Could a vision for a new economy avoid the polycrisis prophecy?

Authored by: Dr Matthew Bell and Anastasia Roussou

It’s easy to look at our collective global progress on environmental, social, and economic indicators and feel as though we’re locking ourselves into an unedifying future – fuelled by unsustainable consumption and production patterns. Indeed, some academics are now saying there are no non-radical futures left , and the weight of evidence supporting pending ecological and social collapse is mounting. But what if we could re-imagine the economy as we know it? What if we could aim toward truly regenerative principles, and move away from short-termism? Could we then make the adjustments necessary to live within planetary limits, and if we did, would we all feel better off anyway? Anastasia Roussou and I drafted this article in response to the thinking we’ve been doing on what a transition to a “new economy” would look like, and why we need it. Urgently.?

An economy in polycrisis - the reality check?

It has been eight years since the Sustainable Development Goals were agreed-upon, and despite hopeful momentum, scientists are warning that the earth has now entered uncharted territory , with insufficient progress made to mitigate climate change and with six out of nine planetary boundaries now transgressed . Inequality too, it would appear, is on the rise globally and we have seen a stagnation or reversal of progress in areas such as wellbeing, poverty and unemployment.??

Individually these would be cause for concern enough, but with increased geopolitical polarization and the advent of two active wars, all of which follows the acute shocks felt from COVID-19 and the energy crisis – it’s hard to deny we are entering what’s being termed an interlinked “polycrisis”: a term that (re)emerged this year at Davos and encapsulates concerns for a business-as-usual (BAU) future state of our global economy.??

Jarring as they are, these crises - and the ineffectiveness of current attempts to avoid or deal with them - are symptoms of wider structural flaws in our pursuit of a vibrant economy, as viewed through the lens of current “societal norms”. While the current system has yielded undeniable societal dividends over the past few decades, yawning cracks in the foundation are starting to show. How much longer can we afford to chip away before the whole structure becomes unstable??

In a relentless pursuit of growth at all costs, the global economy has allowed unacceptable environmental tradeoffs, ignored important drivers of social wellbeing, and fed an ever-widening wealth and power gap between the have-lots and the have-nots.??

This narrow fixation on gross domestic product (GDP), underpinned by corporate growth, has catalyzed overconsumption and vice versa, leading to a society living well beyond our ecological means, ultimately meaning we’re borrowing from the future.??

Driven by a continued reliance on primary materials and low recycling rates, and inhibited by increasing national protectionism, our economies have become less – rather than more – circular over time, perpetuating a linear model of production and consumption that is expanding environmental decline, as well as social inequality.??

We continue to overvalue financial and undervalue much else, disincentivizing the pursuit of an economy that operates within planetary boundaries. This, in turn, can be typified by an internal struggle between sustainability and other corporate functions as environmental and social impacts are traded off against an imperative to meet quarterly or annual financial performance targets.??

The nature of policy and business planning cycles has meant both the public and private sector continue to prioritize the short term. Despite mounting evidence and international calls for action, a collective cognitive dissonance on crises like climate change has meant we are normalizing and even dismissing the scale of environmental and social collapse, delaying critical mitigation and adaptation action.?

At a time when cocreation, knowledge sharing and open collaboration are critical, we continue to approach these complex and interlinked issues in silos.?

These flawed principles upon which our economy operates do not exist in isolation. They are perpetuated through the various economic forces that drive the economy. With the world already facing a disorderly future, worrying trends are emerging that we are at a pivotal tipping point, at risk of locking ourselves into a polycrisis for the long haul.?

Policy inertia and backsliding on international commitments, coupled with geopolitical polarization, have led to an international cooperation landscape that is showing signs of fatigue or even fragmentation.??

With regulation lagging behind and sustainability an afterthought in the design of new tech, technological innovation risks being further concentrated by the few, digitally supercharging overconsumption and programming unsustainability into our collective future.??

Without significant change toward more sustainable production and consumption, and with a global middle class expected to be 40% larger by 2030, both the ecological deficit and inequality are set to rise exponentially .??

