Economics in a time of crisis

This article originally appeared in the UCL Policy Lab Magazine.

The political, social and economic crises that we are confronted with are well known: political disengagement, disinformation and distrust; stagnant living standards and stubborn inequality; and climate emergency. Most of the time, journalistic coverage suggests that it is mainly up to elected, senior politicians to address them. But everything we have seen in our time at the UCL Policy Lab suggests that the range of agents of change is, in fact, much broader. What if you are, say, a policy director at a major grant giving organisation? Beyond the causes you fund, don’t you also have a wider responsibility to do something about these generational challenges?  

Danielle Walker Palmour, founding director at Friends Provident Foundation (FPF) and newly appointed, Honorary Professor of Practice at the UCL Policy Lab, has thought about these challenges and these responsibilities far more than most. She has been a consistent pathbreaker, revealing how civil society organisations can turn outward to the communities they serve.  

The FPF is an independent charity that explores how financial systems and money can support society better. It is a ‘capitalised charity’ - investing its endowment both to generate financial and social and environmental returns. It allocates 90% of its endowment to generate income to support its grantmaking and at least 10% to investments that generate social benefits, a ‘social investment portfolio’.  

In talking with the Lab, Walker Palmour explains how the FPF’s current mission emerged from the financial crisis of 2008. “Previously, our focus had been on financial inclusion,” she says, “which means helping low income people access money, advice, banking, and affordable credit. The idea was that the financial system is an engine for inclusion and growth so the main thing we had to do was hook low-income people up to that engine.”   

The 2008 crash – and the seismic hit to incomes and living standards that followed - changed that view. “We thought: ‘hang on, we’re not sure this financial system is all that good at distributing risk and reward. We were no longer convinced it was a system we wanted to hook vulnerable people up to.” 

 The organisation’s mission evolved. Instead of trying to include everyone in the financial system, it took on the deeper question of how to redesign it.  

Bringing outside voices in  

The attempt to conceptualise a model of how the system should serve people led to a new question: what do ordinary people want from the financial system and the economy?  

But efforts to address this question soon hit a barrier too. Many in the public tended not to feel comfortable talking about it. “People say things like: ‘oh, well I don’t really know about that because I’m not an economist,’ Walker Palmour explains. “Whereas noone says: ‘I’m not a politician so I don’t know about politics’ or ‘I don’t know about society because I’m not a sociologist.’ We detected a lack of agency in talking about the economy.”  

So, the FPF found itself reckoning with how to bring the perspectives of the public into the economic conversation. And that has been a primary focus ever since.  

Walker Palmour makes the case for a dose of institutional radicalism from universities to address this. Economics departments, she argues, have a responsibility to turn their expertise outwards and help improve the public understanding of economics. She envisages a programme that gives people a chance to ask economic and financial questions, with universities holding the space and providing the expertise to answer them.  

She draws an analogy with a programme proposed in the medical world in which patients had the opportunity to ask experts questions about their conditions. As well as improving patient understanding, the programme had another surprising result: sometimes patients asked questions about areas where there was a genuine lack of academic research. Sometimes that was because companies or other funders were less interested in these areas. Walker Palmour argues that, as in medicine, turning to the public to solicit research questions can unearth research topics that would serve the public better and produce more vital work.  

“I wanted to do that for economics. I was thinking: can we ask a bunch of economic activists: what are the questions you need to ask to help you change the economy in your area?” She recognises practical hurdles to doing this, but thinks that something like it could be a model for grant making organisations like the FPF and universities to support the ecosystems of political engagement in communities around them to build progressive change.  

The organisation has already done something similar to bring in voices that have traditionally been left out of the economic policy conversation. They have supported the Women’s Budget Group and the Women’s Environmental Network to build structures to bring traditionally marginalised groups into economic policymaking at the local and national level.  

Curriculum change  

Part of FPF’s work to catalyse new thinking about the economy has been to work with reformers in universities to teach it better. Walker Palmour explains how soon after the crisis, university economics students were being asked by their non-economist friends what just happened. And their answer was invariably: ‘we don’t really know.’   

Although an endeavour like this could only be a long-term project and the operating framework for economics teaching remains conventional in many places, she sees progress. “People are starting to understand that issues like addressing carbon emissions and addressing inequality are not just political questions. They’re also the work of economics.” Moreover, she sees a growing acceptance that economic rules and institutions are human constructs that can and should adapt. “This is not physics,” she says. “The rules are something we have control over. And if we don’t like the way the economy is working, there are democratic ways we can change that.”  

Skin in the game  

Most of all, Walker Palmour believes that organisations like FPF have a responsibility beyond the organisations they fund, to improve the ecosystems in which they operate.  

“As an organisation, we have taken that analysis and said: OK, we as a foundation are an economic actor. What are we doing?”  

As a response, she created the Foundation Practice Rating to rate private foundations in terms of their diversity, accountability, and transparency. Without asking permission of the foundations they rate, the FPF looks at publicly available information on a hundred top UK foundations, gives them a mark from A to D, and publishes the result. This extends to the funders of FPF, she says, “so we are absolutely rated as well.” 

And the ranking has produced results. “This is our third year,” she says, “and we have seen tangible change: a decrease in the number of D ratings and an increase in A’s. But the key thing is that we are doing it to ourselves as well - so we are drawing people into this coalition, this is not ‘us’ and ‘them’. I find that incredibly powerful.  

FPF is trying out new ways for charities and foundations to take their share of responsibility for the political challenges we all face. Walker Palmour’s experience underlines that civil society organisations have skin in the game here – after all, they are economic actors too.  

Bringing new voices into the ecosystem to generate new ideas, solutions, and momentum for change is what Walker Palmour is all about. And that is why she was a perfect choice for an Honorary Professorship at UCL. 

This article originally appeared in the UCL Policy Lab Magazine.