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The latest news, debates, proposals and developments on new economic thinking at a glance.
In his new book Value(s), former governor of the Bank of England, and now UN special envoy on climate action and finance Mark Carney examines the short-comings and challenges of what he identifies as an unreflective belief in the power and competence of free markets. This, he claims, has led to the increasing decay and undervaluation of public goods and society’s core values over past decades – and ultimately fueled the three most significant crises of the present century – the global financial crisis, the climate crisis, and the Covid crisis. All three, he claims, have either been caused or exacerbated by a failure of markets – and those who unquailingly believe in them – to properly value the importance of ensuring our collective future well-being.
The book’s core subject—the tension between market-determined value and human-led social values—lays the foundation for what Carney sees as the solution to the current misbalances: ‘mission-oriented capitalism’. Rather than subscribing to an economy in which “the price of everything is becoming the value of everything“, markets and corporations should prioritize solving society’s problems, improving people’s lives and expanding our horizons. A better, a new kind of economics, he concludes, needs to recognize the importance of values and beliefs and nurture them into the “three key components of any good society: fairness between the generations, in the distribution of income and of life chances.“
The book, its ideas and content will be discussed at an upcoming OECD NAEC conference.
Online Conference: Value(s): Building A Better World For All
When? Wednesday, 01. September 2021: 2:00-3:00 p.m.
Where? OECD Conference Center Paris and via livestream: here
Together with Wirtschaftswoche, the Hertie Foundation invites interested thinkers from the media, universities, think tanks, trade unions, companies and foundations to apply for the essay prize “Democracy and Economy”. The Corona Pandemic is increasingly turning into a stress test for the complicated relationship between democracy and economics. This warrants the question, how much democracy capitalism needs – and how much capitalism needs democracy. Submissions should take a fresh look at the interplay between democracy and the economy, between politics and economics. The deadline for submissions is August 10, 2021.
The essay prize will be awarded for both previously published and unpublished work. Published work will be awarded up to €3,000 in prize money, while unpublished work will be awarded €7,000 (first place), €3,000 (second place) and €2,000 (third place).
The winning texts will be published in WirtschaftsWoche.
All further information and the application form can be found here.
As it has traditionally occurred following our previous Workshops, this time too, a number of contributions selected from our VIII New Paradigm Workshop – “Future of the German model II: Perspectives for the next government” – have been summarised and appear on the new release of Zeitgespräch Wirtschaftsdienst
101. Jahrgang · Juli 2021 · Heft 7 – Wirtschaftsdienst.
The selected contributions are available for download in the links below:
Die Definition einer zukunftsfähigen Finanzpolitik
Max Krahé, Insitut für Sozioökonomie der Universität Duisburg-Essen; Denkwerkstatt „Dezernat Zukunft“
Philippa Sigl-Glöckner, Denkwerkstatt „Dezernat Zukunft“
Wie kann Wirtschaftspolitik zur Eindämmung des Populismus beitragen?
Robert Gold, Institut für Weltwirtschaft in Kiel
Krise und Reformbedarf der BaFin
Martin Hellwig, Max-Planck-Institut zur Erforschung von Gemeinschaftsgütern in Bonn
Gerhard Schick, Verein Bürgerbewegung Finanzwende
Ungleichheit der Haushaltsnettoeinkommen – Trends, Treiber, Politikmaßnahmen
Markus M. Grabka, DIW Berlin/SOEP
Klimaschutz und der moderne Staat
Tom Krebs, Universität Mannheim
There is (once again) a lot of talk about inflation. The reference point is one of the Germans’ favorite specters of terror: the hyperinflation. In an interview, Carl-Ludwig Holtfrerich explains how the fear of inflation was already politically instrumentalized by Reich Chancellor Brüning to enforce a harsh austerity course. Moreover, he says, the historical memory of the two crises of the Weimar Republic is clouded by mixing hyperinflation and the Great Depression.
Instead of inflation, the economic historian is more concerned about the Germany’s attitude towards public debt. Under the reference to a solid budget, there is not enough money for urgently needed public investments. This is counterproductive for wealth creation, especially in a world with declining private investment and a simultaneous increase in global savings. According to Holtfrerich, this development is also the reason for the historically low interest rate environment – and not the ECB’s zero interest rate policy.
You can read the full interview here.
The social market economy (Soziale Marktwirtschaft) has been the consensus concept of German economic policy for decades. Hardly any party or interest group can do without paying homage. But apparently the population sees it differently: according to various surveys, a majority of Germans have for some time been of the opinion that they do not benefit from the current economic system and that the current economic system needs a (fundamental) improvement .
The documentary Germanomics is about the search for the why. Through conversations with 19 scientists, the documentary captures the concept of the social market economy in concrete indicators and highlights the economic policy status quo in Germany in the super election year 2021. The film is also based on some projects of the Forum. Among them a study on inequality by Charlotte Bartels and Carsten Schröder (DIW) or an interview with Robert Gold on the economic roots of populism .
OUR MAIN TOPICS
New Paradigm
NEW PARADIGM
After decades of overly naive market belief, we urgently need new answers to the great challenges of our time. More so, we need a whole new paradigm to guide us. We collect everything about the people and the community who are dealing with the question of a new paradigm and who analyze the historical and present impact of paradigms and narratives – whether in new contributions, performances, books and events.
Redefining
the role of
the state
REDEFINING
THE ROLE OF
THE STATE
For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.
Remaking
finance
REMAKING
FINANCE
More than a decade after the financial crisis there still seems to be something seriously wrong with the financial system. Financial markets still tend to periodically misprice risk and contribute to boom and bust cycles. A better financial system needs to discourage short-termism and speculative activity, curtail systemic risk and distribute wealth more broadly.
Greening
prosperity
GREENING
PROSPERITY
During the high point of market orthodoxy, economists argued that the most 'efficient' way to combat climate change was to simply let markets determine the price of carbon emissions. Today, there is a growing consensus that prices need to be regulated and that a carbon price on its own might not be enough.
Reducing
inequality
REDUCING
INEQUALITY
The rising gap between rich and poor has become a threat to social cohesion in most rich countries. To reverse this trend it will be crucial to better understand the importance of different drivers of income and wealth inequality.
Innovation Lab
INNOVATION LAB
Do we need a whole new understanding of economic growth? What would be a real alternative? How viable are alternatives to GDP when it comes to measuring prosperity? These and other more fundamental challenges are what this section is about.
Globalization
for all
GLOBALIZATION
FOR ALL
After three decades of poorly managed integration, globalization is threatened by social discontent and the rise of populist forces. A new paradigm will need better ways not only to compensate the groups that have lost, but to distribute the gains more broadly from the start.
Europe
beyond markets
EUROPE
BEYOND MARKETS
The euro was planned during a period in which economic policy making was driven by a deep belief in market liberalism and the near impossibility of systemic financial crises. This belief has been brought into question since the euro crisis, which showed that panics do happen. New thinking needs to focus on developing mechanisms to protect eurozone countries from such panics and to foster economic convergence between members.