Category Archives for "Local Economy"

0 St Benedict in the Marketplace

About ten years ago, BBC2 broadcasted a short series called the ‘The Monastery’.  Six men lived in a monastery for a month, adopting the same discipline as the monks.  The monastery was Worth Abbey and the Abbot Father Christopher Jamieson (I believe he still is).  The programmes had quite an impact at the time and Jamieson said many business people contacted him seeking spiritual guidance.  Not all of them were Christians and many had not previously heard of St Benedict, who first wrote the rule that governs Worth Abbey many centuries ago.

There have been other similar programmes since and Jamieson published a book, Finding Sanctuary.  It had a secular imprint because Jamieson wrote it for everyone, not just believers.  It sold out during the first week of publication.  I think that was in 2006, the edition available from Amazon is dated 2008.  (I’ve pasted in a link to the book, in case you’re interested but I am not reviewing the book in this post.)

I am returning to Theonomics, the book I started to review last Friday, when I commented on one short passage from the book.  Today, I shall review one chapter from the book and next week finish by reviewing the whole book.

Chapter 3 on page 37 is “A Framework for Flourishing” by Alan Hargrave.  This chapter is about the Rule of St Benedict and its relevance to business.

Think about religious communities as models of ideal communities.  They are not ideal communities, far from it but places where their members make a conscious effort to live in community.  Benedictine communities follow a rule developed by St Benedict where the community members make three vows.  These vows are not poverty chastity and obedience but obedience stability and transformation (Conversatio Morum).

Here is my take on these three vows; we can all consider them when building local marketplaces.

Obedience

Obedience is not what you might think.  The Latin root of the word means to listen.  The obedient person pays attention and acts accordingly or appropriately.  So, the opposite of obedience is not disobedience but absurdity, acting without reason.

There are those who cannot read the signs of the times and so act inappropriately, not even in their own long-term interests.  Climate change deniers spring to mind.  It seems no evidence will convince them.

I recently wrote a post about Prayer in the Marketplace, wherein I suggested prayer is paying attention.  Obedience is not doing what you’re told but paying attention and acting appropriately.

Stability

It’s where your feet are.  That is the important thing to remember.  This vow is about choosing a neighbourhood and commiting to it.  Your chosen neighbourhood is not better than anywhere else because all places are worth  commitment from those who live there.

Our neighbourhoods are desperate for people who commit to them on the behalf of others, who seek sustainable approaches to the issues of their chosen places.  Community depends upon incarnation, the real presence of those who live there.

Transformation

Scholars tell us Conversatio Morum is difficult to translate.  A close literal meaning is conversion of life but as such it implies an individualistic focus on self-improvement.

Perhaps it is better thought of as a commitment to conversion of life in general, for everyone.  The important thing is an opportunity for everyone to meet their potential;  removal of constraints on human development, such as poverty.

The Radical Agora, marketplaces at the heart of revitalised neighbourhoods, places where community happens, is one way of visualising how conversion of neighbourhood life might look.

The point is the Radical Agora cannot happen if this vision of transformation is all we have.  We need obedience and stability too.

Do you think Benedict speaks to our communities today?  If you have a view, please share it in the comments.

2 What is Common Ownership?

My grandparents’ generation understood common ownership.  Even in the early 2000s, they would proudly quote their membership number when you mentioned the co-op.

It is only in relatively recent times that membership of the co-op has come to mean very little.  In days when every supermarket has a loyalty card, the co-op divi makes little difference and can be worse as in recent years there’s been no dividend.

At one time the divi made a real difference to the household budget.  And shopping at the co-op guaranteed low prices and good quality.  All of these were benefits of common ownership.

Theonomics

The reason I’m raising this issue is the book I shall review over the next few Fridays.  “Theonomics: Reconnecting Economics with Virtue and Integrity”, edited by Andrew Lightbown and Peter Sills contains essays about economics by Christian practitioners.  The papers vary in quality but it is a helpful snapshot of the thinking going on in the churches.

I’ll take a look at the more inspirational papers next time but this time, I want to respond to this passage from Peter Sills’ paper “A Christian Framework for Economics”.  He quotes Pope Leo’s concerns for poverty in the capitalist system and then we find this passage:

“Pope Leo’s social concern is an expression of the divine concern for the poor rather than a political manifesto, and he was equally critical of socialism, particularly its advocacy of common ownership which he saw as destroying the natural right of property.”  (Page 22) (Rerum Novarum, Leo’s encyclical,  published in 1891.)

I’m not particularly concerned about defending socialism, a somewhat varied collection of beliefs.  To praise or condemn socialism, it is usually helpful to explain which particular version of socialism you are praising or condemning.

