Inclusive growth: Making an economy work for a few more?

The report from the RSA inclusive Growth Commission has now been launched – ‘Making our economy work for everyone’. Chaired by Stephanie Flanders, of JP Morgan Asset Management, this work sought to identify practical ways to make local economies across the UK more economically inclusive and prosperous. However, it is arguable that the ideas are limited in terms of wider social justice and economic resilience. Instead of making an economy work for everyone, it’s more likely that it will merely make our economy work for just a few more.

For many years, economic development has been a thin gruel for social inclusion; based overly on economic growth (sometimes at all costs), trickle down and spatial agglomeration. So, it is heartening that the commission seems to have partly picked up on the ideas of CLES and others (you can read our RSA submission here). This includes the understanding (if not a truism) that investment in social institutions and people is as important as investment in economic infrastructure; or, how the spheres of the economic and the social are not separate, but linked. They also highlight the excellent practical work CLES are engaged in: Community Wealth Building and Anchor Institutions.

The RSA commission has assembled some laudable ideas and details excellent policy innovations: place based industrial strategies; new ways of deepening devolution; place budgeting; new investment vehicles and ways of measuring inclusion. It has also gathered extensive views, and emits strong sentiments and empathy; that is to the good.

Of course, many us are willing this report and this agenda to be truly ground-breaking, but we must be realistic.  There are limitations and limited ambitions.  In this, we must be clear as to what this report does not cover and what this agenda is not about (and maybe should be?):

  • Inclusive growth is not about social justice, in terms of the distribution of wealth, opportunities, and privileges within a society;
  • Inclusive growth is not about interrogating the values of financial capitalism, even though this (arguably) has been a contributory factor to global financial travails, anomie, social breakdown and poverty;
  • Inclusive growth is not about de-growth or addressing environmental limits, pollution etc.;
  • Inclusive growth is not about using national levers such as progressive taxation.

For the RSA commission, inclusive growth is broadly about economic productivity issues and a social ‘feel’ to the prevailing economic approach (an approach that caused some of the deep social exclusion in the first place).  As such,  given the existing social crisis, Brexit and global economic travails, this agenda may fall well short of making our economy for everyone.

There are some key questions here.

What if there is no growth?

Unpalatable and gloomy, I know, but CLES warned at the outset of the commission that the commission, should not draw their terms too narrowly, limiting inclusion to be just about growth. They seem to have failed to take heed. As such, this report actually offers very little to many of our poorest, most desperate post-industrial, coastal or rural local economies. Without growth, what does this work offer?

The RSA commission should have given greater consideration to economic resilience and the diversity of economic starting points across the UK. It is perhaps too city focussed, taking too many lessons from US cities (very different legislative, political and economic geography context, with no welfarist tradition). Furthermore, aside from inclusive growth, greater credence should have been given to an inclusive economy, foundational economy and how to build a good local society.

What about wealth and ownership?

The commission have focused on the poor and the excluded. However, it has rather ignored any analysis of wealth and the wealthy – who has it? Where does it go? This is the other side of the inclusion coin to poverty.

RSA commission should have analysed wealth more, (after all, the UK is the 6th largest economy in the world).  This includes a consideration of new forms of local ownership, and retention of wealth through different ownership models such as cooperatives and the role of cooperative councils. Making the economy ours, not theirs.

What about the new economy?

Across the UK there is a growing set of local economic alternatives. They are the seeds of a new inclusive economy. There is a task to grow, accelerate and scale up a movement of community wealth building, and the role of smart local economies and an open source, collaborative economy.

However, the RSA commission have not really acknowledged this growing movement. This economy of the future, should be a greater part of mainstream economic development. See the work of CLES, NEF and Friends Provident for explanation and examples.

What about austerity?

The poorest areas have suffered the most from austerity. This has stymied the ability of public services to innovate and make creative inputs into inclusion and economic success. The RSA Commission has not illuminated the unfairness of public austerity. As such it is blind to how austerity has reduced inputs to economy, part created exclusion, hardship and a social recession.

What about democracy?

Exclusion is not just about lack of money or opportunity, it’s also about lack of power over decisions which affect you. In this local economic decision-making is too often exclusive – too frequently between the interests of financial capital, big investment and the big local and nation state.

The RSA commission have not made enough of  how we are and could democratise more economic decision-making to involve small and medium sized enterprise and communities. It also has failed to acknowledge the need to increase accountability and democracy (participative and representative) within OUR institutions, such as Combined Authorities and Local Enterprise Partnerships and growth companies/hubs.

In conclusion

I respect the RSA commission report in attempting to build and mobilise the existing consensus (and maybe energise new people) within the policy, think tank, business, social sector, government and academic world to think more about inclusion. And, it no doubt opens the inclusion door a bit further, with some policy ideas we can get going on. We should be energised and thankful for that.

However, in face of the real social hardship across the land, it is timid in the face of systemic injustices, and it’s not acknowledging the more bottom up entrepreneurial movements for economic change which are all around us. It has also backed down on the big fights on taxation, deepening social elements for devolution (i.e education), financial capitalism, austerity etc. which are badly required.

Moving forward, we need to grab this agenda, disrupt it and build and accelerate a bolder, braver and more socially just set of policies and practice. This is the task now. Merely limiting ourselves to making an economy for a few more opposed to everyone will just not do.

Atif Shafique was lead researcher for the RSA Inclusive Growth Commission. He has written a guest blog for CLES in response to this article. Read it here.

You may also be interested in: