Are we letting a good crisis go to waste?

rahmemanuelNearly five years on from the financial crisis and we are in danger of letting a good crisis go to waste. And as Rahm Emmanuel (pictured) the former White House chief of staff and now mayor of Chicago says a good crisis is an ‘opportunity to do things you think you could not do before’.

However, for those wanting a more socially and environmentally just England, we are being disappointed by the opportunities presented. Poverty is rising, inequality is deepening, and climate and environmental change is at the back of the queue, as the illusive search for growth strides on. A crisis may be going to waste and we urgently need a change.

There has been much comment on these pages about the financial crisis potentially stimulating ‘people centred’ approaches to poverty and disadvantage. And the creation of a new economic and social story, where we start to develop new welfare models, and create an economy which works for people and places more (here and here and here).

However, this is likely to be just warm words and unrealised, unless we directly challenge orthodoxies. And the biggest ones going are versions of neo-liberal economic actions and outlook. By this, I am talking about approaches that reject redistribution or social justice, view the public sector as a problem not a solution and undermine environmental concerns. They contain policies which promote financial capital and excessively favour the financial haves over the have-nots.

We now know that even the good times of neo-liberal economic policies were not that good. Many of us were lured by the pleasures it brought, but it was ephemeral, built on bubbles detached from the real economy. We only need to look around our cities to see the blight of boomgoggling speculation, with empty office and property spaces, or the oversupply of retail space in many of our our high streets. The ‘good times’ brought growing inequality, de-industrialisation and the growth of financial services, the City and corporate power. At the same time we saw power dripping away from our regional cities, local economies, civic institutions and local businesses.

John Maynard Keynes famously said, ‘The ideas of economists and political philosophers are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist’.

In recent months, we have seen a buzzy atmosphere around ‘one man’s vision’ of the sub national economy – Lord Heseltine’s ‘no stone unturned’. And in the last few weeks we have seen some favourable comments about the government’s response to it. To be fair, it is an improvement. At least it offers an end to three years of economic development drift, muddle and confusion. But neither Heseltine nor the government are offering a new story. This is not about seriously tackling poverty, any more than a ‘rising tide will lifting all boats’ addressed poverty in the boom years. No. It follows defunct economic ideas, which promise no end to social pain or threats to the environment. We need to interrogate this set of ideas and create a progressive political economy instead.

A progressive political economy has a set of principles in which the economy is not separate from social life and places, but intrinsically connected to it. A progressive political economy is not just about rising tide will lift all boats, but is about directly improving the fortunes of its citizens and businesses. In this, economic success is about policies which support local economies, business growth and private gain, but simultaneously, strengthen local economic infrastructure, build enduring social and civic institutions for the future and creating a decent standard of living for all. Economic growth can go hand in hand with social growth. We can have business success and private gain with social justice and decent welfare. They are not mutually exclusive.

To develop a progressive local political economy, we have a job to do. The neo-liberal outlook has become the orthodox and default position. We must jolt ourselves from it. We need a new language of alternatives. To do this we need to harness new forms of participative democracy and action, and get the power of people to question and reject economic development stories which stalk the city, which pick the haves and discard the have-nots. We also must build and enhance local representative democracy, to fight with and for people. Local government must get belligerent.

The crisis is five years old. An economic story of the past remains in charge, but it’s holed beneath the waterline. It is sinking, fraught with problems of its own making and weighed down by its own contradictions. It needs replacing. By charting a progressive political economic approach, England can rise again as a force for social justice and decency. We cannot let this opportunity pass.


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Rupert Greenhalgh
Rupert Greenhalgh
11 years ago

Before we become “the slaves of some defunct economist”…do we therefore need to implement new/radical ways of developing socio-economic research and local economic strategy? If so, who should define what we look at, where we start; and how should we make policy recommendations?

A number of commentators in the UK and over the pond in the US have called for blank slate/new story for local economic development. However, would such a ‘big bang’ not be too risky for places to adopt immediately, especially in such uncertain times?

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