Neither do I praise or condemn the “natural right of property”.  People do own property and I’m not aware of any political system that does not endorse a right to private ownership of property unless it uses totalitarian methods to enforce some alternative.

State Ownership

Pope Leo was writing long before the Soviet Union and so it is difficult to know exactly what he meant.  In the twentieth century we saw several experiments forcing populations to give up private property in favour of “common ownership”.  But what we saw was not common ownership but state ownership.

I am in favour of state ownership where it is appropriate.  The state must own the NHS, for example,  to deliver free health services to the population.  Paying for the NHS through taxation is the best method we have been able to find.  It is hard to imagine any advantages to moving the NHS into common ownership.

Common Ownership and Private Enterprise

The point is different activities need to be supported appropriately.  Common ownership is not the same as state ownership.  Common ownership is where customers or workers own an enterprise.  So, for example, John Lewis’ workers own the company.  Those workers also own their own property.  When they receive a dividend from the business it is theirs to spend as they wish.  Whilst I’m sure this approach is consistent with some versions of socialism, it does not follow that all those employed by John Lewis are socialists!

Common ownership is an approach to economics embedded in a system where everyone owns private property.  In a system that optimised common ownership (this would mean common ownership of most established businesses) there would still be some state ownership, eg the NHS, and there would still be private ownership.

Every household would own property, some financed through common ownership.  But more important there would still be private businesses.  And the place where they would be found is locally!  Small businesses, privately owned are an efficient way of testing new ideas.  There is work and expense in  setting up common ownership and for a lot of new businesses, it is more economically efficient to test a new business at its owners’ risk.

The time to decide to create a co-operative or social enterprise, or use any other beneficial business model, is once you have a business.  These days successful businesses are usually incorporated.  It would be good to see more proven businesses exploring alternative pathways with elements of common ownership.

The Common Good?

Pope Leo went on to say:

“develop the idea of the ‘common good’ as a positive duty ‘to make sure that the laws and institutions, the general character and administration of the commonwealth shall be such as to produce of themselves public well-being and private prosperity.”  (page 22)

Sills goes on to show how the Catholic Church developed these ideas during the twentieth century.  My question for Pope Leo is: how does he intend to deliver on his light-weight concept of the common good without common ownership?

Common ownership is the road less travelled.  It is rarely advocated by politicians or theologians even though it offers “public well-being and private prosperity”.

0 Fundamentalist Economics

Is it true scientists and engineers are more prone to being recruited as jihadis?  Paul Vallely in his Guardian article, Are scientists easy prey for jihadism? suggests maybe it is.  This is not an easy question to answer but perhaps we see  fundamentalist economics at play here!

Engineers solve convergent problems.  These can be highly complex but if you crunch the numbers, the likelihood is they will converge on one or a few answers.  Furthermore, once you get it right, others can reproduce your answers and there may be consensus about the correct answer.

This approach contrasts with divergent problems where more information leads to increasing numbers of answers.  There is no right answer and so everyone has to choose the answers they want to run with.  This means answers are contested and any consensus will be provisional.  The arts and humanities generate divergent problems.

Vallely’s article suggests someone has studied mainly convergent problems might seek convergent answers in all disciplines.  This leads to a fundamentalist mindset, where there is one answer and everyone who disagrees is being deliberately obtuse.

I have two problems with this view:

Are Scientists and Engineers really More Prone to Fundamentalism?

Vallely suggests this problem may originate in universities in the Middle East.  This could be so.  However, if the problem is with convergent problem solving, then any student in engineering or science disciplines would be vulnerable.

First, whilst I appreciate scientific disciplines may be taught in such a way that only convergent problems count, it simply is not true that all scientific problems are convergent.  Indeed physicists sometimes adopt a mystical worldview as they probe the mysteries of relativity and quantum mechanics.

I can appreciate some people who work in IT might see all problems as convergent.  Certainly many people treat website design as if it is!  A moment’s reflection would show website design is far more a human than a technical challenge.  They are communication tools and so good design addresses the infinite range of human perceptions.

Surely, the problem is the other way round?  Many religious people do not understand science.  The fundamentalist mindset is attracted to a worldview where both science and religion produce single correct answers.

Take a look at this passage from Vallely’s paper:

What Rose has done is to highlight three specific traits that characterise the “engineering mindset”: first, it asks “why argue when there is one best solution?”; second, it asserts “if only people were rational, remedies would be simple”; and third, it appeals to those with an underlying craving for a lost order, which lies at the heart of both salafi and jihadi ideology.

