Towards an inclusive economy

Inclusive Economy15 May 2013Sara Murawski

‘Spurring economic transition’ is the follow-up to The Broker’s debate on inequality. What are the most important conclusions of the inequality debate that it needs to address?

In the past months, the Broker hosted an interactive debate on inequality against the background of the post-2015 agenda. One of the main outcomes of this discussion, in which both scholars and practitioners took part, was the need for a transition towards a more inclusive economy. What an inclusive economy should look like remains an open question but the conditions required to achieve it are much clearer.

Different forms of inequality passed under review. Firstly, the contributors discussed inequality in economic terms: they addressed income inequality, the uneven distribution of the tax burden between capital and labour, and mechanisms in the financial system, such as tax havens, that contribute to inequality. They defined political inequality as the lack of democratic voice and political participation within nation states and limited political representation in international organizations. Finally, the participants pointed to social inequality of employment, education and social security as violations of human rights.

The inequality debate also focused on the structural causes of inequality. The contributors identified globalization and the financial system as important causes of global inequality. In addition, their blog posts addressed the policies that underlie or sustain these macroeconomic processes. International trade agreements, for example, have enabled the free flow of capital on a global scale, but also lead to capital flight from developing countries and a race to the bottom on the global labour market. The fact that political power is concentrated in the hands of a tiny elite cannot be ignored in this context. To tackle inequality globally, the interests of the stakeholders who benefit from the asymmetry of market economies must be unveiled.

The effects of inequality have contributed to social exclusion all over the world, particularly affecting the most vulnerable members of society: the poor. Inequality hinders people from participating in economic processes while allowing the rich to benefit most from the accumulation of wealth. Furthermore, inequality corrodes the quality of institutions, may lead to conflicts and hampers human well-being. To reduce inequality globally, its causes must be fought at the roots. The transformation towards an inclusive economy might offer a solution to these global problems.

The goal of inclusive economy is to prevent social exclusion. Inclusive economy means creating more sustainable and inclusive societies that aim at including all members of society in the growth process itself instead of distributing wealth among them after periods of steep growth. Additionally, inclusive economy models are targeted at preventing global economic crises by regulating capital flows and reforming the financial system. Inclusive economies also pay attention to the environment, aiming at a sustainable and green global economy.

A new economic framework requires rethinking the meaning of economic welfare and well-being. For example, we need to redefine growth beyond the narrow definition in terms of GDP. An inclusive economy also requires that we rethink the concept of scarcity: how are assets distributed across the world, and who prospers from that? In addition, inclusiveness at the global level calls for just tax transfer systems that focus on predistribution rather than redistribution.

Inclusiveness stresses the participation of people in economic, political and social institutions. Organizations of farmers, industrial labourers, etc. can democratize economies, since they aim at putting production processes under the control of the stakeholders. This implies focusing on a larger role for local market economies rather than one-sidedly on global markets. Moreover, inclusion requires strong civil societies, where political decision-making processes are democratized, and where global public goods are protected against the detrimental effects of the global economy and are accessible to those who most need them.

The challenge of making the global economy more inclusive demands that we identify the structural causes of inequality and put forward the conditions under which global inclusiveness can be achieved. Ideas on how to shape inclusive societies must be proposed in terms of concrete policy measures. The Broker’s inequality debate has sketched the scope of these challenges and solutions. Let the debate now continue.

The Broker warmly invites everyone to continue the discussion by contributing to our new Spurring economic transitiondebate, which focuses on the following questions:

Assuming that the goal is to transform the global, regional and local economy in such a way that well-being for all is more important than growth rates:

  1. How could this be done?
  2. What hinders this economic transformation?
  3. How can such an economic transformation be structurally incorporated into policy at national, regional and global level?

Please send us your contribution and ideas at