Achieving a sustainable prosperity requires compelling social narratives and robust economic models to deliver them. Theme S2 aims on the one hand to develop qualitative narratives of sustainable prosperity and on the other to explore the quantitative implications of these narratives through the development of macroeconomic models. Our research explores the economic, social and environmental implications of these models and narratives. We also examine the role of good work in delivering sustainable prosperity. Browse through updates from this theme below. Read on for detailed information about the work programme.
This theme uses empirically-calibrated, economic system models to explore visions of sustainable prosperity. It is composed of two parallel main strands: the first is collation and synthesis of narratives of sustainable prosperity arising from across the CUSP programme; the second is development of models for the analysis and testing of the economic, financial, environmental and social dimensions of these narratives. We work with our partners within CUSP and with external organisations (including KTH Sweden, the Finance Innovation Lab and the Institute and Faculty of Actuaries) to draw up plausible and contrasting visions of sustainable prosperity. Modelling is based on the platforms developed in the Prosperity and Sustainability in the Green Economy (PASSAGE) project (including the Green Economy Macro-Model and Accounts (GEMMA) framework being developed by Prof Tim Jackson, University of Surrey and Prof Peter Victor, York University, Canada), and the expanded World 3 model being developed by the Global Resources Observatory, Anglia Ruskin University.
S2.1 :: Model Development
At the heart of Prosperity without Growth is the call for a new ‘ecological macro-economics’: an understanding of the dynamics of the modern economy that can also incorporate the reality of ecological and resource constraints. A critical challenge for this new approach is the need to ensure economic and social stability even as relentless growth in consumer demand is attenuated. Forging a ‘post-growth’ economics is central to our work. Historically, socially and physically grounded, our work draws on a wide range of theoretical and conceptual approaches—including ecological economics, post-Keynesian economics and modern money theory. Tim Jackson has been working closely with other economists—in particular the Canadian economist Peter Victor—to develop a suite of system dynamics models capable of describing a sustainable national economy operating within ecological limits. These include the FALSTAFF model which explores the financial and economic dimensions of a post-growth economy; the SIGMA model which addresses the key challenge of inequality in the context of declining growth rates; and LowGrow SFC which develops scenarios for the Canadian economy out to 2067. In other work, the expanded World 3 model being developed by the Global Resources Observatory (GRO) at Anglia Ruskin University takes a global, shorter term approach. Its aim is to evaluate the systemic risk generated by food and energy supply trends and shocks, and their interactions with the material, financial and knowledge economies, under the constraints of a finite planet. It thus addresses the question: What are the systemic and cascading risks in the near term in financial and economic systems as a result of resource scarcity?
S2.2 :: Narratives for Sustainable Prosperity
There are, of course, many diverse visions of sustainable prosperity, and this strand of work collating, synthesising and developing a select number of core, alternative narratives as they arise from the other CUSP themes. These narratives could include, but are not limited to, the following emerging ideas:
- Technology investment and innovation: According to this narrative, investment in technological innovations will achieve low-carbon, inclusive, climate resilient growth. It is widely explored in the literature (see for example the New Climate Economy report).
- Structural economic change: This narrative is based on a core vision inherent in the focus of CUSP themes >>A and >>S1: the potential for a structural economic shift towards sectors that deliver high social, psychological and cultural satisfaction but require lower throughput of material resources.
- Sufficiency: In this narrative, everyone, including the poorest, is envisioned to have the means to achieve a ‘decent’ life. This is a key narrative arising from themes >>M and >>S1, relating to social justice and equitable access to goods and services.
- New models of enterprise: This narrative explores the potential for alternative business models to contribute to sustainable prosperity. Such a narrative would envisage enhanced contribution to economic activity from, for example, social enterprise, the collaborative economy, the sharing economy, and green investment. This narrative is strongly linked to CUSP theme >>P.
S2.3 :: Scenario Testing: outcomes and indicators
The narratives developed in Project S2.2 are tested using the modelling framework(s) developed in Project S2.1. In particular, we are exploring the macroeconomic and financial stability of the narratives under different assumptions about investment, public spending, consumer behaviour and the money supply. A core aspect of the analysis (see Project S2.4 below) focuses on questions concerning work, employment, labour productivity and the substitution between labour and capital. An additional element is focusing on the finance sector, including the creation of money, and the potential for innovative investment models. Further analysis is investigating the resilience of the economy (and in particular the finance sector) to assess whether these narratives and frameworks lower the risks from wild card or shock events (such as acts of war disrupting energy supply chains or climate change events impacting on food availability).
While the analysis reports on a variety of indicators such as economic output, resource use, emissions, employment, inequality and wellbeing, the most appropriate indicator set to describe sustainable prosperity is not an easy or obvious choice. We therefore explore and test a variety of new alternative indicators such as adjusted GDP, wellbeing life-years, and inequality between wellbeing groups, in order to develop a multivariate indicator set that adequately describes sustainable prosperity, without being overly numerous.