These are traits of fundamentalist thinking.  Vallely is right when he says it depends on how scientific subjects are taught.  Correlation does not necessarily imply causation.  Fundamentalists attracted to engineering are just as likely as engineers becoming fundamentalists.

Here’s a cartoon about Religion, Science and the Fundamentalist Mindset.

It is an Economic Problem

So, what explains this correlation (if it exists)?  I think the clue is right at the end of Vallely’s article:

But they will need something that cannot come from western cultural experts. What the report omits to point out is that students will require input from others within their faith – to open up to them the richness of the Islamic traditions that constituted the religion before the arrival of oil-rich salafi fundamentalism.

The key word is “oil-rich”.  Fundamentalism is divisive because it promotes superiority for those who are right and  traditionally wealth is the primary indicator of who is right.

Neo-liberal economic systems treat economics as a science.  When I was at university in the 1970s, economics was a part of the social sciences and as a real scientist, I looked down on social sciences as a subject that had pretensions to scientific rigour.

Certainly, some social scientists envy science’s clarity.  But economics is a divergent system.  Whilst it is possible to play the system if you have enough wealth or power, it still depends on multiple human interactions.

IS Same or Different?

The wealthy use the power of wealth to control others.  Fundamentalism is one way of doing this.  Islamic State (you know who I mean) opposes the West, not because they are different but because they are similar.  The neo-liberal state is a direct competitor to their power base.

Most of us don’t have a stake in this rivalry.  Refugees and those killed as a result of terrorist attacks in the West are victims of a proxy war between two competing ideologies.  The wealthy have a lot to defend and can afford the weapons.

We’re often told IS is not Medieval because they use the Internet and modern warfare but the rich and powerful have always been with us.  They’ve always dealt in certainties because it allows them to divide the world into good and evil.

Vallely is right about the richness of Islamic traditions.  The best in all the religious traditions favours supporting ordinary people who simply want to make a living in the world.

0 Money Circulation in the Local Economy

I’ve explained this to several people but so far not written about it!  Writing about the local economy, it is easy to imply local economy means money is somehow ring-fenced to particular localities.  The key thing to remember is money circulation is the key to local economies.

The wealth of any particular geographical area would be measured (if it is possible to measure it) as the flow of money through that area.  Money accumulated is not a measure of wealth because accumulated money is not active.  Whether it is in a shoebox under a bed or held in a bank account, inactive money does not contribute to local wealth.

Sometimes people use the leaky bucket as an analogy.  The thing is you need the leaks.  What matters is where the money flows out to and that the flow in at least matches or exceeds the flow out!

Money Circulation Tornado!

Think of a tornado.  Air circulates in a column that narrows as it approaches the ground.  If you look down on it from above, you would see a spiral of air currents if air currents were visible.

This is certainly over-simplified but the point I want to make is the circulation is not solely around a neighbourhood but has to flow through other parts of the economy.  In practice money will circulate in far more complex ways.  It is impossible to map the flow of money but it may be possible to find out what blocks the flow.

Money can accumulate at any turn of the spiral.  However, the further out you go, the more likely it is accumulation of money will damage the economy.  However, there are some advantages to accumulation of finance.  Finance can be used for large-scale infrastructure projects.  These projects bring jobs and finance to local areas.  This is usually described as investment.

There are generally two ways money accumulates.

The first is through taxation.  The big advantage of taxation is use of money is to some degree transparent and accountable.  Public sector finance creates jobs and supports the economy in local areas.

However, the trend in recent years has been to privatise public services.  When local authorities use tax payers money to enter into long-term contracts, where voters are not permitted to see the terms and conditions of those contracts, they have sold their democratic accountability.  I’ve never understood how large corporations can possibly be more efficient than public services; corporations pay shareholders and this is an additional cost.

The corporations are the second way in which capital accumulates.  Even here the scale of the accumulation is important.  A small developer who raises capital to build houses probably does little damage to the local economy.  Indeed I suspect many such businesses are finding it harder to raise capital.  Alternatively, a small landlord who buys property to rent may not be such good news.

How is Accumulated Capital Used?

It is worth asking what the wealthy spend their capital on.  The reason finance is not easy to find for small businesses is because most of it is going into purchase of property.  By property I mean things like houses and infrastructure but also shares in companies.

If you own stuff you control it. This is known as a rentier economy and the point is, it is an economy that has slipped the moorings of democratic control.  What we need to understand is a rentier economy is an economy that is anti-business.

It is alarming to hear that production is declining.  We’ve seen further closures of steel companies in recent weeks and this is a sure sign that financial transactions take precedence over transactions benefiting the whole community.

