“As the world is challenged with tackling the current global environmental and economic crises, many have come to question whether or not the current economic systems can meet global needs while remaining sustainable. The current system has largely been driven by a concept called ‘Economies of Scale’, the idea that production costs per unit declines as output increases, thus making larger industrial production more attractive and profitable. The belief in this approach has created an industrial production system that is largely dominated by mass production and concentrated industrial cores” – The future is distributed by Lund University
A central question facing any economic system is how to harness all of the resources available within the society towards productive ends and then distribute the returns in an equitable fashion. Within just the past couple of years, the topic of inequality has moved to the forefront of public discourse within developed economies, where the returns going to the very wealthiest have risen while those going to the middle and lower income have stagnated or declined, leaving many to fundamentally question whether the current economic model is really sustainable. At the same time with the rise of mass automation and smart systems employment has also moved to the forefront of public attention as many jobs are set to be automated in the coming decades. The fallout of these changes is seen as a key factor in current political disruption in the form of the rise of populism.
As technology becomes more powerful, being able to do more and more with less and less resources and people, the bizarre picture of a future economy that simply does not need or incorporate the mass of people looks like an ever growing possibility. A world where there are centralized highly efficient organizations with few people – vast empires of technology generating huge revenue streams for few – while the majority are left outside disenfranchised, unproductive and disengaged in economic activity. This trajectory, that we seem to be currently on, has already created huge divides and disparities that feed through too many social problems.
A central question to developing a sustainable economy and society will be answering the question of how to engage the mass of people in the economy; how to harness their resources and effectively distributed the revenue so that it flows to all areas of society. Traditional mechanisms of state redistribution are far from idea, they can be seen as artificial in that they do not match the underlying flow of resources within the economy, in fact quite the contrary they are designed to manipulate that flow and redistribute it so as to solve the problem. Political redistribution of revenue is a method that at best can be seen as dealing with the symptoms, at worst a method for buying social peace, but ultimately it is not a solution to the problem.
Publish Date: 12-12-2017
Length: 67 pages
Category: Economic Analysis