As sustainable finance continues to grapple with scale, consistency and transparency, there are growing concerns around greenwashing, competing interests and inequality risks linked to the commodification of sustainability.??

New business models are disrupting the market, but growth and returns remain a green ceiling for sustainability-oriented businesses and market concentration in the hands of fewer and fewer incumbents risks vacuuming up or limiting much needed innovation. With the number of business bankruptcies this year reaching levels not seen since 2008 and an uncertain economic environment ahead, the ability of businesses to increase or even prioritize existing sustainability commitments is at risk.??

All of this paints a dire picture; a diagnosis of a patient that is sick and getting worse. Treating the symptoms alone won’t solve the problem. To get unstuck from the polycrisis economy, we must first acknowledge, then address, the root causes and the systems that reinforce them. And importantly, if we are to run away from the polycrisis of today, we must agree what it is we are running toward, surely??

A new, regenerative economy – a sense of hope?

Despite negative trends, it is not all bad, or at least, we think there is still a case for optimism. Across the same economic forces that are driving the polycrisis, there are also promising signs that we are at a pivotal moment for transformation, one where the crises we face today could become the catalyst for an economic reset.???

There is a growing movement for economic transformation, founded in new economic thinking and science, increasingly finding its way into policy discourse. While seemingly split under many different frameworks, e.g., doughnut economics, beyond GDP, ecological economics, degrowth and regenerative economics, these initiatives are ultimately all striving for the same thing: an economy founded on human and planetary flourishing.??

Technology holds great promise — from digital twins and the metaverse , unpacking systems complexity; to blockchain and digital passports , enabling value chain visibility and traceability; to artificial intelligence and the Internet of Things,x changing how we collect, share and utilize data; to digital platforms, enabling a world connected — technology has the potential to fundamentally reprogram how we live and work, for the better.??

Modes of consumption are changing too; 21st century consumers are increasingly valuing experiences over physical goods, and are more eco-conscious and globally and culturally mobile. Enabled by digital platforms, they are more empowered to organize and amplify knowledge, ideas and trends. Digitization of once physical products (like entertainment), coupled with decarbonizing energy systems to power them, gives some hope of less consumptive patterns.?

Though a further acceleration is needed, the finance world has made strides in sustainability in the past few years, outpacing policy and industry. Greater volumes of traditional finance are being directed toward sustainability, with market forces driving the scale up of renewables exponentially – with calls to triple current investments by 2030. Financial innovation is opening up new routes to financing, restructuring financial products and market structure; tokenization is even challenging the very concept of money itself.??

Digitalization, consumer attitudes and sustainability are unlocking business model innovation, with peer-to-peer, cooperative, service and sharing models fundamentally challenging traditional business ownership, governance, value-sharing and location paradigms.?

These trends provide a glimpse into a better future, rich for consumers and organizations, that is still possible if we act swiftly and decisively. To harness the momentum and transition from our polycrisis state to a new economy, we suggest that these five guiding principles should underpin this transition:?

1. Sufficiency — seeking enough for a good life within planetary boundaries?

The idea of reducing consumption may seem scary to many of us used to overconsuming Western lifestyles. But done right, sufficiency promises a different type of abundance; of time, community and meaning over material goods; and allows those that are not currently consuming their fair share to do so sustainably. The Great Resignation, downshifting, slow living, zero waste living, vegetarianism and many other initiatives are evidence of a growing, bottom up movement toward sufficiency-oriented lifestyles, which have been shown to not only reduce ecological pressures, but also deliver higher levels of wellbeing . The boom in access-over-ownership models, alternative proteins and the rise of the wellness economy is evidence that while sufficiency requires a fundamental rethink by businesses around what they market, why and how, there is also opportunity for those willing to think outside the box.?