One of the biggest political lies is that opposition to accumulated wealth, or inequality, is the same as being anti-business.  On the contrary, the City of London and similar, are the enemies of business.  They take finance out of the economy and are not democratically accountable for the finance they own.

How do we redress the balance?  Clearly, getting the right balance of accountable capital into the economy is important.  One simple thing would be to abolish fractional reserve banking.  This is where when banks make a loan, they do not have to match what they loan from their reserves.  In effect every time a bank makes a loan, it creates money.  This means the flow of money into the economy is not controlled by the state.  (The link connects to Positive Money, a campaign against fractional reserve banking.)

If banks had to match their loans to their reserves, this would reduce the impact of finance on the economy.  Whilst the volume of money in circulation would be reduced, so would inequality.

Of course, it is not as simple as that, it never is.  My main point today is to underline the interests of the wealthy  oppose the interests of local businesses.  Those who oppose capitalism do no good if they oppose local business.  The challenge is not to abolish capitalism so much as to find a capitalism that benefits everyone.

0 Postcapitalism: A Guide to Our Future

Whilst in some respects Paul Mason’s “Postcapitalism: A Guide to Our Future” is a good read, I found it disappointing.  I expected at some point to understand what Mason means by postcapitalism and whilst I understand why it is not possible to define it, the concept seems incomplete.

The argument is capitalism cannot adjust to the Internet age because the Internet makes production effectively free.  Work no longer has financial value.  People collaborate and create new things because they enjoy innovation.  But as soon as you create something, it can be duplicated for next to nothing by machines.  This applies to material as well as digital products; once machines are in place, production requires little contribution from human beings.

Exactly how this brave new world operates is naturally a mystery because it is still emerging and so we cannot fully discern its shape.  Capitalism has been around for about 200 years.  The earlier economic system, feudalism, lasted many centuries longer.  Inequality is a major issue today.  The market doesn’t work properly because 1% hoover up most of the resources.  Feudalism and its precursors do not seem to be any better.  Inequality was just as much a feature of the Roman Empire, itself a pattern for every dictatorship we’ve seen since.

It is hard to see how allowing a new paradigm to emerge, trusting it will be fairer than the one we have, is going to solve anything.

Resisting the Inevitable

Mason takes a lot of time explaining Marxist theory.  This is interesting and the best part of the book.  He describes how capitalism’s story is of long-term cycles.  Someone invents something, it opens up new possibilities and so the economy grows.  As more people take on the new development, returns fall and the economy moves into recession.  It seems the latest cycle has broken down; capitalism cannot resolve the current cycle created by the Internet.

Possibly this theory shows the struggles of the last century are the struggles of the proverbial bald men fighting over a comb.  It has never been a fight between capitalism and anti-capitalism (called communism, socialism or, bizarrely, liberalism (a more pro-capitalist ideology is hard to imagine)) but a fight between capitalisms.

The Soviet Union was not an alternative to capitalism but state capitalism.  China today is managing to be capitalist without the democratic trappings of the West.

In truth we can design our own capitalisms.  After all, the issue is not the value of capital but the ownership of capital.  When 1% of people own most of the capital you can expect the economy to be less healthy.  Demanding this should end is not demanding an end to capitalism.

One interesting point Mason makes is the working class in the UK did not follow the Soviet route but chose to reform capitalism.  One such route was trade unions.  Their approach to capitalism was so threatening to the wealthy that the Tories crushed them in the 1980s and still feel threatened by the feeble rump that remains.

Co-operation: an alternative?

Another approach, Mason hardly mentions, is co-operatives.  The co-operative movement was immensely diverse during its glory days and presented an alternative economy within the imperialist economy of the British Empire.  It was crushed during the 1980s too, to the extent most people no longer understand mutuality.

So, how about this vision of post-capitalism-as-we-know-it?  Run the corporations, big businesses and public services as mutuals to set the standard for the economy.  Smaller, local businesses can be mutuals but self-employed are able to set up smaller businesses.  This allows people the flexibility to experiment with new ideas at a local level.

In such a local economy, people still have money and property but a lot of what they own is part shares in mutual businesses.

The Internet

Mason claims the digital revolution is a main cause of the current recession and transition to some unknown future.  He actually writes little about the digital revolution and in that respect the book is a disappointment.  The problem is I can’t help asking whether he would hold to his analysis if he knew more about the digital revolution.

One obvious issue is the digital revolution works only when most people link to it and that costs money.  If the machines can open up something new, how does everyone take part?  It may be true that a lot online is free but it is free only once you have purchased the equipment and access to the Internet you need.

