The Shared Societies Project

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Policy Perspectives on the Economics of Shared Societies

The economic argument for building a shared society seems obvious. If sections of society are marginalised they will contribute less to the economy. They will have poorer education and limited skills to contribute and less capital to invest. They may also be less willing to contribute to a society that they feel does not respect them or treat them as full citizens. They may go further and resist the status quo and it may cost the state a good deal of its surplus wealth to maintain it. The state may resort to increased security measures, such as enlarged security forces, enhanced equipment for the security services, larger and stronger prisons. External capital is unlikely to invest in a society if it seems unstable and tension is high. While this type of analysis seems self-evident, it does not seem to have much impact on many current leaders.

The Shared Societies Project believes that leaders will make greater efforts to achieve a shared society once they and their communities understand and communicate the economic benefits of building a shared society. We have therefore been keen to explore how to make this case and how to ensure that the argument is internalised and acted upon by leaders.

We first looked to see if the argument actually holds up in practice. Can we show that shared societies are more economically successful? That evidence does exist but how can it be made more accessible?

See background documents on Building the Economic Argument for Shared Societies

For this purpose, the Shared Societies Project convened the Economic Argument Group of Experts, coordinated by Dr. Clem McCartney, which examined the link between economic development and Shared Societies. It considered how best to present the economic argument for Shared Societies and the appropriate policy options that should be considered. This Group of Experts published in January 2011 the Economic Rationale for Shared Societies, the principal product of their findings. Among the various conclusions of this document are the 10 Guiding Principles of the Economics of Shared Societies and the consequent Recommendations on Policy, Practice and Structural Initiatives. Some key points of these conclusions are:

• Governments and international institutions need to raise awareness of the benefits of progressive tax system that correct gross income inequalities and benefit more disadvantaged groups in order to gain public support for such systems.
• Countries with insufficient or deficient systems of social protection need to reform them to establish basic universal coverage as they support the development of a Shared Society. External assistance should be provided for low income countries that do not have sufficient resources to do so.
• In order to increase economic opportunities for the population of low income countries, high income countries should create fair trading conditions, including the opening of markets and the phasing out of subsidies to agriculture, which distort trade and severely hurt the growth potential of the developing world. High income countries must increase awareness of the unfair nature of subsidies and protectionism, especially among those who benefit from them.

The Project has commenced a new phase to highlight and disseminate the solid evidence-based arguments that support the relationship between social cohesion, economic growth and well-being. It aims to present the arguments in such a way that they are internalised and acted upon by leaders. The strategy is based on the idea (confirmed by the leadership experience of Club de Madrid Members) that leaders are reluctant to communicate the economic benefits of building a shared society to their communities and to introduce more equitable economic policies. However, if the case is properly made, it can be a powerful impetus for effective policies.

The Club of Madrid has already begun presenting the Economic Rationale for Shared Societies to various institutions and collaborating with organisations which share this perspective--including the United Nations Department of Economic and Social Affairs (UNDESA), Gallup, Friedrich Ebert Stiftung, The World Bank,  European Policy Centre and the Brookings Institute--and will continue to disseminate it to new stakeholders.