New Economics for a Successful Policy Paradigm

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Abstract: Drawing on past policy paradigms in political economy – classical liberal, Keynesian/Social Democratic, and neo-liberal—we identify four features contributing to their success, including complementarity of their normative foundations and their economic model. We propose a radical restructuring of economic theory integrating research of the last four decades, together with a synergistic set of ethical commitments that go beyond shared affluence to also include sustainability and equal dignity. The resulting model of the economy is dynamic and interdisciplinary, and it suggests an enlargement of the state space of policies and institutions under consideration to include not only the poles of markets and governments, but also civil society. We provide examples and a conjecture on the likely success of the new policy paradigm, which like previous successful ones must address pressing problems on people’s minds – now including climate change and social injustice.