The UK government must think small to bring about big economic change
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Version 0 of 1. Don't look now, but the political language is changing. Once, the phrase "rebalancing the economy" was the cornerstone of coalition economics; shifting energy from finance to manufacturing, from big to small, from London to everywhere else. Now, I notice, it has come to mean little more than reducing the UK trade deficit, which is not the same thing at all. But don't let's lose the previous meaning entirely, because it stood for something important. We still need to rebalance the economy. What we lack is a formula to regenerate cities and towns using their own resources, without having to wait around for the outside investment or government grants that never arrived. This is the missing element of rebalancing we've never quite developed. It would mean better using the money that is already flowing through the community. It would mean using the wasted land, people, buildings and waste material, putting them altogether and – shazzam! – the wealth appears. Well, not wealth exactly, but enough economic activity to claw back some of their economic destinies. The difficulty is that these economic techniques exist, but in the UK at least are in their earliest stages – usually based on community banking or community energy generation. We can catch glimpses of what is possible in the efforts of local authorities such as Enfield or Preston, looking at different ways of doing procurement. We can see it in the development of linked local food businesses in Vermont, or the community currencies for women entrepreneurs being introduced by the Brazilian central bank. We need to develop these ideas, and I set out how in my report Ultra-Micro Economics, published today by Co-operatives UK – because the prize is worth winning. It would be a genuine antidote to the trickle-down effect on which most economic policy is still based, even though most evidence suggests that wealth tends to hoover up rather than trickle down. There is evidence that these techniques might work a good deal better than traditional regeneration, shifting the poor out and selling their homes to the rich. But there are three important blockages. First, our institutions of regeneration, from the energy intermediaries to the high street banks, are designed for big institutions and find it hard to connect with small players. Try helping your village generate its own energy and things get difficult. Second, there is a blind spot about economic regeneration in most local authorities. They don't see it as their business, and this kind of learned helplessness – passive in the face of whatever disasters the global economy might throw at them – has been carefully nurtured by the Treasury for a generation, terrified of the spectre of the Bank of Our Friends in the North. Third, there is a kind of snobbery among economic policymakers about it, as if ultra-micro was all a bit too small to matter. Economic strategy has kudos and status; looking at money flows on the ground and how to make money connect more locally isn't what they imagined doing. Money flows? It's too much like plumbing for comfort. The government's City Deals are a good start, though the most ambitious local projects have had to be forced through a reluctant Whitehall. But the real lesson is that small-scale matters. One of the ultra-micro heroes, Pam Warhurst of Incredible Edible, said, for example, that the "government will spend millions of pounds on a campaign to eat five a day". Instead, the local GP centre in Todmorden used wasted scrubland outside to encourage people to plant vegetables and fruit for everyone to use. "It helps if you don't ask permission," she said. The ultra-micro approach transcends conventional right and left, just as it goes beyond the conventional distinction between free and controlled markets. But the real argument is about scale, if enough people and places are doing this. Because, as they say in America, small plus small plus small plus small equals big. |