The Grey Chronicles


New Economics 20

New Economics Foundation's From the ashes of the crashThe New Economics Foundation [NEF] (2008) proposes twenty steps to build a better economy:

“In the ashes of the predictable crisis in the global system lie important signs that a new economics is emerging. The tragedy is that the financial system has long since failed to do the basic job required of it — to underpin the productive economy and the fundamental operating systems upon which we all depend. . . We make a number of proposals that include measures both for immediate stabilization of the economy and for the long-term restructuring that will support a new economy that serves a vibrant and dynamic society, not the other way around.”

1. Demerge banks that are ‘too big to fail’

“Mega-banks make mega-mistakes that affect us all. Instead of institutions that are ‘too big to fail’, we need institutions that are small enough to fail without creating problems for depositors and the wider public.”

2. Segregate financial markets

“We need financial institutions to focus on specific functions and to do these well, not to chase the latest bandwagon. Formally segmenting the system by function ensures this diversity, but also allows appropriate regulation of each sector.”

3. Bring onto the balance sheet, rigorously check and officially license all ‘exotic’ financial instruments

“Anyone trying to circumvent the rules by going offshore or onto the internet should face the simple and effective sanction of ‘negative enforcement’—their contracts would be made unenforceable in law.”

4. Create a secure, accessible local banking system

“the Post Office should be grown into a national banking system that delivers stable, accessible and dependable services to the public and businesses. It stands to be one of the best guarantees underpinning economic resilience, promoting financial inclusion and allowing people to invest and save with confidence and security.”

5. Enhance economic support for the local economy

“a network of alternative financial institutions has operated alongside conventional banks. . . They provide alternative sources for small-scale financial services, including savings, affordable loans, debt advice and financial literacy. connect these services together to provide a one-stop-shop alternative to the high street banks and predatory lenders. Government should invest in, scale up, and strengthen this network.”

6. Encourage the introduction of complementary, multilevel currencies

“At the international level, the global financial system needs to be underpinned by a new global reference currency, along the lines of the bancor proposed by Keynes at the Bretton Woods summit, and backed by a basket of commodities.”

7. Create new public money

“to provide the loan finance for the new local lending infrastructure. This should then be repaid, free of interest, when the task is complete, and then withdrawn from circulation.”

8. Introduce a ‘People’s Pension’

“People’s Pension’ gives people more control over where their savings go and what they are invested in.”

9. Enable ‘local bonds’ as a secure investment vehicle

“These investments would also stimulate productive local economic activity, and yield rich rewards through job creation—critical as our service-based economy shored up by unsustainable credit feels the effect of the economic slowdown.”

10. Housing

“Introduce a moratorium on crash-related home evictions and rebuild the UK’s stock of social housing. Implement radical innovations to prevent a repeat of destructive house price inflation. ”

11. Take a ‘social investment approach’ to public services

“Social Return on Investment (SROI), which allows a comparison of the value created by a given investment in social, environmental and financial terms—the triple bottom line.”

12. Tap into the hidden value of time banking and grow the ‘core economy’

“Timebanking is a tried and tested way of growing the ‘core economy’—the abundant wealth of human assets that are largely neglected by the machinery of state and eroded by the market-system. These assets are embedded in the everyday lives of every individual (time, wisdom, experience, energy, knowledge, skills) and in the relationships between them (love, empathy, watchfulness, care, reciprocity, teaching and learning).”

13. Improve checks and balances by introducing capital controls

“The logic for doing so is that allowing completely open access would bring major economic benefits—there is no evidence at all that this is what has happened, but plenty of evidence that the opposite is true.”

14. Make taxation work

“move towards taxing more what we want less of, such as pollution and unsustainable consumption of natural resources, and taxing less what we want more of, such as those activities needed for the environmental transformation of the economy.”

15. Increase stability and raise resources with currency and financial transaction taxes

“A small tax on international currency transactions would discourage short-term, high-frequency trading (you pay the tax every time you trade) but leave longer-term, real investment unaffected.”

16. Launch a Green New Deal to fight the recession whilst tackling energy insecurity and climate change

“Such a plan would rein in reckless financial institutions and use a range of fiscal tools, new measures and reforms to the tax system, such as a windfall tax on oil companies.”

17. Pay for energy transition and fuel poverty with a windfall tax

“to protect low-income households subject to fuel poverty and who would otherwise be too adversely affected by fossil fuel price rises during the transition to a low-carbon future.”

18. Hold accountancy firms accountable

“to reshape the world of auditing so that it reflects new expectations of transparency, prudence and responsibility in the modern global economy.”

19. Introduce a maximum pay differential, or maximum wage

“[T]he economic case for high executive pay in terms of company performance doesn’t hold up, and because highly unequal societies have a habit of falling apart.”

20. Take a ‘five-a-day’ approach to well-being to help beat the negative psychological effects of recession and build resilience

Connect with the people around you. . .Be active [by] discovering a physical activity you enjoy. . . Take notice [by] being curious, or remarking on the unusual or beautiful. . . Keep learning [by] trying something new. . . Give [by] doing something for a friend, or a stranger.”


New Economics Foundation [NEF] (2008). From the ashes of the crash: 20 first steps from new economics to rebuild a better economy. UK: New Economics Foundation [NEF], October 2008. 122pp. back to text

Disclaimer: The posts on this site does not necessarily represent any organization’s positions, strategies or opinions; and unless otherwise expressly stated, are licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Philippines License.


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