THE BLOG

Chaos and 'An Economy That Works'

09/12/2014 13:18 GMT | Updated 08/02/2015 10:59 GMT

I've never been a huge fan of the butterfly effect. The idea that small changes have big effects - like the eponymous fluttering of distant butterfly wings creating the appearance of a hurricane weeks later - can, I have always felt, lead to rather pessimistic thoughts. At its worst, blaming momentous events on a butterfly lets us abrogate our responsibility to tackle big problems with the phrase - "Oh, there's nothing I can do about it".

The butterfly effect is grounded in complexity theory. It suggests that our world is so complex and so interdependent that any change may have far-reaching consequences that we cannot consider or control. While that is clearly accurate in some instances, it encourages a surgical way of thinking that lumps specific outcomes with specific causes.

It encourages us to seek and solve an imagined single root cause of a problem rather than step back and look at the system and its multitude of drivers.

And it is this surgical thinking, a belief that a specific cause equals a specific outcome, that has crept into our economic thinking.

This has had particularly profound consequences for the way that we have tackled issues like sustainability that are inherently complex. For example, we try to solve poverty with handouts while ignoring wellbeing; we try to solve obesity by cutting sugar intakes but discounting social influences. Perhaps most damaging of all, we use GDP as the overriding measurement of national economic success whilst ignoring growth in communities or levels of contentment.

In so many cases, we are trying desperately to stop a single butterfly but ignoring all the other disturbances around us. In reality, the greater the complexity, the greater number of causes for any specific outcome. A single-issue focus to address complex social and environmental challenges cannot deliver lasting solutions. To tackle an issue like sustainability we need systems-wide policies - looking at all the butterflies together - that approach problems in a long-term, holistic way.

Todays launch of 'An Economy That Works' (AETW) is an attempt to identify the full ecosystem of these policies. AETW is a coalition of businesses and civil society organisations who believe that a successful economy must focus on more than financial improvement if it is to provide social impact, prosperity, competitiveness and sustainability for companies and communities, together in union.

This coalition is not small - it includes, Nestle, BT and Aviva alongside the WWF, the National Trust and the Friends of the Earth. Today, they have come together to agree that it is time for a positive, ambitious narrative that unites business, civil society and our political leaders. They argue that six core characteristics must be at the heart of economic policies - together in harmony, not separately. A focus on high employment (1) must not come at the expense equality of opportunity (2), or wellbeing (3). A focus on lowering carbon (4) must not come at the expense of low waste (5) or long-term sustainability (6).

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Today, depending on which politician that you believe (if you believe any of them!), we are beginning to leave the financial crisis behind - but still have years of austerity ahead. I don't disagree with this analysis, but am disappointed that the overwhelming economic narrative from all of the main parties is focused on short-term solutions and incentives.

An economy that is largely focused on short-term growth, risks addressing the urgent at the expense of the important.

I believe that to maintain a healthy economy we must make a conscious effort to focus on what's important today AND in the future.

For me the AETW approach is best summarized by a well known Greek proverb:

"A society grows great when old men plant trees whose shade they know they shall never sit in"
I hope that the main parties sit up and take notice of the AETW philosophy and appreciate the breadth of the coalition of interests that sit behind it.

Perhaps, thinking positively for a moment, this crisis is the opportunity that we need to step back and re-programme our economy. We need to move away from short-term responses to the specific fluttering of butterfly wings and develop long-term, systemic approaches that benefit our economy, our businesses and society.

Arlo is on the Advisory Board of An Economy That Works