The Economics of Belonging

Martin Sandbu has been writing at the FT since 2009 and advances here 'a radical plan to win back the left behind and achieve prosperity for all.' His thesis and policies are now even more important and urgent since the coronavirus crisis and its economic fallout. I have reviewed a number of books discussing the relationship between the financial crisis of 2008 to nationalism and globalisation. These developments have increased polarisation at a time when we need enhanced cooperation and collaboration. With other liberal authors, Sandbu shares the view that economics and our economic systems lie at the heart of increasing inequality, and must be addressed in the interests of social cohesion. Another key factor is technological change, and the new challenges of robotisation are now being added to the deindustrialisation that had far reaching effects on factory employment along with mass outsourcing to China. The three parts of the book address what went wrong, what is to be done, and the way forward.

There is no doubt that the economics of belonging have been eroded, as have in many places the ideals of liberal democracy centred on individual rights, equality before the law, independent institutions, a social market economy, and openness to the outside world. The author analyses the fundamental causes in terms of technological changes and domestic economic policy choices rather than globalisation per se - often used as a scapegoat. The key consequence is that 'the western social order no longer fulfils its promise of an economy that offers a (good) place for everyone' and underlies social cohesion, as successful Nordic economies have demonstrated. This breakdown provides the context for anti-system populism and its recommendation that we ditch the liberal social order. The answer has to be better and more inclusive policies at the macro-economic level, including universal basic income and taxes on capital and wealth – anathema to governments controlled by corporate oligarchy. The comprehensive package proposed – a 'new deal' based on a centrist economics of belonging - confers a greater role on the state, but more in terms of intelligent steering (gouvernail in French means rudder) rather than rigid control. The most important political point is that in the package must deliver on its promises if we are to escape from existing polarities. One first step would be to popularise the title of the book, which I hope will be widely read, especially by civil servants and policymakers.