Transforming our economic system will not be an easy task. Gradually adapting the existing system is not enough. Radical change is required, yet in an evolutionary process. Such a change encompasses a redefinition of progress, a revaluation of the way we live, cooperate and communicate, and a redesign of our economy. We should change policies to restore capitalism and make it purposeful, in line with our world goals as articulated in the SDGs. In our vision paper ‘Turning the page – A radical agenda for economic transformation’ we describe how we propose to do this.

A broken model with devastating side effects

The global financial crisis of 2007-2008 was the economic landmark of the previous decade. In its aftermath, a broad consensus grew for the need for change: less financial risk, more connection with the real economy, stricter regulation for the financial sector. 

In the aftermath of the crisis, more and more people came to realise that our environment and social infrastructure are under enormous pressure. In 2015, the world community took two crucial steps to meet these challenges. First, in September, the Sustainable Development Goals (SDGs) were adopted. These 17 targets are the global policy strategy towards a more sustainable world. In December of the same year, world leaders gathered in Paris for COP21. The Paris Climate Agreement’s central aim is to strengthen the global response to the threat of climate change.

Considering the urgency felt back then, the last decade has been disappointing. We are hardly ‘doing things differently’, while risk-taking increases by the day in this ultra-low interest rate environment, in search for financial returns. The connection with the real economy has never really been repaired. On top of that, the sustainability and economic agendas seem to remain two separate entities, instead of being integrated. This is why we are nowhere near the goals we set five years ago.

A radical agenda for economic transformation

There is only one conclusion: neither the financial crisis, nor the environmental and social challenges we’re facing, have led to the necessary fundamental change. The core of our economic system remains unchallenged in every respect. After more than 10 years since the devastating experience of the financial crisis, we are still stuck in an economic model governed by the ideas of the so-called Washington Consensus of free trade, free markets and deregulation. This model delivered growth right up until the financial crisis, but also caused it.

We really have only one choice: change our current economic model and transform it into a model that delivers wellbeing for all. This requires far more than a few cosmetic changes. We need to make our economy less growth-dependent, less financialised and less harmful. And this means that we must get rid of our traditional reductionist economic approach and start looking at the economy for what it is: a complex, interdependent system firmly rooted in and part of our biosphere.

We need to look at economic processes from a holistic perspective: what do they deliver in financial, ecological and social terms? Economic processes can only be economic if the results are ‘net positive’ within ecological boundaries and social thresholds.

The transformation we envision, requires commitment on all levels. Policy makers will have to create the right institutional circumstances. Producers will have to change the way they do business, consumers will have to change their spending patterns. In our view, the financial sector plays a crucial role. Allocating the capital for change is a powerful and necessary task to realise real change.