S2.4 :: Calibrating Good Work
Building on the employment focus in our scenario testing (S2.3), we are exploring the relationship between work, environmental impact and wellbeing. Drawing on insights from Project >>A.2 and >>S1.2, we want to test the hypothesis that there exists a ‘sweet spot’ of ‘good work’ in which certain sectors of the economy offer a triple dividend: low environmental impact, high labour intensity, and high levels of worker satisfaction. Project S2.4 is carrying out a statistical exploration of the relationship between the material or carbon footprint of different sectors and the quantity and quality of employment in those sectors. We are testing the wellbeing implications of a structural shift towards low-carbon, high employment sectors.
Sluggish recovery in the wake of the financial crisis has revived discussion of a ‘secular stagnation’. These conditions have been blamed for rising inequality and political instability. Tim Jackson contests this view, pointing instead to a steadfast refusal to address the ‘post-growth challenge’. (An earlier draft of the article was published as CUSP Working Paper No 12.)
Revised second edition of Peter Victor’s influential book. Human economies are overwhelming the regenerative capacity of the planet, this book explains why long-term economic growth is infeasible, and why, especially in advanced economies, it is also undesirable. Simulations developed with Tim Jackson, show that managing without growth is a better alternative.
System dynamics model by Tim Jackson and Peter Victor, developing low carbon and sustainable prosperity scenarios for the Canadian economy out to 2067. The scenarios are not predictions of what will happen, but an exploration of possibilities. Interested readers can explore the implications for themselves in the online beta version of the model.
The second in our series of briefing papers on building An Economy That Works explores inequality in the UK. It examines the evidence for rising inequality over the last fifty years, estimates the economic welfare lost to society from an unequal distribution of incomes and addresses the critical question of managing inequality in the context of declining growth rates.
The need for an environmentally sustainable economy is indisputable but our understanding of the energy-economy interactions (dynamics) that will occur during the transition is insufficient. This raises fascinating questions on the future of economic growth, energy technology mix and energy availability.
This first in our series of briefing papers on building An Economy That Works explores the underlying phenomenon of ‘secular stagnation’ – a long-term decline in the rate of growth of the Gross Domestic Product (GDP). The paper examines the evidence, explores the causes and discusses the implications of what some now call the ‘new normal’.
This paper aims to contribute towards the development of a political economy of work fit for purpose in a world of social and environmental limits. In order to get beyond today’s dominant conceptions of work in a growth-based capitalism, Simon Mair, Angela Druckman and Tim Jackson explore the role of work in historical utopias.
Sluggish recovery in the wake of the financial crisis has revived discussion of a ‘secular stagnation’. These conditions have been blamed for rising inequality and political instability. Tim Jackson contests this view, pointing instead to a steadfast refusal to address the ‘post-growth challenge’.
The requirement to reduce emissions to avoid potentially dangerous climate change implies a dilemma for societies heavily dependent on fossil fuels. As renewable capacity requires energy to construct there is an initial fossil fuel cost to creating new renewable capacity. An insufficiently rapid transition to renewables, it turns out, will imply a scenario in which it is impossible to avoid either transgressing emissions ceilings or facing energy shortages.
Piketty argued that slow growth rates inevitably lead to rising inequality. If true, this hypothesis would pose serious challenges for a ‘post-growth’ society. Fiscal responses to this dilemma include Piketty’s own suggestion to tax capital assets and more recent suggestions to provide a universal basic income that would allow even the poorest in society to meet basic needs.
It is widely acknowledged that GDP is not a suitable measure of economic welfare. In this paper, Simon Mair, Christine Corlet Walker and Angela Druckman propose a novel framework for indicator development: the ‘Theory of Change’ approach — a causal model approach in which the relationships between system inputs, activities, outputs and outcomes of the economy are explicitly articulated, and can be used to identify theoretically sound indicators for economic welfare.
As part of a new compilation of groundbreaking work on social indicators, Simon Mair, Angela Druckman and Tim Jackson have contributed a chapter examining how globalisation since 1990 has shaped fairness in the Western European clothing supply chain.
The publication of Prosperity without Growth was a landmark in the sustainability debate. This substantially revised and re-written edition updates its arguments and considerably expands upon them. Tim Jackson demonstrates that building a ‘post-growth’ economy is not Utopia – it’s a precise, definable and meaningful task. It’s about taking simple steps towards an economics fit for purpose.
This paper explores the use of instability indicators developed in statistical physics to analyse the stability of the GDP within national longitudinal datasets. From our early results it is suggested that they may provide invaluable insights into the inter-decadal dynamics of the macro-economy, providing potentially useful insights into (e.g.) the nature of the business cycle, secular stagnation and the restoring forces of the economy.
The use of quantified indicators for the implementation and measurement of social progress is a well-established policy tool. However, any form of ‘social progress’ is inherently contested and a meaningful application of indicators in such contexts poses numerous challenges. In this paper we explore how indicators might be used to research and implement sustainable prosperity.
Understanding sustainable prosperity is an essential but complex task. It implies an ongoing multidisciplinary and transdisciplinary research agenda. This working paper sets out the dimensions of this task. In doing so it also establishes the foundations for the research of the ESRC-funded Centre for the Understanding of Sustainable Prosperity (CUSP).