At our second get together of “What on earth is the economy for” one of the issues we looked at was prosperity and what it might mean:
What do we want the economy to do? For a long time, the simple answer to this question was: “grow.” When the economy grows, so we’re told, it creates jobs, lifts wages and allows people to move on in life. It has often been referred to as “trickle down” i.e. the process of creating wealth at the top that will then trickle down to the people at the bottom.
But the last few years have defied this accepted narrative. By the standard measure – GDP – the economy is growing, but this isn’t translating into progress for the vast majority of people. The jobs that are being created are low-skilled, zero hours jobs. And people are turning to insecure self-employment in larger numbers than ever. Real wages are not rising, they are falling. And because of this, tax receipts are flat, so public investment in services is shrinking, and, we are told, must shrink even further to deal with the deficit. A deficit created by spending over one trillion bailing out the banks.
The promise of a market economy is that in return for time and labour, people will receive fair payment that allows them to provide for themselves, their families, and create a better future. But this bargain has been upended. It is now only a minority that the economy works for, not the majority. Britain’s five richest families own more than the poorest 20% of the population. And pursuing growth as an end in itself has seen the exploitation of finite natural resources which has led to the extinction of more than half the world’s wildlife. Carbon concentrations in the air are the highest they’ve been for millions of years, increasing temperatures and threatening dangerous changes to our climate. And in the UK, air pollution is killing more people than road traffic accidents.
This is not a state of affairs which will provide lasting prosperity for the majority. Business as usual is not working. This is why am hosting a conversation to ask how we can make the economy work for everyone, to generate broad prosperity, while protecting our finite natural resources.
And it’s a conversation we need to have. There has been an abject failure by those in positions of power to get to grips with the current crisis and offer a long-term solution. A debt-fuelled bubble crashed our economy, but rather than see this as a fundamental failure, the established parties saw it as a blip. They stood behind a discredited model and bailed it out with public money, while shifting the burden of the crisis onto ordinary people. The results are plain to see. Over one million people using food banks, 1.5 million people on zero hours contracts, an unprecedented decline in real wages, while bank bonuses continue to rise, and the average salary of a top company boss has grown to more than 170 times that of the average worker. This is despite good evidence to suggest that in a more equal society, even the rich do better.
We need to drive a conversation about our vision for a new economy that delivers prosperity for all rather than wealth for the few. We believe this means more social enterprise and community owned businesses offering local jobs in a zero-waste system that is powered by renewable energy. In turn, the business sector needs to support, through corporate and individual taxation or more directly through local links, a social system that provides quality public healthcare, affordable housing, and the emergency and other services that we often take for granted, yet are essential for our every day lives. In other words, we all need to do more to support those things that are the building blocks of a high quality of life, rather than just try to maximising corporate profits and personal revenues so that those who can might buy those services instead.
This is not fantasy – Bristol is widely recognised by businesses as one of the best places to be; they tell me that they can recruit and retain the best staff outside of London because of the quality of life here – defined not by GDP, but by indicators such as access to green space, culture and leisure, cycling and walking. We won the European Green Capital Award partly on the basis of its significant low carbon environmental goods and services sector.
New models are emerging which offer a glimpse into this more prosperous future. Legal forms such as cooperatives, which empower local communities to take greater control of energy, finances and land, are on the rise. For example, the Bristol Energy Cooperative, founded in 2011 is raising money to grow the supply of clean energy. Community Land Trusts are being established nationwide to support self-organised and custom-built housing and other spaces that benefit the community. Membership of credit unions, an alternative to high street banks, is increasing. Local currencies, such as the Bristol Pound, also offer a way to ensure that money spent locally stays within the community. It is noticeable that many of these emerging ideas are community-led projects, with widely-shared local benefits. And the structures which support them ensure profits are equitably distributed. Engaging and empowering local communities will be central to an economy which delivers prosperity.
Ultimately, the question underpinning this conversation is a simple one: what kind of country do we want our children to grow up in? A country of growing inequality, minimum wage jobs and dirty air? Or a more equal country, respectful of the environment and finite resources, creating innovate jobs that contribute to building a stronger community. The answer is obvious, getting there is the challenge.
We hope you will join the conversation, demand change and help us build a better, more prosperous economy.
“What on earth is the economy for?” is a monthly get together hosted at Bordeaux Quay by myself and David Powell, Senior Economics Campaigner for Friends of the Earth.
The sessions are supported by Nathan Williams from New Communications