New Economy

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New economy is a general label applied to an actual, anticipated, or proposed restructuring of economic institutions. It is neutral with regard to the actual nature of the restructuring. Those who use the term agree only that the economy of the future will be, or should be, different from the economy of the past.

The term new economy has been used to refer to the service economy that has replaced the industrial economy in many high-income countries. Many have used it to refer to the transition to a high tech information economy. Some pundits made the claim prior to the Wall Street meltdown of 2008 that a new economy of financial innovation would make old approaches to wealth creation based on material production obsolete, eliminate business cycles, and usher in a new era of perpetual growth in material prosperity free from environmental constraints. Most new economy visions are focused primarily on institutional restructuring driven by advances in technology.

New economy - a progressive perspective

More recently, the term new economy has come into use by progressive groups concerned with the need to bring human consumption into balance with Earth’s regenerative capacity while eliminating economic deprivation through a reallocation of economic resources to increase equality and eliminate wasteful and destructive uses. These groups generally oppose the model of a global economy that concentrates power in global corporations accountable only to the short-term financial interests of their own shareholders and top managers. They generally favor economic models that root economic power equitably in people and communities of place, support local self-reliance in food, energy, and other necessities, and serve the needs of all for essential goods, services, and a meaningful source of livelihood. By their reckoning, any economic model that concentrates power in the hands of unaccountable decision makers and measures economic performance primarily in terms of financial return is merely a variation on an old economy model that fails to distinguish between the interests of a ruling financial elite and the real wealth needs of the rest of society.

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Author: David Korten