We need a new name for local economics

The direction of travel is all too clear.  Go to East St Louis or Camden, New Jersey.  Go to Detroit, and the swathes of abandoned housing, vacant land stretching as far as the eye can see, rubbish strewn and miserable.

The prevailing economics of regeneration is based on the idea of comparative advantage.  Places need to specialise, otherwise – heaven forfend – everywhere will have to build their own radios or cars or anything else.

Or so the old-world economists mutter when you suggest that ‘comparative advantage’ might be taken too far.

Because when it is, what you get is too few winners and far too many losers, places that are simply swept aside in the narrowly efficient new world, where only one place builds radios.  Or grows carrots.

The irony is that places like East St Louis, where – at one stage – the police were expected to provide their own patrol cars, is that they don’t exist in such an advanced stage of decay in the UK.  Yet.

The other irony is that they do include some of the basics they need for an economy: they have money flowing in to the remaining public sector outposts – universities or hospitals – and they have people with imagination and drive who want to work.

They have people who need to buy things, and they have raw materials – maybe in the form of rubbish – but resources nonetheless.

The idea of really local economics suggests that there might be some way to bang together this base metal and turn it into a regenerated economy – in certain circumstances.  A group of us have been talking informally to the Treasury about this, and have tried to shape an understanding of the opportunities and what stands in their way.

This is what we came up with:

• There is money around, but not nearly enough institutions to invest locally and those which do exist are often too risk averse for growing local markets.
• There are assets in communities – knowledge, skills resources, land and buildings – that can be harnessed to support local economic development.
• There is money flowing through the local economy but, when there are few local enterprises and supply chains, it tends to flow straight out again.
• We have a sense of place, where all the economic levers belong and link together.

Some months down the line, it is pretty clear to me that three things are missing.

The first is that conventional economics ignores these very small-scale possibilities completely, and somehow we need to persuade policy-makers that they may actually be ignoring one of the few remaining levers left to them.

Second, most of the institutions of economic renewal that we have – from those that provide credit to those that help support local energy generation – are almost entirely designed for big players not small ones.

Finally, we need a name for this bundle of neighbourhood approaches.

When we have that, people can ask their mayors and local authorities if they are doing it, and if they are not, then why not.  But we need to be able to call it something before we can demand it.