A central theme that resonated through the session was: Do we serve the economy, or does the economy serve us?
There was broad agreement in the room that reimagining economic systems goes beyond mere measurement and entails a profound consideration of our societal priorities and values.
By the SDG Lab
On 31 October 2023, as part of the SDG Lab’s ‘So What’s Next’ series, the SDG Lab organized an event on ‘Rethinking Economic Systems to Achieve Long-term Sustainability.’ It brought together influential speakers from the UN and various civil society organizations (CSOs) to address the urgent need for a paradigm shift in our economic systems.
The discussion was presided by Tatiana Valovaya, Director-General of UN Office at Geneva (UNOG), and moderated by Trine Schmidt, Strategic Advisor with the International Institute for Sustainable Development (IISD) and the SDG Lab at UN Geneva.
A central theme that resonated through the session was: Do we serve the economy, or does the economy serve us? This fundamental question, posed by Amanda Janoo, Economics and Policy Lead of the Wellbeing Economy Alliance, underlines not only the importance of measuring what we value but also asks the fundamental question of what we aspire to cultivate and why. There was broad agreement in the room that reimagining economic systems goes beyond mere measurement and entails a profound consideration of our societal priorities and values.
Mindset change and going beyond traditional economic metrics
Valovaya opened by addressing the elephant in the room. Our economic systems are not fit-for-purpose, they do not serve us in our quest for a sustainable future, she said. Systems are not a God-given or AI-generated, they are created by people, and people can change systems. However, she underscored, to change systems we first need to change minds, a point that subsequent speakers affirmed speaking of the need for political will and courage.
Sandrine Dixson-Declève, Co-President of the Club of Rome, delved into the pressing need for a shift in mindsets to transform existing economic systems and argued that we urgently need to take a ‘Giant Leap’ to reducing poverty and achieving universal well-being and to avoid social tension and unrest.
Moving beyond gross domestic product (GDP) may be a central component of activating political leadership to rethink our economic systems. Anu Peltola, Acting Director of Statistics, UN Conference on Trade and Development (UNCTAD), pinpointed the entrenched reliance of our current economic system on the GDP metric and called for a ‘moonshot’ to move beyond it. “We need a moonshot to go beyond GDP! … The need to go beyond GDP is nothing new, but perhaps it resonates much more loudly than ever before. We have come to a crossroads in our interaction with our planet, with each other and with future generations,” she said.
Olivier de Schutter, UN Special Rapporteur on Extreme Poverty and Human Rights, emphasized the inadequacy of GDP as a one-dimensional metric that fails to capture the complexity of economic activities and well-being. He argued that the single most important obstacle for countries to move beyond GDP is debt. Countries, he said, feel a duty to grow to pay back their public debt, which locks them in a continued quest for economic growth. Debt relief will be a key ingredient to give countries the fiscal room to rethink economic systems. De Schutter also proposed leaning on the human rights framework as a compass for economic system transition, emphasizing accountability to future generations.
Political courage, accountability, and power
A recurrent theme throughout the 2.5-hour discussion was the prevalence of short-term thinking and the need for altering power dynamics. Özge Aydoğan, Director of the SDG Lab at UNOG, highlighted the current economic system’s bias towards prioritizing profit over long-term well-being of people and the planet. At the core of long-term well-being, she said, is the need to ensure intergenerational equity and redesign systems around values of current and future generations.
Reflecting on the role of the private sector, Catherine Howarth, CEO of ShareAction, stressed the need to rethink the fiduciary duty so that the legal obligation is not solely focused on profit. She highlighted that this power dynamic needs to be challenged for meaningful change to occur. Building on this, Paul Ladd, Director of the UN Institute for Social Development, highlighted the need for legislative courage to counter unsustainable financial flows, challenging the status quo.
While there was agreement on the crucial role of politics in shaping economic systems, identifying the ‘how’ of bringing about political will for effective change was more difficult. Laurence Jones-William, Director of Rethinking Economics International, called for strengthening social movements to exercise pressure on governments to change. For these movements to thrive, he said it is crucial that universities’ economic curricula relax their focus on teaching exclusively traditional, orthodox economics and allow for the cultivation of new, radical, and unconventional ideas in education that challenge the current economic system. Comments and questions by participants online and in the room further underscored that there is no way forward without addressing the question of power, whether in the form of power dynamics based on colonial legacies and maintained through economic extractive systems or in the shape of the new power of technology.
Why context matters
The final segment delved into more specific elements of the equation with a couple of concrete examples. Andreas Dimmelmeier, PostDoc and Economists for Future Germany, highlighted the importance of understanding and using context-specific economic data, while stressing the need for a common overarching language. Highlighting the short-term nature of GDP, Zakaria Zoundi, Policy Advisor at the International Institute for Sustainable Development (IISD), used the example of Trinidad and Tobago to illustrate the risks of overreliance on a single economic activity and argued that a holistic view of economic costs is necessary for long-term sustainable economic systems.
To reconnect the financial system with the real economy, Paul Ladd, Director of UN Research Institute for Social Development, called for ESG reporting (environmental, social, and governance aspects) to be context specific, to determine whether a business is truly sustainable. He gave the example of water use by companies, where they currently report on how much they reduced water consumption based on previous use rather than against the available supply.
In conclusion, participants highlighted the pivotal drivers of change in economic systems. Political commitment, the influence of crises, and the power of social movements can drive economic system change, while challenges include resistance to change, the deep-rooted nature of short-term thinking, the lack of accountability vis-à-vis future generations, and the simplicity of GDP. To overcome these challenges, it is crucial to challenge monetary dominance, address power dynamics, and adopt alternative, holistic metrics. The speakers’ insights provide inspiration for reimagining economic systems focused on the well-being of people and the planet.
You can watch the full recording of the event here.
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As the discussion on Rethinking Economics made clear, systems change requires a fundamental restructuring of society, including a collective shift in mindsets, a new set of governance models, and a change in how we understand societal progress. Such change may seem utopian, daunting, or scary, triggering emotional and cognitive resistance from different groups of society. While emotions and economics might appear as opposites, unpacking the role of emotions and affective science for sustainability can prove useful in advancing radical thoughts and actions for long-term systems change. On 29 November, the SDG Lab invites you to dive into the topic of emotions – a missing link towards delivering the SDGs and long-term sustainability. Register here.
The SDG Lab’s ‘So What’s Next’ series builds around the notion of promoting innovation and systems change for the SDGs and long-term sustainability. It strives to overcome short-termism in favor of long-term approaches. The series aims to unpack new perspectives and insights on the SDGs and long-term sustainability and to bring concepts “from the margins to center.” The SDG Lab is a multi-stakeholder innovation space at the UN Office at Geneva on the SDGs and long-term sustainability. IISD is a key institutional partner of the SDG Lab.