The Internet and the Social Economy

Local economies are our opportunity to build a truly social economy.  Their social dimension distinguishes local economies from neo-liberal economic practices.  These favour accumulation of wealth and power in remote places, beyond democratic accountability.

What Makes an Economy Local?

Ideally, local or social economies

  • Pay their staff the real living wage (higher than the government’s national living wage) or more. This is an effective way to get money circulating in the economy.
  • Pay their taxes. Tax avoidance is legal but distinguish using avoidance intended by legislation, eg ISAs, from using legislation in ways never intended, eg complex offshore accounts.  Taxes keep money circulating by redistributing it throughout the economy.  Whilst we might argue with specific applications of tax, even applications we disapprove of keep money circulating.  What is not acceptable are tax avoidance methods that take money out of circulation.
  • Invest in the local economy, both time and money.
  • Use local suppliers

Local businesses benefit more people than entrepreneurs and their immediate families.  It seems we live at a time when this is not generally understood.  Contrast the era of great industrial families, whose names are still found in buildings and parks around our cities.  They took pride in their cities.  This is not to say they were perfect, conditions in their factories were often appalling but their vision was wider than immediate family.

The characteristics listed are aspirations for many local businesses.  I would love to employ staff, pay taxes and invest locally but my business cannot support these at present.

This does not amount to a full description of the local economy.  Those elements not described as business are missing.  Community activity, sometimes called the core economy,  builds relationships and supports local businesses.

Much remains unchanged since the growth of the Internet.  Businesses and their customers still need to meet face-to-face and the networking and referral approaches that worked before the Internet, still do.

How the Internet Contributes

Here are some approaches, where the Internet supports the local economy:

  • Brochures are perhaps the easiest to represent online. A brochure site has several advantages.  It is cheaper than paper, requires little maintenance and can support more adventurous forays into online local marketing.  Brochures work best as part of a vigorous in-person marketing campaign.  Refer contacts to your site to learn more, before or after a one-to-one meeting.  Good brochure sites help referral marketers refer a business to a potential customer.
  • Make purchases – this is the obvious one for organisations that offer information products or deliver physical products to the doorstep.
  • Registration on the website helps maintain contact with customers. Invite people to sign-up at meetings or complete a form online.  Many businesses invite visitors to their site to sign-up as a way of maintaining contact.  Registration with a purchase, maintains contact with customers.
  • Websites can offer opportunities to join a membership organisation with online privileges.
  • Email lists can be valuable and there are opportunities to use them locally. A shop might tell subscribers of special offers or new products or services.  Or it could provide services, eg a food shop might publish recipes and offer special deals on the ingredients.
  • CRM – Customer Relations Management – is a massive area covering the storing of information and providing services to customers. It includes ability to chat with customers online.
  • Locating businesses – imagine you can use an app on your mobile phone to find the nearest business matching your requirements.
  • Mapping – or an app that shows you a map of the neighbourhood and the businesses in it.
  • Portmanteau sites are where several businesses with something in common, eg location, develop a joint portal to promote their collective presence.
  • Local currencies are usually managed online.

How to Work Locally

What do we want to do locally and how can it be supported online?  Begin with the local, in-person dimension and ask how to support it online.

The big advantage of the local economy is its potential to develop in-person relationships.  Customers use local services because they know like and trust the owners.  These relationships are the bedrock of local economies.  When we trade with local businesses, we have a good idea where the economic benefit is going and as much as possible will circulate locally.

The Internet can support local economic activity but is not central to it.  The strength of the local economy is its capacity to build relationships that keep it going.  Relationships come first; when business comes first, it inevitably leads to burnout at best and dishonesty at worst.

Businesses are part of a web of relationships that can make business practice much easier.  Well-designed interventions, such as local currencies, build on existing community relationships.  They depend on trust, which is why they have no financial value outside of their community of origin.

What are the practical advantages to putting relationships first in business?

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About the Author

I've been a community development worker since the early 1980s in Tyneside, Teesside and South Yorkshire. I've also worked nationally for the Methodist Church for eight years supporting community projects through the church's grants programme. These days I am developing an online community development practice combining non-directive consultancy, strategic management, participatory methods and development work online and offline. If you're interested contact me for a free consultation.

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