A trio of leaders of organisations that have emerged as responses to the Crash talk to The Mint about the progress so far and the future outlook.
Maeve Cohen, Fran Boait and Anna Laycock all came to the new economics movements from different starting points. None of their paths were direct. But then if they had come through a standard economics training, they may never have ended up where they did.
Cohen grew up first in Langley Park, County Durham, a mining town. She says the aftermath from the 1984 strike was evident enough to make her aware “that economic decisions have maybe quite catastrophic consequences”. However, that did not lead directly to studying economics as she was not really sure what she wanted to do; nor did she want to stick around for A levels which seemed to have little purpose. So she headed off working and travelling in Africa and India and again saw ‘the devastating effects of economic decisions”. Then the Crash happened which hit her family hard changing her life dramatically.
She decided then she needed to get some qualifications so she could do a fulfilling job. She thought of studying economics but was saved from that fate when a friend told her she would hate it. She recounts: “He said, ‘It’s dry. It will be awful. Go and study PPE.’ That’s what I did”. And after seeing an email from now author, Joe Earle, rallying “all econ skeptics,” she got into the New Economics Movement “which wasn’t a thing at the time.
“After that, me, Joe and Zach set up Post-Crash Economics.”
Boait was in a very different place when the Crash happened. She was doing a PhD in climate change mitigating technology when the Crash changed everything for her: “I was a scientist, but the Crash really got me into economics. I saw lots of my fellow students from university in science and engineering going into the City. Not only is this stealing all of the brains but it’s actually undermining social and environmental values.”
Nevertheless in 2007 she had been tempted to go into the City after attending an evening when Deutsche Bank wined and dined students. Serendipity stepped in when she was called by her father to share her plan. “I rang my dad and he’d just seen Ann Pettifor talk. She was saying that it’s all going to crash and meltdown. My dad said, ‘I don’t think it’s a good idea’.”
So she stayed in academia and did a PhD and after the Crash started reading about economics. “It was actually Tim Jackson’s book, Prosperity Without Growth, that was a key way in for me. As an environmental thinker at the time, for me, that was like a clear way in – it doesn’t make sense continued growth on a finite planet. I saw after the crash that not only was it turned into this whole made-up austerity story, but at the same time, we had climate change being completely shelved. We had to just worry about GDP growth.”
And Ann Pettifor came into her life again in 2011 at a conference she attended and opened her to a new direction. “She spoke about how we could afford renewable energy if we wanted to, and that when Ben Bernanke bailed out the Fed, he just typed numbers into a computer. That blew my mind.”
With her mind opened to new economics she went job hunting and ended up the campaign manager at new pressure group, Positive Money, a year later she became their chief executive.
Laycock’s path was different again. She admits that she didn’t initially recognise the Crash as more than a “bad thing”. In retrospect she sees her response as typical for most people who see finance and economics as “a technical thing, that belongs to the experts,” which, she says engenders “a sense of public powerlessness”.
Her entry into finance was accidental. She moved to Yorkshire, where she sought to apply her skills gained in justice and sustainability with organisations like Oxfam. Eventually she took a job in Ecology Building Society attracted by its mission to promote sustainable development. On starting she attended the Institute of Social Banking summer school, which dramatically altered her perspective on finance. “Going there was a bit like scales dropping from my eyes, to be honest, because all of a sudden I recognised that all of the issues that I had worked on, trade, education, climate, health, they were all underpinned by the way economics and finance works.” In 2015 she moved to London to play a fuller part in the new economics movement and secured the executive director post at Finance Innovation Lab, where she has been ever since.
So how do these leaders rate the progress in new economics ten years after the Crash? All three agreed that the new economics movement had grown substantially over this period but unsurprisingly they agreed also that there was a lot more to do.
Boait particularly talked about the achievement that banks are most proud of: the introduction of ring-fencing between their retail and investment arms.
“Is that making our banking system serve society? I don’t think so.”
She put her skepticism down to two factors:
- the retail side of banks was hardly a good thing given its focus on mortgages underpinned by a dysfunctional housing market; and
- the huge complexity of the regulations on ring-fencing provided a feast for lawyers, bankers and accountants looking for tempting loopholes.
“Actually, again, you probably miss the bigger picture of what’s going on just like they did in the run-up to the Crash. I think the key is are banks serving what we need? No. They’re serving global financial markets. Are we able to regulate them better than we were before? Maybe a bit. The attitude, I think, is much more risk management. The idea that if they become insolvent, we can quickly sort them out. But it’s also about human psychology – markets. If one bank starts panicking, isn’t it bound to spread?”
According to Laycock, “Civil society acts within the system we’re trying to change, so we’ve all been subject to the same funding pressure that every organisation has, in a time of austerity. We can’t avoid the system that we’re trying to change”. This she thought reduced the ability of the new economics movement to have impact at the scale required.
Cohen said she had been “shocked” by the unwillingness of economics departments to accept the value of economic teaching that involved critical reflection on different schools of economic thought. Academics in one school considering theirs was better, was understandable but she had “assumed that university is this place where everybody has open discussions and critique each other and develop thoughts together. The fact that it was so siloed and monocultured was genuinely shocking to me. It’s still shocking to me now.”
However she recognises the power of practical institutional barriers: “There’s nobody there to teach (other schools of thought) because to get a good job at a good university, you have to be published in a four-star journal. All the four-star journals are Neoclassical. There’s no people to teach this stuff, even if they wanted to.”