Who Decides How Technology Works?

The reason so much is free online is a decision taken by the people who invented the Internet.  Lanier in his book, “Who Owns the Future?” says the links we use are one way; they point to another page.  You cannot track back to the original page through the same link.  If they had chosen that option it would have been possible to track everyone’s contribution and they could have earned a share in any profit made through their contribution.

They made these early decisions for good reasons but the decisions that prevail are the ones that favour those with power.  The information you put on Facebook, for example, benefits Facebook’s owners. The Internet is an unparalleled opportunity to aid communication within and between communities.  We have hardly begun to explore its potential.  Our ancestors achieved unbelievable things through mutuals with limited transport (trains) and mass communications (newspapers and the telegraph).

What do you think?  Do we wait for Mason’s postcapitalist world and then decide whether we want it?  Or do we follow the example of the Rochdale Pioneers and shape the new world from within in our own way?

2 Reorientating Economics

In most debates about capitalism, it seems, no-one has a clue what it is they are talking about!  Capitalism has become a catch-all for the modern economy.  I heard two Conservatives debating capitalism on the radio the other morning.  Is capitalism essentially free enterprise?  Or does it also encompass the financial markets (a misnomer if ever there was one) and capital accumulation with no connection to production?

If small businesses are part of a capitalist economy, then so are co-operatives.    Mutuals hold wealth in common and some people do not believe this is really capitalism.  Their view is capitalism is about accumulation of personal wealth.

I have argued elsewhere that accumulation of wealth is the wrong priority.  Wealth needs to circulate and to measure its circulation is to measure the economy’s health.  How do we set about reorienting economics?

I’m not an economist and so one problem I have had is finding an economist who discusses these ideas.  Perhaps Roberto Mangabeira Unger, whom I mentioned in my post Approaches to Social Innovation a couple of weeks ago, is one such economist.  If you click on the link over his name it will take you to his Wikipedia page.

I make no apology for basing this post on a Wikipedia page; you are following the development of my thinking and this is as far as I’ve got with his contribution.  I intend to read some of his books and will review them later.  For now, if you want to follow these thoughts you can scroll down the Wikipedia page to Economic Thought and read on from there.

Today I shall highlight two insights from these paragraphs.  I’m sure I shall return to these themes in the future.

Classical and Marginalist Economics

Unger distinguishes these two approaches.  Classical economics focuses on social value and this means economics  has a vision for the future.  You can look at what’s happening and say, “We don’t like that so let’s change the way we do things.”

Marginalist economics began as a response to socialism and is the dominant approach today.  It is an empirical approach to economics, which claims to be more scientific because it measures things.  You can look at what’s happening and say, “It’s a pity things are that way but there’s nothing we can do about it because that’s what the statistics say.”

Unger seems to be saying there is something profoundly wrong with marginalist economics but I don’t think he is advocating a wholesale return to classical economic models.  So, what is his model?

Permanent Innovation

This is a massive generalisation but it seems to me Unger has thought through the implications of an economy based on permanent innovation.  There are, he argues, no real economic eras such as feudalism or capitalism.  These are rationalisation we impose upon history.  What actually happens is a struggle, as I see it, between those with a practical, innovatory approach who seek problems and solutions and those who have an absolutist, ideological approach who seek certainty and domination.

The former tends to be reformist and the latter revolutionary.  Looked at this way, we can see both approaches are potentially flawed.  The practical approach can lose sight of social values, whilst the ideological approach can stifle innovation, running after a false vision of what human society can be.

He advocates a revolutionary reformist approach, an approach designed to make politicians on both the left and the right worried!  This is exactly where I have found myself, advocating a national localised economy.  It looks reformist to the left and revolutionary to the right.  It is the approach most co-operative and trade-union movements took in the UK.  Compare their approach with the 1917 revolution in Russia.

How to Stimulate the Economy

I fully intend to return to Unger’s contribution in future posts.  In the meantime, I shall finish by listing three key policies he advocates.  They are all about encouraging innovation in the local economy:

The Wikipedia article hints that Unger’s work is worth exploration.  Leave a comment if you know his work or find what we know so far exciting (you’re allowed to be excited even if you don’t agree!)

0 Business and Society in Bed Together (Shock! Horror!)

I’ve read the New Statesman from cover to cover every week for decades. The only exception is their supplements; mostly they are not worth the effort and serve to publish dry-as-dust material that no-one would pay for.  Last week’s supplement, about business and society, was an exception and I went out of my way to read it. “Should Business Play a Role in Addressing Poverty in the UK?” can be found in the 23 – 29 October edition or you can download the pdf by clicking on the link.

