What is the foundational economy and how to

What is the foundational economy? (and how to build social citizenship) Joe Earle, Julie Froud and Karel Williams foundationaleconomy. com A zonal concept of economies (not the economy) Why foundational matters? the infrastructure of everyday life A brief policy historical achievement + recent degradation Social citizenship + re-doing politics = finding out what to do

“The economy” is a post 1940 s invention: GDP based management + polit. promise “ vote for us and we will make the econ. work for you”

Tradeable competitive economy Overlooked economy of haircuts, sofas and holidays Foundational economy of material and providential essentials Core economy of family and community FE revives an earlier alternative zonal concept of economies (in the plural): as in Fernand Braudel or E. P. Thompson

Why the FE matters? infrastructure of everyday life which keeps us safe and civilised • On the demand side, all households depend daily on essentials where interruption of provision = immediate crisis: üprovidential services like health services and care, universal primary and secondary schooling = the badges of our civilisation ümaterial infrastructure of pipes and cables connecting households to systems which make everyday life possible, safe and added 20 years to urban life after 1880 • On the supply side, these activities distribute welfare through waged employment: eg in UK typically 30% in the providential, a more modest 15 % in material infrastructure; roughly equal distribution across regions with networks and branches according to local population

So, how does this unthink “the economy”? recognises the heterogeneity of consumption • We do not confuse the tradeable part with the whole economy; nor confuse infrastructure with railways and pylons; and we do not make the GDP/ GVA mistake of adding up heterogeneous activities according to market value • Foundational thinking recognises the heterogeneity of consumption and adds other differentiators • Zones are differentiated in terms of norms and practices about eg sources of revenue, typical business model, organisational forms and status as policy objects • And these secondary differentiators are not fixed but change over time within one zone; change is partly through the incursion of norms from other zones (what Braudel and Thomson described with the expansion + incursion of the market)

Form of consumption Examples Provider business model Source of revenue Core Economy Non-economic because "we must love one another and die" Parenting, voluntary action etc. Gifting: no charging or recovery of cost Foundational Economy Daily essentials via infrastructure of networks and branches Material e. g. food, and utilities; Providential, health and care, social housing WAS low risk, low return, long time horizon for public and private providers Occasional purchases of Takeaway food, sofas Overlooked Economy mundane, cultural necessities Tradeable, (aspirational) private competitive Economy purchase Goodwill Re-invented forms e. g. divorce and marriage in our generation When the state retreats, try volunteers Tax revenue for free at point of use or subsidised; or regulated private purchase Low mobility and mortality as networks and branches 'ground' firms, stable demand Privatisation, outsourcing and shareholder value = new business model Financialized corporates Discretionary from vs SME and micro pro market income lifestyle and getting by Cars, electronics, new IS high risk, high return, kitchens and bathrooms, short time horizon private housing Organisational mobility Post 1980 s public policy and mortality High mortality in small Below the policy radar if firms and structural firms too small to take shifts e. g. streaming not outside capital DVD Market income from High mobility as wages (state subsidy for footloose under free R & D, training etc. ) trade; cyclical demand Business friendly, structural reform

A policy history of the FE : “municipal socialism” to national settlement • If you think foundational, then one key role of public policy is to secure the supply of basic services for all citizens; a SOBO for R H Tawney “ what a man cannot buy by working overtime” or J K Galbraith “private affluence and public squalor” • Now rediscovering how market incomes do not guarantee foundational provision (eg unaffordable housing In London now or gilets jaunes on fuel in France = the issue of household residual income after housing and transport) • Foundational provision is now + always was of the European right as much as the left üUrban common sense pre 1914: gas and water “ municipal socialism“ ex conservatives or liberals eg 1870 s Birmingham üNational settlements after 1945: led by Social Democrats but co-opting Xtian democrats

how did it go wrong after 1979? privatisation, out sourcing + and mis-selling • FE public or private (municipalities or railways) was historically 5% ROCE in activities which were low risk, long time horizon • Post 1979 financialised private firms (Public Limited Companies and Private Equity) bring in unsuitable 10 % plus ROCE high return business models ex high risk, high return activities: 1. Privatisation = cash extraction ex monopoly with ineffective regulation (eg UK water loading with debt while distributing profits or energy firms doing confusion pricing ) 2. Outsourcing imports instability ex leveraged search for returns (eg Four Seasons care homes) or PLC conglomerates falling over as chase earnings growth ( Serco + the rest) 3. Mis-selling with fines becomes an acceptable cost of doing business eg retail banking and PPI or European diesel cars = efficient breaches of the law

FE is not about the right “econ. policy” but about social citizenship • Recognise distinctiveness of FE spend: 1. Morally, essentials eg housing or legal aid = unlike a dress from Primark; collective benefits ex eg clean air in cities are distinguishable from individual feel good ex a new kitchen 2. Economically, requires collective systems investment eg infrastructure for public transport or branch provision as with A and E departments; individual can buy a smart phone but not 4 G in trains 3. Politically, FE provision is often a matter of citizenship and entitlement eg health or education: FE is about social citizenship as defined by Marshall “ the right to live the life of a civilized being according to the standards prevailing in the society”

Why the FE is + should be politically contested and deliberative § FE is about finding out what to do with citizen input amidst political dispute; mainstream economics is about knowing what to do so experts can choose the right policies; § Sources of dispute ü rights and duties of citizens = natural persons and corporations: eg is housing for citizens asocial right not individual asset eg “ business friendly “ vs raising the social ask with new duties for corporations ü role of political actors: eg is collectivism to be led by the state as socialists and free marketeers assume; or should intermediary institutions ( eg housing associations) play a part as liberal collectivists argue ü participative and deliberative role for the citizenry; classic delivery was top down and technocratic cf hospital provision in the 1950 s vs what kind of older care now

So how to stop the radical right ? four democratising political shifts • Across Europe we have the new instability with the radical right setting political agendas. Dutch fragmentation; German or Swedish 3/4 way split with radical right and left; Spain or UK with new left or split left parties. • “Inclusive economic growth” isn’t going to happen and in any case won’t fix the FE, so four political shifts 1. Get participation by asking citizens about FE priorities and organising deliberation 2. Extend social influence over business by licensing corporate business which wants to tap local demand 3. Reinvent taxation especially of wealth and unearned income to secure foundational revenue and capital investment 4. Create political alliances for changing foundational policy on the basis that government is not always benign or capable NB a multi level national, regional and local agenda

• Many of the issues eg air quality or type 2 diabetes are technical and require expertise; So, what’s the role of expertise? citizen friendly • But, under “ business friendly”, expertise has collapsed into facilitating business, especially private developer led regeneration which does not know how to stop (eg Manchester 50, 000 1 -2 bed new flats in the centre + no social housing tho’ 80, 000 on the waiting list) • What we need from expertise is citizen friendly 1. Regional and national strategies on water, air, energy, food and housing on the Barcelona model; so that political debate is formatted + targeted, popular politics has a matrix of FE priorities for deliberation 2. Dispersed expertise so that it is not making field trips from the town hall but in the communities and integrated through various processes like asset based community development or citizens’ juries

A zonal concept of economies The argument summarised Foundational infrastructure of everyday life Extend social citizenship + wellbeing The urban/ industrial achievement Repair via political shifts to participation with expertise 1880 -1970 s Degraded by privatisation and outsourcing