a result of rising costs attributable to climate change, pensions, health and social care. To reduce this fiscal pressure, there is a strong case for increasing corporate taxation and taking action to counter multinational tax avoidance.

Wealth and income inequalities within and between nations are of a dramatic magnitude and have been increasing over time. Thomas Piketty’s classic 2013 work Capitalism in the Twenty-First Century provided incontrovertible evidence of the causes of growing inequality over long historical periods due to the rate of return on capital exceeding the rate of economic growth, principally benefiting the top 10% relative to the other 90% of the population. Changing the world of work is central to reforming capitalism to ensure it operates in the interests of everyone. Better working conditions with better pay and better job security are the key indicators of social progress. Greater equality and fairness can be achieved through the active contribution of state investment in infrastructure, research and innovation so that everyone benefits from the provision of transport, housing, energy and broadband systems, as well as education, healthcare, childcare, social care and leisure opportunities. Part of the solution to these challenges lies in the provision of adequate social security and healthcare benefits to the entire world’s population by means of gradual expansion of the number of persons covered and the increase of benefit amounts and eligibility conditions. The coronavirus epidemic called for responses on an epic scale comparable to wartime efforts. The post-pandemic period will offer opportunities for the creation of forward-looking plans to rebuild the global economy, to create improved quality of life and conditions for achieving greater equality, to address the challenges posed by technological revolution, and most importantly, to commit to a green recovery plan to counter the existential threat of climate change. It is essential to stress that global problems require global solutions and therefore supranational organizations need to be strengthened and accorded greater respect among nations to achieve these noble objectives.

There is an urgent need for the notion of a green industrial revolution on a global scale. Decarbonising the economy and reducing greenhouse gas emissions will only happen if national governments implement policies of public investment, procurement, taxation, and regulation, together with research and development programs. Policies should target investment towards a 100% renewable energy supply, investing in renewable energy projects, and incentivizing onshore wind and solar power. However, private sector finance tends to be risk averse and of a short term nature, with venture capital typically structured to achieve returns over a three to five year period. Long term finance is essential to bring about the green economy. The tax system should reward long term investments, particularly in green jobs and research and development, and create and enforce incentives and disincentives to address sources of pollution. An equitable and just transition to a new green global economy is required with strong leadership and commitment from national and regional governments.

In 1944, world leaders met at Bretton Woods in New Hampshire to forge a new global economic order led by a set of international institutions including the International Monetary Fund and the World Bank. These institutions have evolved and reorganized over the last several decades to tackle emerging challenges. The post-pandemic period provides an opportunity to reform the Bretton Woods institutions to provide new mandates to support global efforts to address the challenge of climate change, with reformed governance to rebalance the power relationships between advanced and emerging economies. These new mandates should encourage national governments to adopt more ambitious carbon and emission reduction targets, giving an even greater priority to supporting countries in climate adaptation towards low carbon energy supply and reduction of carbon emissions.

Ken Buffin, Editor