The supplement is based on a report, supported by the Webb Memorial Trust, about the potential role of business in reducing UK poverty.

Just like most of these supplements, this makes sober reading and the very first sentence does not bode well. “Business and society are often portrayed as being unlikely bedfellows.”

What does this say about our society? How have we found ourselves in a place where the purpose of business is not seen as the benefit of society? The only other possibility is that the purpose of business is to enhance personal wealth and I fear that may not be far from the truth, not only in the public mind but also in the minds of many wealthy owners of corporate businesses.

The Poor Contribute More to Cashflow

It is worth referring to this blog post, “Why companies don’t just target the rich – because the poor have most of the cashflow”. This is a more polemical piece but the point it makes in the first graph is certainly true (although it isn’t referenced at the time of writing). The bottom 50% in society own almost no wealth but provide 30% of the cashflow. The top 10% own 70% of the wealth and contribute 20% to spending.

I argue in this blog, wealth is of no value to society if accumulated in bank accounts. It adds value when it circulates. It seems the poorest contribute proportionately more to circulating finance in the economy than the wealthy.

So, it is not business per se that is the problem. The problem is what happens to the wealth created by businesses. Distribute more of it to the poorest and there will be more cash flowing in the economy and more businesses benefit.

Excessive accumulation of wealth not only locks people into poverty but also makes business more difficult. The various scams described in the “Why Companies …” blog post would not be necessary if more money were circulating.

Private Sector Benefits from Tackling Poverty

Return to the New Statesman supplement and turn to page 7, where you will find a table listing how the private sector benefits when it tackles poverty:

Poverty it seems “with its associated physical, mental and emotional problems, contributes to reduced productivity.” I’m sure that’s right but the point is inequality also contributes to poor business prospects by reducing the money in circulation. Poor circulation will affect productivity too because it means it is harder to meet costs.

Reputation suffers because businesses resort to scams as described in the “Why Companies …” blog post.

New opportunities implies the challenging financial climate opens up new business opportunities and revenue streams. Really? I understand the argument, for example climate change could mean more jobs for businesses installing renewable energy sources or insulation.

But the main blockage, true since the recession in 2008, is there is too little money in circulation. You can’t get a loan to finance your business ideas.

In the end, the supplement demonstrates the poverty of thinking endemic among the political classes. It’s not that poor people’s stress affects productivity so much as the inequalities that make them poor in the first place. If our political leaders do not understand this, what chance have we of a fairer society?

Business and society are natural bedfellows, it is our blindness to the impact of globalisation and the corporate élite that both increases poverty and reduces productivity.

1 Approaches to Social Innovation

Today’s topic is an article by Geoff Mulgan in the 16-22 October 2015 edition of the New Statesman, “Trotsky, Blair and the new politics“.  (You may find it helpful to read the article first; it will open in a new tab.)  Mulgan does not dwell on either Trotsky or Blair; he tells his own story and raises a number of issues.

Sadly, the article is another dig at Jeremy Corbyn.  The New Statesman does not support his leadership and has found it difficult to find a constructive response.  This article might be their most positive approach so far.  It begins by arguing Corbyn’s leadership “could help the Labour Party rediscover its purpose”.  At the end Mulgan suggests the party may have turned down a cul-de-sac.

To a degree, I share this ambivalence.  As a Green, I depart from Corbyn’s approach to the environment, the economy and democracy (voting systems).  Nevertheless, I welcome his promotion to leadership because politicians have become too complacent. It is possible his leadership will open up new possibilities.  It’s a pity the New Statesman can’t offer constructive ideas about how the Labour Party could develop in the future. Instead it laments the loss of the election in 2020.

Mulgan’s career took him from the hard left to working closely with Tony Blair.  He learned to see the difference between the divisive and largely theoretical leftism of the various Trotskyist groups and the need for good management and administration.  He understood the implications of digital technology in the late twentieth century and argued for “networks and different ways of organising the state”.  This contrasts with the top-down arguments for nationalisation and planning from the hard left.

He contrasts political protest movements with the use of political power to cut poverty and rebuild public services.  A significant problem on the left, is a tendency to overemphasise the former at the expense of the latter.  Is it better to emphasise management? The ideal is perhaps credible politicians energised by a strong movement.  Without such a movement the party is solely concerned about winning elections and not about what to do once they have power.

The problem for many on the left is they do not recognise entrepreneurship and innovation.  This does not derive from committees but from people experimenting on the ground.  I have written about the innovation that accompanied the growth of the retail co-operative movement.