2. Circularity — aligning production and consumption with nature??

Even at a lower level of consumption, circularity is key to addressing the quintuple crisis of climate change, nature decline, pollution, waste and resource scarcity. The products and services of the future will need to be designed to last and to cycle, with sufficiency in mind. Right to repair requirements and bans on circular-washing and planned obsolescence are increasingly making their way into legislation across the EU and US . Aside from the galloping pace of renewables, regenerative practices have also been gaining focus in recent years, particularly in agriculture, as a key solution to repair soil productivity and reduce environmental impacts. The sharing economy has been seeing an unprecedented boom, powered by digital platforms; and the overall economic value of circularity through the extension of product value and the transition from products to services is estimated in the multiple trillions . Beyond the economic, environmental and social co-benefits, the challenge of turning the line into a loop, poses an exciting opportunity to yield collaborative innovation breakthroughs, beyond today’s incremental and siloed improvements.?

3. Systems thinking — connecting the dots to catalyze systems change?

From energy, materials, transportation, food and buildings, down to the single value chain, our economy is made up of complex, dynamic and interconnected systems, which are in turn operating within the system of systems that is nature. Mapping and understanding the relationships, dynamics and causal links between nodes and actors in a system will be key to identifying the points of intervention that can create the positive tipping points and feedback loops for transformation. Such a tipping point may have already been reached in the scale up of solar energy — now set to become the dominant power source before 2050 even without additional policy support. Beyond unpacking system complexity, transitioning to a new economy – including mainstreaming sufficiency and circularity models – will require cross system engagement and cocreation. For businesses, this means understanding their position and role within the system, moving beyond linear, centralized solutions to single issues and expanding beyond value chains, to value networks.??

4. Value redefined — placing planetary and human flourishing at the heart of value creation??

In today’s economy, price drives value rather than the other way around; we have lost sight of what value really means. Redefining value itself is therefore critical to the transition. This requires enhancing our understanding of what drives prosperity and mainstreaming metrics linked to planetary and societal thresholds. Here again, there is no shortage of initiatives and coalitions exploring new value frameworks. At the national level, countries are beginning to experiment with “wellbeing ” or “green ” budgets. The UN’s System of National Accounts (SNA) is due to be revised in 2025 and has launched taskforces on issues including sustainability, wellbeing, digitalization and the informal economy. At the business level, the Science Based Targets initiative , the Science Based Targets Network and the UN Sustainable Development Performance Indicators , are just a few of the multitude of initiatives driving the adoption of metrics based on context (thresholds) and long term trends monitoring. Collaborative refinement, standardization and consistent adoption in governance and accounting will be key to achieving this shift and business will be the critical link between policy and real economy action. Where markets are failing to self-correct on what’s driving value for society, governments are and will intervene, as the increasing number of carbon markets, carbon border adjustment taxes and human rights violations penalties illustrate.?

5. Equity and justice — achieving shared and lasting prosperity for all?

Our economy is fraught with inequality, and achieving the transitions needed will be disruptive. We must ensure that the flourishing we are striving for is shared fairly, now and in the future, and that the transition leaves no one behind. This will require the empowered and inclusive participation of diverse system actors, in order to cocreate solutions that work for those they are designed for and that will benefit from widespread adoption. It will also require distributed governance to harness local knowledge and build local resilience, and stewardship. Decentralization through citizens’ energy communities, for example, is key to creating a more democratic, responsive and clean energy system , particularly in developing nations. The same applies to nature conservation; at least one quarter of the global land area is traditionally managed, owned, used or occupied by Indigenous people and solutions led by local and Indigenous communities have been shown to yield better results for nature and people compared with those led by external organizations . Lastly, achieving an equitable and just transition will require changing the structures that promote and perpetuate inequality, particularly in the distribution of benefits and burdens. To enable this shift, businesses will have to ask two critical questions: for who does the business create value and how is that value distributed and sustained over time.?

So, there it is: two future economies, one deeply entrenched and one slowly emerging, both likely to continue vying for dominance. Incumbency of industry actors, predictability of government revenue from historic streams, and the insidiousness of lobbying efforts have all contributed to resistance to change.? The transition — though it will be disorderly — is not only possible, but also attractive, from an economic, planetary and social aspect. Achieving the shifts needed will be a long term project, but the policies and strategies being set in the short term will define which future will prevail. The question we must therefore ask ourselves is which one is the future we will gift to the next generation, and what will our role be in bringing it about.?