Economics anyone? — RSA Journal
The Queen captured the public mood in the UK when, in the wake of the economic crisis in 2008, she asked a roomful of economists, “Why did nobody see it coming?” The crash marks a turning point in the history of economics. Since then, a welcome reassessment has been taking place of the goals and purpose of the economy, driven by the understanding that economics as a discipline should be in service to citizens. The watchwords of this new phase include ‘inclusive growth’, ‘shared prosperity’, ‘behavioural economics’ and ‘wellbeing economics’. All of these concepts, in their different ways, confront previously held orthodoxies that economic success must be measured exclusively in terms of GDP growth, or that progress can be reduced to wealth creation without wider concern for social and environmental outcomes.
It is in this context that the RSA embarked on its Citizens’ Economic Council, to explore ways of democratising national economic policy. Our recently published interim report argues that current economic practice still largely lacks three features: transparency, legitimacy and accountability. These three features together make up a democratic deficit in economics.
First, there is the problem of transparency about the political implications of economic decisions. This lack of transparency is supported by the assumption that ‘real’ economic thinking is restricted to the domain of ‘experts’, and that there is no need for citizen voice on economics. This is compounded when simple concepts are wrapped in complexity and jargon, concealing many political trade-offs and choices that are legitimately the domain for public dialogue and participation.
Second, there is a lack of legitimacy in economic decision-making caused by the dominance of technocratic systems, as well as the exclusion of citizen voice. This has resulted in the rise of populism and the revoking of the ‘social licence’ of policymakers and economists. Underlying much of this is a decline in trust. The Edelman Barometer of Trust (2017) reported a global implosion in levels of citizen trust in policymakers, companies, politicians and economists in 2016. Meanwhile, Oxford Dictionaries declared the international word of the year to be ‘post-truth’. There is mounting evidence that politics and democracy itself need to change; nowhere is this more apparent than in the field of economics. The sheer rate of change — seen in environmental degradation, globalisation, rising levels of migration and the effects of automation — has contributed to many citizens’ sense of economic insecurity, increased levels of distrust and a perceived loss of control. The Leave campaign’s slogan ‘take back control’ sought to exploit those very concerns. When 2.8 million British ‘non-voters’ (those who had never before voted in a general election) turned up at the ballot box, voting to leave the European Union despite a widespread consensus among economists and policymakers that a remain vote would be in the UK’s best interests, it revealed an enormous disconnect between citizens and ‘experts’.
Third, declining accountability has resulted in an economic framework that is less creative, less connected to, and less able to respond to people’s lived experiences of the economy and our collective social problems. Accountability describes the responsiveness of our institutions to citizens, which is clearly lacking at the moment. We heard during our Economic Inclusion Roadshow that economic policy has considerable influence and impact on the day-to-day lives of citizens; for example, the way interest rates are set has had a profound impact on the cost of living for many of the people we spoke to. Despite this, there have been limited efforts to engage citizens in economic decisions, which are often made ‘behind closed doors’. As a consequence, policymakers often find themselves subject to fierce public scrutiny and criticism as controversial ideas face a public backlash and in some cases — such as the Conservative Party’s recent proposals for changes to social care funding — a forced reversal of economic policy. This ‘decide, announce, defend’ model of decision-making can end up costing more, while also damaging the legitimacy of politicians and policymakers.
We need to move towards a more virtuous circle of good public engagement and participation. The RSA Citizens’ Economic Council has worked in an experimental way to better understand how legitimacy, transparency and accountability for both economists and citizens can be strengthened through innovative participatory techniques. Drawing on deliberative models that have been used by organisations such as Involve and The Democratic Society in the UK, MASS LBP in Canada and the New Democracy Foundation in Australia, we sought to understand better the potential such processes have to strengthen citizens’ influence over economics.
The Citizens’ Economic Council engaged 54 people on a journey through national economic policy over five days. We then worked with more than 50 economists, media commentators, academics and policymakers to co-create a national charter for a citizens’ economy. This was supported by Roadshow workshops in some of the areas most ‘left behind’ by economic policy — Port Talbot, Glasgow, Oldham and Clacton-on-Sea — on people’s experiences of the economy. The workshops explored intergenerational issues and specifically engaged with people from ethnic minority communities, young people in schools, LGBTQI people and disabled people. Throughout, our work has been underpinned by an extensive stakeholder engagement strategy. We have connected grassroots findings with national media, policymakers, RSA Fellows and academics, crowdsourcing ideas in response to policy challenges identified by participants.
Despite low levels of trust, and in some instances, profound levels of exclusion, many of those we worked with became fully engaged with the process and said they felt empowered by having the opportunity to gain a better grasp and understanding of economics. Our experience suggests that there is a considerable appetite for greater participation in economic discussions when these are made relevant to people’s lives. In turn, this seems to strengthen people’s sense of power and willingness to participate in other civic initiatives.
Citizen engagement on economics has enormous potential to strengthen the legitimacy of economic decision-making, but there is a need for significant reform in the way participation is done if we are to realise this potential. We propose that organisations such as the Bank of England, HM Treasury and other government bodies (including those of the devolved nations) instate deliberative, advisory citizens’ councils, citizen juries and citizens’ assemblies. These would bring together experts and citizens when complex decisions are made about issues with a high level of public interest; for example tax policy, government budgets or setting monetary policy and interest rates. Deliberative processes should not just be limited to government. Large companies can use them to understand and respond to their stakeholders in a way that is more upstream and democratic. By way of example, the RSA will be engaging citizens on the ethics of artificial intelligence in 2018, in partnership with Google DeepMind, through citizen juries.
But we recognise that the adoption of advisory councils alone is not sufficient. It is also important to create the right conditions in which they can thrive. To this end, we propose that the government creates a code of practice for effective public engagement and participation, recognising the sheer range of engagement approaches that can empower citizens; for example, participatory budgeting, citizens’ reference panels, citizen juries and co-production methods. At its core should be engagement and participation practice that extends beyond simple consultation towards approaches that are more deliberative, promote dialogue and allow sufficient time and space for policymakers to respond to citizens’ views.
To make this possible we also propose the creation of an expert resource centre on inclusive and participatory economic policy that would support government departments, non-departmental public bodies and publicly funded organisations, including the Bank of England. It would be modelled on a similar programme funded by the Department for Business, Energy and Industrial Strategy, Sciencewise, which offers public bodies support in participatory policymaking relating to science and technology issues. Both the code of practice and expert resource centre would also work in cooperation with the existing international Open Government Network, which engages civil society in creating a more open and transparent approach to government across the world, and build on those ambitions set out in the Civil Service 2012 reform plan.
It is clear that we stand at a crucial crossroads. We can either ignore the populist signal and the democratic deficit at the heart of our economy, trapping us in a vicious cycle of distrust and instability. Or we can build a legitimate, transparent and accountable system that brings the much maligned ‘expert’ and citizen together to shape a fairer economy.
Originally published in the Royal Society of Arts (RSA) Journal on November 21, 2017.