Minimalist and Maximalist Social Innovation

Mulgan cites the work of a Brazilian thinker, Roberto Mangabeira Unger, who in a new book, New Frontiers in Social Innovation Research (Palgrave MacMillan) distinguishes minimalist and maximalist social innovation.  Mulgan writes

“The minimalist view puts social innovations squarely within the third sector and: ‘Its resonance is with solidarity and communitarianism … within the tradition within classical liberalism that prizes voluntary associations as well as with the strand within socialist thinking that proposes a non-statist socialism.’

“By contrast, the maximalist view, Unger writes, is concerned with ‘the whole of society, of its institutional arrangements and of its dominant forms of consciousness … At its maximalist best, the social innovation movement [undertakes] the small initiatives that have the greatest potential to foreshadow, by persuasive example, the transformation of those arrangements and of that consciousness.'” (All ellipses and additions are Mulgan’s.)

I have argued, for example in my ebook “Community Development is Dead!” (see below) that community development is weak when tied into the third sector.  Local businesses are at best ignored.  Even social enterprises, whilst often similar to small and medium businesses, are designed over and against mainstream local businesses.

Innovation and the Third Sector

Mulgan and Unger are not arguing against social enterprises, so much as underlining the fact that social innovation can happen anywhere through the work and the risks taken by just about anybody.  It is not right to restrict social innovation to the third sector.  There are two reasons for that.

Third sector organisations can be just as moribund as public sector and large private sector organisations.  The third sector draws many people with alternative values and so if you’re looking for the entrepreneurial spirit, for social innovation, it is one place to look.  But large voluntary sector organisations can become just as ossified as other organisations of comparable size and age and even smaller groups just as readily opt for bureaucratic solutions.

The second reason is that a lot of social innovation does happen in the private sector, particularly in the local economy.  For many, their starting place may be different but their destination closely parallels that of social entrepreneurs.

The fact is neither of the main political parties has ever favoured local business or social innovation.  Both favour top-down, corporate planning solutions.  Their policies always seem to be about concentrating wealth and power in fewer hands.

This is the political change we need.  Neither main party embodies this approach, although Mulgan suggests, bizarrely, David Cameron’s Big Society is closest.  Corbyn has broken the mould but I do not as yet see any evidence his economic policies are close to understanding social innovation.

Still, whilst things are chaotic, we cannot be sure how things will pan out.  It will be interesting to see how the debate develops over the coming months, now that Labour has jettisoned the ridiculous idea it needs to win the next election.

0 A Case for Regulation

There is common ground between Jeremy Corbyn, the new leader of the UK Labour Party and Bernie Sanders in the US, an influential contender for the Democrats’ leadership. The word used of both is “authenticity”.  Their political stance implies they favour regulation.

My purpose is to ask what that word “authenticity” means and why it has so much impact. The implication is that politics as we experience it somehow lacks authenticity. The political centre has moved far to the right.  Even left-wing politicians such as Tony Blair or Barack Obama occupy similar ground to right-wing politicians. Corbyn and Sanders have fewer associations with vested interests on the right and tap into a sense of independent thinking.  Whether this makes them electable is another matter. It will be interesting to see the long-term impact of their influence

A paper, Threat to Democracy: The Impact of “Better Regulation” in the UK, issued by the New Economics Foundation this week, shines light on the reasons for this perceived lack of authenticity. The primary purpose of politicians is to protect the interests of the people who vote for them. Politicians bought by these huge commercial concerns become inauthentic.

A Case for Regulation

The paper describes an activity introduced during the Coalition government (with roots in the previous Labour government). They aim to deregulate just about everything. The paper is not long and so I shall not go into detail. It shows deregulation is not in the interests of the economy, society, democracy or the European Union. The United States is one of the few countries that has gone further down this road than the UK. The paper makes the point that regulation and red tape are not the same thing and indeed shows how deregulation can result in an increase in red tape, when it suits big business.

The main point I want to make in this post is the case for regulation. The following is a paragraph from the report. I’ve added bullet points but otherwise it unchanged:

Local Business Benefits from Regulation

In other words, regulation is good for local businesses. Deregulation is abdicates democratic control of the economy, resulting in capital accumulated in the hands of very few people. They benefit because politicians allow them to.