Laycock’s organisation had the advantage of having concrete examples of new financial products and services they could point to as tangible success stories. Though she emphasised that “the real heroes in this story are the people who led the businesses”. The Financial Innovation Lab’s role was, she says, to act as a catalyst, bringing together and incubating the people and ideas that could change the system for the better.
The Mint asked what were there chief lessons learnt since they embraced the world of economics? Cohen says her biggest lesson was in the dynamism of her generation. “Young people are really active; they want change urgently, particularly with environmental degradation. People of my generation and younger have got a passion and strength that I just did not know we had.
“The disconnect between what we’re told and what we experience is just so vivid. I think the pervasiveness of these problems and the fact that they are in our face all day, every day has created urgency and passion in this generation. Because basically if we don’t succeed, we will all die. That is a really, really strong incentive to keep fighting.”
Boait’s lesson was a more personal and difficult one, given that the person who had inspired her on her path, has turned against her organisation: “I think that starting off with one very radical proposal of how we should stop banks creating money and we should hand the power to the Bank of England got us a lot of support and simultaneously turned some people off Positive Money, including Ann Pettifor who is one of our biggest critics. I joined Positive Money and then, suddenly, realised that people who I thought had the same values as me really disliked us. That experience made me realise the dangers of dogmatism in economic thinking and has led me to align with organisations like the brilliant Rethinking Economics, and the movement around Economic Pluralism.”
As a result, she moved Positive Money to become more open-minded and engage in “creative, collaborative dialogue”. This was a “response to toxic economic technical debates which can descend quickly into personal attacks whereas actually, most of the time, we’re all starting from the same set of values”.
This, she said, didn’t mean that Positive Money wasn’t working on specific proposals, but they were trying to do so in a different way, “we are still putting out some serious policy development, e.g. hard-wiring sustainability into the Bank of England, but we aren’t focused on one silver bullet change”. “Nobody has all the answers,” she says. “These are complex topics and we live in very uncertain times. We do need more collaboration and we shouldn’t make criticism personal, it should be respectful. We should come from a starting point of people in this space all want to make the system better. Let’s see what we can learn from each other.”
What we can say for certain is that ten years ago we did not have these dynamic, committed and creative civil society leaders seeking to change radically how we think about organising our economy. Nor did we have the type of new economics movement we have now. So even though changing something so central to every society seems like an overwhelmingly huge endeavour, it may not be impossible.
Clearly we are seeing dramatic political and economic changes on a scale we could not have imagined five years ago, many not for the good. Cohen, Boait and Laycock are determined to drive positive change and we should wish them well – maybe even help them out. After all, the stakes may well be the survival of human civilisation.
“It’s incredible how big it’s gotten. We had our first event in 2012. The conversation at that time was very much about whether or not there was a problem. Now, it’s widely recognised that changes do need to be made to economics education. A lot of people are doing incredible work in economics education and practise but there’s a lot of institutional barriers to change and lots of vested interests that are very difficult to shift.”
“I think we’ve got to be proud of an active and, I’d say, growing and thriving civil society movement. That just wasn’t there after the Crash.
Occupy was fantastic. If you think that was 2011, so three to four years after. Essentially there wasn’t enough of a voice, everyone on the media was basically from the finance sector. And a lot of economists just had their mouths open. They didn’t really know what had happened. There wasn’t any counter response. Therefore, I think we have failed in really reforming the banking, money and finance sector.”
“I never thought it was going to be a short job, having seen how hard it was to campaign on anything that was complex and not immediate to the public. So I guess, when I look at 2018, I have a lot of hope, from looking at the growth of Global Alliance for Banking on Values, and the growth in demand for businesses with social purpose. I also have some frustration, particularly around the challenges of really penetrating public awareness about the nature and role of finance.”
“In 2016 we drew together our past experience in incubating to launch Lab Fellowship, a structured programme of support for financial innovators with a social or environmental purpose. One of our participants in that was an organisation that’s now called CredScope, which aims to offer a democratic credit-scoring system. That was started by Freda Owusu, who looked into the credit scoring system and asked, ‘Why am I not able to know about and correct information that’s being used to judge me?’.
“In 2016, Freda was one of our first Lab Fellows. CredScope is now authorised by the Financial Conduct Authority, available for individuals and service providers, and has a Board including members of the Lab community who engaged with her through the programme. She also benefited from mentoring and PR support through the Lab community. CredScope is now working in partnership with charities and housing associations, to get this product helping people, particularly people who don’t have a credit history or have ‘thin’ credit files, for example, they’ve come from another country to work or study here.
“Finally, Blox, participated in our 2017 fellowship, which was focused on financial health. We recognised there were some real issues around how little appropriate support and products there were for people with poor financial health, and how fintech aspired to address this, but wasn’t connected to the real experts – the people experiencing poor financial health.
“So, Blox came to us with an idea around using blockchain technology to build communal savings and build cooperative facilities management among people living in predominantly social housing.
“Blockchain is still a part of it, but at the moment its real focus is engaging the community through collective buying schemes, where people pool their buying power to negotiate with providers of like broadband and renewables. They brought in energy saving, and a renewables element, and then, on that, they’re building in a time-banking approach, whereby different people within a block of housing swap skills and knowledge, to support each other. And ultimately the pooling of resources will build on that. They’re currently piloting the concept by door-knocking in a Peabody estate in London, to build awareness and learn what they can do with their product.
“What Fellowship brings is a community of people who will support them, believe in them, a network of people that will give them time and expertise, deeper leadership skills and real resilience, an ability to .stay focused on their social purpose in an incredibly commercially-driven marketplace In finance, of all industries, how do you put social purpose at the heart of your work, build a business around that and keep it there? That’s really crucial.”