There's a revolution unfolding in economics, and it could drastically the change the way we think about money in the future.
Let's call it the 'new economics' -- an emerging set of ideas based on the growing recognition that unfettered free market capitalism is endangering the future of life on Earth.
Now it's obvious that capitalism has achieved some incredible things. The numbers of people living in extreme poverty have fallen dramatically in the past few decades, and many people in advanced economies can access technological and material comforts that would have been unthinkable a generation ago.
But it's equally obvious that getting all this stuff has come at a cost. Climate change, if it goes on unchecked, looks likely to render swathes of the planet uninhabitable, claim millions of lives, and speed up the mass extinction event caused by the impact of companies on the environment, according to scientific consensus. Forest and ocean life has been decimated in the past few decades; and the sea is awash with plastic pollution -- to name just a few of the environmental crises we're facing. If we don't do something drastic to change course, then we're looking at the Hunger Games at best, maybe Mad Max.
So, what does this have to do with economics?
A lot, as I've slowly begun to understand.
Not long ago, I interviewed Kate Raworth, a British economist at the University of Oxford, and author of the surprise bestseller "Doughnut Economics." Her argument (which other 'new economists' also advance) is that we're in the mess we're in due in large part to the false assumptions baked into economics over the past 250 years. If you're keen to hear more, definitely check out Raworth's very cool website which illustrates what she means with some short animations. https://www.kateraworth.com/
(You can read my Ozy profile of Kate here: https://www.ozy.com/rising-stars/is-the-future-of-the-economy-a-doughnut/88546)
As Kate points out, lots of the assumptions behind classical economics clearly don't add up. We are not all rational 'economic men' making logical decisions to maximise profits (yes, classical economics was mostly created by men). Writing off pollution as an 'externality' that can be safely ignored doesn't make sense when greenhouse gas emissions could lead to runaway global warming that could trigger the collapse of civilisation, by some estimates. And, most importantly, economic growth cannot go on forever -- there is a limit to the amount of resources the Earth can provide. Kind of obvious when you think about it, right? After all, when something in our body goes on growing forever, we call it cancer.
The 'new economists', like Kate Raworth, believe we need to design new 'circular economies' based on re-using, recycling, and sharing. We need to stop using economic growth as the supreme yardstick of success, and start making sustainability our priority. We might even need to start talking about 'de-growth' -- recognising that the impending ecological crises tied into the global climate system will inevitably lead to a shrinkage in global economies, rather than endless expansion.
I believe that it's time these 'new economists' were put in charge of policy. And businesses should embrace the 'new economics' by starting to measure their performance in terms of their positive impact on society, not merely in terms of generating shareholder value. I can already hear some of you spitting out your cornflakes. So tell me why you think I'm wrong. But if you think there's some truth in what I'm saying, let's get together and give the revolution a push!