Opinion: Small plus small plus small equals BIG

ultra-micro economicsIn the heady days of the Thatcher government, when the hideous mistakes of Big Bang were being forged and coming to fruition, I used to run an excellent magazine called Town & Country Planning.  In those days, we were extremely exercised by the idea of the huge and mounting cost of rundown private sector homes. Who was going to repair them?

We don’t talk about that problem any more. This is not because it was ever exactly solved, but because of one of the more benevolent effect of rising house prices, before the oligarchs came in, was that it made a bit of DIY worthwhile. Instead of the government shelling out to repair all those privately-owned dwellings, the young owners went down to B&Q and bought a paintbrush.

It was a lesson to me that neither the conventional public sector nor the conventional private sector may be best placed to tackle the really intractable problems.  And it makes me wonder whether the great unanswered questions about rebalancing the economy might eventually be answered – not by the long night of the soul as we wait for the Treasury, but by the places themselves.

It would mean using the money better which is already flowing through each community. It would mean using the wasted people, land and buildings, the wasted material – putting them altogether and, not creating wealth exactly, but creating enough economic activity to claw back some of their economic destinies.

We can catch glimpses of what might be possible in the development of linked local food businesses in Vermont, or the community currencies for women entrepreneurs being rolled out by the Brazilian central bank.  Or in this country in the emerging community banking and community energy models.

We need to develop these ideas, and I set out how in my report Ultra-Micro Economics [pdf], published by Co-operatives UK, which I wrote about today in the Guardian.

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.  It is a potential answer to the sheer dependence of local poverty.

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.

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.

Third, there is a kind of snobbery among economic policy-makers 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. It’s a bit too much like plumbing for comfort.

The future direction of ultra-micro economics is extremely sketchy, but I believe it represents the future.  But only when local politicians start to demand it from their local leaders.

 

* David Boyle is policy director of Radix, co-director of New Weather, a fellow of the New Economics Foundation, and the author of The Xanthe Schneider Enigma Files and other books.

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5 Comments

  • Eddie Sammon 13th May '14 - 5:55pm

    David is clearly dedicated to social policy and I commend the effort plus the emphasis on the ultra-micro. My disagreement is with the co-operative structure. I don’t want to trade just for profit either, but I reviewed the other structures the other night and I see a problem with the one member one vote co-operative system, rather than the one-share one vote. I think it can lead to a person losing control of their company, which I suppose is kind of the idea of collective organisations.

    I think it is important that people can choose from a variety of structures – co-operates, CICs, partnerships, companies etc. I personally prefer the self-employed or limited company structure, but that is me and I know others differ.

  • Is there any evidence that economics as a discipline or a profession has anything to do with making the world work better for ordinary people? I think not. It got far more to do with making it work better for the 0.01% which is a completely different objective. So it’s not so much “snobbery” that the ultra-micro is too small per se, rather that most economists work for those who command big pools of money and who are only really interested in how to hoover up yet more money. Keeping it flowing for small players and within communities is of marginal importance at best.

    Of course, in the longer run endless accumulation by a tiny minority is not only distinctly psychotic but also a self-defeating strategy. Real wealth springs from having a claim on and share in the totality of what a community (or nation) is worth. Hollow out the foundations too much and having vast credit at the bank becomes meaningless – it doesn’t relate to anything real any more except a destitute and ravaged land.

    So I basically agree with David that we need to evolve a new understanding of economics except I would say it must go far beyond the ultra-micro. And to do that we must first develop a new confidence to assert the legitimacy and supremacy of the claims of the community on economic resources. If something doesn’t help people – as opposed to vague constructions like “the economy”, “the market” and the like – then it’s a bad idea.

  • Matt (Bristol) 15th May '14 - 12:19pm

    BIll, this is interesting and refreshing. This is a model of local government we need more of; alive to the potential and frequent need to intervene in the free-market economy to protect the vulnerable, but doing it by addressing structural inequities; devolving power and avoiding (where possible) creating many more large institutions or franchises that do things ‘to’ or ‘for’ communities (ie – to meet targets), and never genuinely ‘with’.

    WIth regard rather more to your opening point than the overall thrust (not that it’s totally irrelevant) – can I plug the excellect work of Care and Repair with vulnerable owner-occupiers, which you doubtless are already aware of?
    http://www.careandrepair-england.org.uk/

  • Matt (Bristol) 15th May '14 - 12:20pm

    Sorry, David, not BIll, don’t know why I did that.

  • Chris Manners 15th May '14 - 8:11pm

    “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.”

    You’re expecting them to spend lots of time and money on it and then get knocked back by the Treasury anyway?

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