Whilst people, when asked about red tape, might favour deregulation in theory, they tend to favour regulation when they contemplate its detailed impact. The report puts it:

“It seems that deregulation, in the abstract, is an attractive idea, but when confronted with specific protections, most people quickly recognise how important good regulation is to the quality of their lives. It’s also clear that tokenistic consultation measures are sufficiently flexible to allow this inconvenient discovery to be ignored.” (Page 11)

Politicians are finding most people do not support this campaign to empower the corporations and so introduce it under the radar. Many sense politicians are either selling out to unelected corporations or else not aware of what is happening (much deregulation does not need parliamentary approval).

What is to be done? Read the report and support its recommendations!

0 Who Owns the Future?

Who Owns the Future by Jaron Lanier offers two visions for the future. Like all such visions, they are incomplete.

The first is a humanistic future, where machines help people become their true selves. It is where people find “the thing they cannot not do” and if they need help machines are on hand. So, the surgeon uses machines to monitor and guide her hand. And note this is a world where all benefit. Those who are differently-abled find machines help them live a full life. The key idea is shared benefits are true benefits.  Maybe this is idealistic but some people have already chosen this future and through collective action we can choose to make this real for all.

The alternative is not, as you might expect, a machine-centred future. Machines have no purpose of their own and Artificial Intelligence is still something we’ll ever see. The alternative hierarchical future is where machines concentrate money and power into fewer hands. Again, some will argue, it is already happening.

Evidence for both futures can be seen in the present. We can choose either.  There are other possible futures, for example where there are no machines because we can no longer fuel them. My hunch is the second future is a step along the road to ecological disaster.

Our Choice

We can choose to use machines to help us become better human beings. The key word in that last sentence is “us”. Who is “us”? I could have written, “We can choose to use machines to help others become better human beings”. Perhaps I mean “those whose hands are on the levers of power can choose to use machines for the benefit of others”. If current practice is evidence of their intentions in this respect, the prospects are not encouraging.  The Volkswagen scandal suggests they have used machines to deceive; no-one believes they are the only ones.

“We can choose to use machines to help others become better human beings”. Look closely at the last sentence and ask, who is “we”? Perhaps the key to this is mutuality or self-interest. When I help others, I benefit too. The key to the future is not machines, it is collaboration. People working together for a better future for all.

Jaron Lanier

Jaron Lanier in his book “ Who Owns the Future?” argues the impact of machines has not been entirely benign because they have concentrated information into the hands of the few. Kodak used to employ 140 000 people and was worth $28 billion. It is now bankrupt and replaced by Instagram, worth $1 billion and employing 13 people.

Middle class people used to benefit from what Lanier calls levees. Levees are the walls built in fields to retain water and so feed the crops. It used to be possible to build levees around certain activities, where the practitioner’s expertise prevented others joining them without being accepted into the profession. Machines are used to break down these walls. For example, a few years ago you would have had to ask professional video makers to produce a video. Now you can easily do it yourself. Granted there is still a market for good videos from those who don’t have the time or patience to learn to do it well. The same applies to web design.

However, what might appear to be a process of democratisation, where people are able to do things they couldn’t a few years ago has its downside. Are those 13 Instagram employees really worth $76 million each? Compared with Kodak’s employees worth only $200K? If Instagram’s employees are really worth that much, I wonder how many of them have seen anything like $76 million.

Siren Servers

Lanier writes about “Siren Servers”; they

“gather data from the Internet, often without having to pay for it. The data is analysed using the most powerful available computers, run by the very best available technical people. The results of the analysis are kept secret, but are used to manipulate the rest of the world to advantage.”

Think of the impact of siren servers on bookshops. Siren servers practice data scraping, where they pick up bargains on rival bookshops’ websites and then they can undercut them. How do we react? We can choose to visit the local bookshop to look at books but there is always the temptation to find the online offer that undercuts their special offer. The net result is fewer bookshops. Is that what we really want?

(Yes I am a hypocrite.  I use affiliate links to a huge siren server.  I don’t do this for the money (income from my affiliation so far is zero) and I don’t believe this will significantly change.  It serves as a link to more information about the book I’m reviewing.  Where you choose to buy it is your choice.  Perhaps we need a peoples’ movement who check out online and then purchase in shops, where shops are accessible.)

Conclusion

Lanier’s book is a good explanation of the challenges we face from those who control new technologies. He suggests solutions, which certainly open up new possibilities and show how decisions sharing data online are not set in stone.

Whether his solutions are practical is another matter. My view is people need to be realistic about where the power is online and work together to create genuine alternatives. These alternatives must be rooted in our lives as we live them and we decide if machines will aid us.

We have access to information and communication unparalleled in human history. We can allow the corporations to control it and so concentrate power in their hands or we can collaborate to build our own levees, where genuine interactions can take place in our neighbourhoods, cities, towns and villages.