Productivity, equity and sustainability

The grand challenges facing economics as a discipline, and facing economic policymakers across the world, are how to promote both productivity and equity, all in a way that is environmentally sustainable. This is the agenda addressed in the opening article of this issue, ‘Productivity, equity, and sustainability: A trilemma for contemporary human development’, by Mattia Tassinari. It is posed as a ‘trilemma’ because while these are regarded as ‘essential components’ for societal and economic development, there is a question of whether there are trade-offs between them.¹

Tassinari creates a composite index to measure the performance of countries in achieving the three objectives of productivity, equity and sustainability, finding ‘a general progressive improvement in the ability of economies’ to advance all three objectives. Nonetheless there are what he terms ‘incompatibilities’ between them, most obviously with the process of economic growth ‘still associated with rising environmental degradation’, as well as problems regarding inequalities. Tassinari goes on to discuss ‘possible policy solutions to the “trilemma”, such as the structural changes necessary to ensure that improvements in productivity are accompanied by rising equity, sustainability, and effective human wellbeing’.

Tassinari acknowledges that there would be much work to do for his approach to replace the currently standard one of measuring and prioritising economic growth on its own. However, he does argue – convincingly in my view – that his paper ‘has shed light on a number of actions that can potentially foster the envisioned consistency’, concluding that

These actions are associated, for instance, with the decarbonisation of production and consumption, reduction of waste, limitation of the production of ‘unnecessary’ goods and services, more equal distribution of income and employment opportunities, reduction of working hours and increase in opportunities for enjoying leisure time and relational goods. These transformations seem to lead, on the whole, to a considerable improvement in our present condition, depicting the contemporary climate crisis as a propitious opportunity to advance human development and effective well-being.

(emphasis in the original)

These issues are also at the heart of the three books covered in the Review Article at the end of this issue. Virdee and McGeever (2023) focus on the issue of racial equity. Wolf (2023) sees the economic failure of current capitalism, which includes the failure to deliver the sort of productivity growth that previous eras managed, as threatening the very future of democracy, since if this is all that democracy seems capable of delivering, there may be few defenders. Dorling considers all three aspects of productivity, equity and sustainability but sees the failures of equity as threatening everything else, including productivity and sustainability. Dorling does set out the sort of policy agenda that Tassinari suggests would be necessary to ensure that productivity growth does not come at the cost of equity and sustainability.

Since that Review Article was written, Dorling has published a further article, commenting on a new podcast featuring the UK Chancellor of the Exchequer who was responsible for the austerity measures from 2010 onwards, which did such huge damage to productivity, equity and sustainability, and Ed Balls who is a former shadow chancellor in the UK (Dorling 2023a, 2023b).

Dorling points out that the two of them agree on many of the most damaging policies, from ‘a very low minimum wage for huge numbers of workers and greatly curtailing the ability of trade unions to protest and organise’ to restricting benefits ‘so that parents can only claim support for two children’, which ‘has been a key driver of child poverty’. Dorling’s point is that these representatives of the UK’s two main political parties generally reach a consensus on policies that would take us in precisely the wrong direction, most particularly as regards equity.

So, while Tassinari sets out the challenges required to develop our economies in ways that promote equity and sustainability as well as productivity, Dorling demonstrates the scale of the political challenge – certainly in the UK, but also in other countries – to get governments to actually implement the sort of policies, on the scale necessary and for the time required. There are urgent political challenges as well as economic imperatives.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Tassinari notes that Mahbub ul Haq, the architect and founder of the United Nations Development Programme (UNDP) Human Development Reports, identified productivity, equity and sustainability as ‘essential components’ of the human development paradigm (Haq 1995, 16). Tassinari also acknowledges that Haq identified empowerment as a fourth ‘essential component’, not included in Tassinari’s article because of not being so directly observable as the other three.