A dark skyline above a polluted cityscape

In this blog post and exclusive audio recording, Mohamed A El-Erian introduces us to the theme of economic permacrisis which is central the new book he has co-authored with Gordon Brown and Michael Spence.

Earlier this month, G20 leaders spoke of a planet gripped by “cascading crises.” Permacrisis: A Plan to Fix a Fractured World (out 28th September) is our attempt to understand and explain where we’ve gone wrong, and then go a step further by presenting a plan to better manage the future for the benefit of the many and not the few. 

Behind this permacrisis are failed approaches to growth, economic management, and global governance  In analysing these main drivers, we show why things will get even worse if policymakers fail to course-correct. But it’s not all doom and gloom. Far from it. Rather, our aim is to put forward a positive and realistic set of actions that can take us off this bumpy road and toward a better destination – reimagined models that can turn vicious cycles into virtuous ones.

‘Permacrisis’ originated from a series of Zoom calls among friends started during the first Covid lockdown. While Gordon, Mike, Reid and I came from different professional backgrounds and with different perspectives, we were united by a common concern about the world our children would inherit. And what kept us together is the desire to put forward an actionable agenda for improving their future.
What lies behind much of what has gone wrong, and is still going wrong, are those broken approaches to growth, domestic economic management, and global governance. The longer fractures persist, the more worrisome the global outlook. 

When we think of the stubbornly high inflation that has hit the poor particularly hard, climate emergencies increasingly met by a global shrug and not a groundswell, lagging growth within and across countries, ever greater indebtedness, worsening inequalities and spreading insecurity – we are reminded of the painful signposts that have come to define this permacrisis. Yet while approaches are broken, they are not beyond repair.

It is possible to deliver inclusive, sustainable and secure growth by harnessing strides in artificial intelligence and other innovations, fixing supply-side constraints, addressing labor and learning shortages and, where needed, restructuring debt for growth. 

Economic management, which as of late has come off as a contradiction in terms, can be made to better work by greater coordination and accountability, crowding-in more voices with diverse perspectives, and evolving new frameworks and targets that respond to – rather than reject – new realities such as a world facing supply rigidities. And a rapidly changing global order means we need to rethink governance structures and multilateral institutions so they can better cope with the shift from a unipolar to multipolar world, hyper-globalisation toward a globalisation-lite rather than fragmentation, and the slide toward neo-nationalism.
There is no big bang corrective measure. As hard as the four of us tried, the proposals we set out in ‘Permacrisis’ are not a singular silver bullet. Rather, we put forward a menu of actions that are both desirable and achievable –a set of steps that build positive momentum and open the way for virtuous cycles linking economics, finance, institutions, politics and, most importantly, societal wellbeing. New approaches to growth, economic management, and global governance, each on their own, will get us some of the way to a better destination. But acting on all three fronts at once is how we turn additive gains into multiplicative ones. That’s the kind of breakthrough needed to end today’s permacrisis. And it is within our reach. 

About the authors

Gordon Brown

Gordon Brown was Chancellor of the Exchequer, a role he held for more than a decade, then Prime Minister of the United Kingdom. He is credited with preventing a second Great Depression through his leadership at the 2009 London G20 summit where he mobilised global leaders to walk the world back from the financial brink. Today he is fully engaged in international development work serving as the United Nations Special Envoy for Global Education, spearheading efforts to deliver a quality and inclusive education for all of the world's children, and as the World Health Organization's Ambassador for Global Health Finance. Brown has a PhD in History from the University of Edinburgh. A Member of Parliament between 1983 and 2015, he lives in Fife, Scotland, and is married to Sarah, and the couple have two teenagers.

Mohamed A El-Erian

Mohamed A El-Erian is the President of Queens’ College, University of Cambridge. Since 2014, he has served as Chief Economic Advisor at Allianz, the corporate parent of PIMCO where he formerly served as Chief Executive and Co-chief Investment Officer. He is Chair of Gramercy Fund Management, a columnist for Bloomberg Opinion and a Financial Times contributing editor. He is a Senior Global Fellow at the Lauder Institute and the Rene M. Kern Practice Professor at the Wharton School of the University of Pennsylvania. He was previously a deputy director at the International Monetary Fund, a managing director at Solomon Smith Barney/Citigroup, and President and CEO of Harvard Management Company. From 2012 to 2017, Dr El-Erian served as Chair of President Obama’s Global Development Council. His books When Markets Collide (2008) and The Only Game in Town (2016) were New York Times bestsellers.

Michael Spence

Michael Spence is the Philip H. Knight Professor Emeritus of Management in the Graduate School of Business at Stanford University, a Senior Fellow at Stanford’s Hoover Institution, and a Council on Foreign Relations Distinguished Visiting Fellow. He is an adjunct professor at Bocconi University and an honorary fellow of Magdalen College, Oxford. In 2001, Spence received the Nobel Prize in Economic Sciences for his work in the field of information economics. He is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World (2011). Spence served as Dean of the Stanford Business School from 1990 to 1999 and Dean of the Faculty of Arts and Sciences at Harvard from 1984 to 1990. He is a recipient of the John Kenneth Galbraith Prize for excellence in teaching and the John Bates Clark Medal recognising American economists under forty.

Transcript of audio recording

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