A new urban economic agenda: localise, socialise, and democratise

There are sensible ways through which we can reorganise the UK economy, argues CLES CEO, Neil McInroy. He explains how a new urban economic agenda can be implemented and how it can help build a more socially just future.

All things must pass and the dominant urban economic model of the last few years is starting to creak, and a new progressive agenda is threatening to replace it. At its core is a rejection of liberal economics, a questioning of urban economic policy, and a desire to reorganise our city economies: social justice and environmental sustainability are not just hopes but central objectives.

Global investment, agglomeration, property and financialisation, is not socially delivering. In this, the new movement is working to distribute the economy and broaden power over it. This is not theoretical: the agenda is practical, live, and growing. As the political theorist Hannah Arendt said: ‘politics is based on the fact of human plurality’. And we are seeing a new plurality of action exemplified by municipalist movements (i.e Barcelona) and new global networks such as ‘Fearless Cities’. It is about community wealth building in UK and Europe by the Centre for Local Economic Strategies (CLES) and the Democracy Collaborative in the US. It extends to social innovation, as exemplified in good city economies. It is about unleashing activity around foundational economy, municipal energy, local finance, cooperatives, community banking and fab labs.

Sadly in the UK, and especially England, many of our cities are behind the curve. For the last 8 years, under the cosh of austerity, many have put much blind faith and excessive trust in the urban liberal economic policy of city devolution, agglomeration economics, and boomgoggling growth policies. It’s now obvious that the development orthodoxies of pro-developer urban entrepreneurialism are socially failing. Wealth gain is either flowing to the already wealthy or extracted by external investors. An approach which promised and delivered the ‘creative class’, city centre consumption, and new shiny edifices of urban living has, by equal measure, delivered deepening inequality and the hardening of poverty. This flaw is nothing new – it has been evident for decades across the world. Yet in England, it was given a belated fresh lease of life by the liberal economics of the Treasury, framed by unprecedented public austerity.

This socially and environmentally neglectful agenda is weak in the face of the challenge, and is increasingly out of touch with the public mood. As a mild antidote, we have seen the rise of the ‘inclusive growth’ agenda and we can expect laudable action such as voluntary employment charters (often with no teeth), increase in business philanthropy, better access to jobs, and improved skills programmes. All these are decent things, but hopelessly weak, given the scale of challenge. Let’s be under no illusions, minor social adjustments won’t check the urban liberal economic juggernaut. Inclusive growth may recognise the problem, but it shies away from challenging wealth concentration or building social justice. Inclusive growth is not a socially just reorganisation of the economy, it’s ‘let’s have our cake and eat it’ – and as such is unrealistic. Of course, global investment and competitiveness within the global economy is important, but we also need to deal with the harsh realities of the now.

Firstly, economic decline. With ongoing global economic uncertainty and Brexit, it is highly probable that areas will economically struggle more than is optimistically predicted (i.e the Greater Manchester Spatial Framework is predicated on 2.5% annual growth in VGA until 2035). This is ambitious but wildly optimistic. We need to be sensible and build economic resilience, and have less blind faith in growth and wealth to bring the promised social dividends. The future is to ensure that industrial and economic strategies balance financial and social return and that a new social narrative of cities is allowed time and space to develop.

Secondly, technological shifts prompt a shift in wealth. The technological revolution and the acceleration of automation are speeding up a longstanding shift from wealth through employment to wealth through investment return. Automation increasingly means that lower/medium skilled production jobs will disappear. Therefore, we either condemn more to low-paid, robotic, and insecure work or we reorganize the economy. Workplace protection must be restored and financial return on investment needs to be broadened and deepened, not narrowly held by a few. The task is clear: we now must build more forms of democratically owned municipal investment and return vehicles, and advance ownership forms which seek to capture and broaden out wealth gains (i.e cooperatives).

Thirdly, local strengths. Pick any English local economic strategy, and it will highlight the importance of advanced manufacturing, bio-technology, digital sectors and high skills. There is no doubt that these will be key sectors in the future and must be developed at pace. But the ferocious nature of global economic competition means that these aims are shared by hundreds of cities across the advanced world. We need to be smarter and less generic. In many of English city regions, the more realisable economic options are the existing social and creative industries, and the local enterprise. Cities need to invest in social infrastructure and social enterprise and above all, support indigenous small business activity.

Fourthly, invest in economy of care. We must counteract the economic development disrespect given to the caring professions (social work, nursing, elderly care etc.). Human touch, care, and empathy cannot be automated, and as such these jobs will not only endure, but with an ageing population will no doubt increase. A shift to investment in these industries (which are too often seen as a cost), is essential part of any economic strategy. Indeed, for some cities they should be given equal weight to investment in high-end skills, hard infrastructure or property development. They may not help with economic growth but they remain foundational aspects of all economies, and vital in advancing human decency and a good society.

The new urban economic agenda is happening across the world. Our cities must not be cowed by, or remain locked into the out of touch liberal urban economic ideas and practice. There are sensible, doable ideas which can localise, socialise, and democratise the economy right now. Our English cities have little choice: continue as they are and oversee deepening hardship and divides, or grab this progressive agenda, advance ideas and energy already there, and build a more socially just urban future.

This article first appeared in London School of Economics and Political Science and can be viewed here