What would be the difference between a national localised economy and the current neo-liberal model? We need to build sustainable localised economies. A localised economy means neighbourhoods need huge investment in rebuilding what the neo-liberal consensus has destroyed.
Towards the end of the nineteenth century, the first wave of co-operatives found opposed interests between retail and worker co-operatives. Retail co-ops aim to maximise dividends for their members, who are also their customers. Worker co-ops aim to maximise the workers’ wages.
Whilst there is a place for worker co-ops, it is not necessary for all businesses to be co-operatives. Indeed, any structures that divert energy into complicated constitutions, boards of directors, etc are not a good idea.
The key is collaboration. Small businesses work together to build their local economy and links into the national localised economy. If you are a baker you have no need to compete with other businesses in your area or bakers in other areas. It may be possible to collaborate with other bakers in your area. It depends on how many bakers a given neighbourhood can sustain. Increasing numbers of people ready to buy locally produced bread, might be an example of mutually beneficial collaboration.
The local economy becomes sustainable when money circulates within it. A pound coin spent in the morning might be spent several times that day. Think of it as one coin. A coin spent 10 times is worth £10 in terms of the goods received in return for it. It continues to be an asset to whoever holds it. When I hand a coin over I tend to think of it as lost to me. But in fact it is only by handing it over that everyone else’s wealth increases. As their wealth increases so does mine. If I have something to sell, they are more likely to buy it from me.
Consider the Local Economic Trading Systems’ (LETS) experience. They use a local currency. The best participants are not those who accumulate the currency, or accumulate debt. The best customers are the ones who most often cross zero. Accumulation means the economy becomes stagnant.
If everyone has £100 and no-one ever spends anything then the economy is not sustainable. It is the transactions that keep it going. This is how economies crash. As more people accumulate debt or wealth, the economy will slow down. The economy works when people spend.
Trust
Many conservative economists talk of an invisible hand that keeps the economy going. They claim it has its own intelligence. This is of course nonsense. The thing that keeps the economy going is visible and it is trust. When people lose confidence because of fraud or maladministration, the market fails.
People are more likely to trust their local market. People get to know the businesses in their area. They make recommendations to friends and so businesses grow. Those businesses can employ more staff, which increases currency in circulation and so long as they keep trading they help to keep the economy going.
The big challenge is how to restart this traditional approach to the economy. The retail co-ops started at a time when people were desperate for change. We cannot ignore adverse economic conditions and the selfish practices of corporations and their political supporters. But we need to show how it is done from the bottom up, just like economies throughout history.
We know how to do it and we know the basic principles. The challenge is to learn the practicalities of building a local economy in the 21st century.