Above photo: From the Foundational Economy Collective.
This manifesto is an intervention by a Europe-wide group of academics – the foundational economy collective – who have for several years in books and articles argued that policy makers need to balance concern with jobs and wages with more attention to essential goods and services like housing, food, utility supply, health, education and care. The provision of all of these things relies on the collective organisation of much larger systems; if group provision breaks down, citizens cannot buy their way out through individual consumption.
This foundational economy is often invisible, buried within the abstract idea of the economy and neglected by policymakers who focus on high tech and tradeable sectors. But during this coronavirus pandemic it has become highly visible because societies are shutting down everything except those parts of the economy providing essential foundational goods and services. When the collective provision of these essential goods and services breaks down, in particular places or for particular groups, basic human needs almost immediately go unmet.
Our starting point is that we must use the crisis actively as a lever to make the case for foundational provision, recognising the value of collective consumption supported by infrastructural systems. After the pandemic we should not revert to the old order of priorities and forget what we have learnt about the importance of foundational provision. Instead, we must find a way of broadening access to and improving the quality of essential foundational goods and services in ways which add meaning to citizenship.
Extending collective responsibility for the provision of basic human needs
Below we offer a ten-point platform which defines a broad foundational agenda for Europe’s national and regional governments. We lay out how we believe the extension of collective responsibility for foundational basics can be achieved through different means, such as social licencing and wealth taxes; and how it would work differently vis-à- vis various infrastructures and activities from housing through food supply to energy.
1) Start with health as a core activity where collective provision is legitimate and health professionals can provide leadership. The pandemic has highlighted major gaps in acute healthcare systems and regional inequalities, such as between the north and south of Italy, which need to be addressed. Broader community-based health and social care systems need investment and to be geared towards wellbeing, not just narrow biomedical needs. Finally, public health needs a broader role in tackling poor diet, air quality and mental health issues as well as disease control, and it needs to be integrated with economic and social policy because none of these issues can be addressed in isolation.
2) Use housing and energy to ensure the provision of basic human needs and address broader environmental crises. Governments in association with regulated not-for-profits and tenant groups need to take responsibility for the availability of social housing which offers quality de-carbonised homes with security of tenure at rents geared to local wage levels; de-carbonisation involves green energy supply as much as insulation on new and existing homes with all forms of tenure. Regional and industrial policy needs to be shifted away from unrealisable ambitions for job creation towards more realistic aims to increase the stock of social housing. In parallel, all of Europe needs to experiment with public and community energy provision, learning from the German Energiewende pioneering of community controlled green energy systems.
3) Food is complex but steps should be taken to control the big players and support experiments in sustainable food supply. In every national market a few supermarket chains have corporate power and a dominant retail position. The supermarket business model is unsustainable and fragile because it is based on capturing supplier profits through the perpetual threat of switching, while just-in-time ekes maximum value from retail floor space. Localised/small-scale food systems are not a replacement for the modern food system but it is therefore important to encourage experiments in sustainable food supply – like the Bristol Food Policy Council.
4) Introduce social licensing i.e. regulation which imposes social and environmental obligations on all corporate providers of foundational services. How do we ensure that giant firms meet their social and environmental obligations? Profit and not- for-profit foundational providers in effect have a territorial franchise through their networks and branches; they should offer something social in return, like ending tax abuse or insecure employment. Social licensing by national and regional governments is a way of negotiating that quid pro quo. All other large corporates should be brought into this regime as and when they want anything from government (e.g. bailouts, planning permission, government contracts, training etc.).
5) Reform taxes on income, expenditure and wealth to greatly increase the capacity of government to raise revenue. In this crisis, debt levels are likely to double or more to levels not seen since the aftermath of world war in the 1940s. Even with low interest rates and the benefit of steady inflation, it will be a major challenge to service, refinance and pay back this debt. If tax is not reformed, so that a higher percentage of GDP can be raised in an equitable way, then the prospect is 10- 20 years of super austerity when tax-funded services like education, health and care will be starved of revenue as they were in many European countries in the austerity years after the financial crisis. Revenue raising through tax reform is the first most fundamental precondition for defending and extending the foundational basics.
6) Disintermediate investment from pension funds and insurance companies so that it goes directly into provision of material infrastructure. The foundational economy offers stable, long term, low return investment opportunities like care homes and local energy networks which could and should be financed by 5% coupons. The capital that went into nineteenth century railways earned returns of 5% or less. But financialised capitalism brings public companies or fund investors like private equity with expectations of double-digit returns on capital. Double-digit business models are fundamentally unsuited to capital intensive foundational activities where high operating returns can only be obtained at the expense of other stakeholders’ returns, including the foundational service delivery workforce whose value we are now rediscovering socially after financialised management has spent years eroding their wages and conditions.
7) Shorten fragile long supply chains in foundational commodities while recognising the futility of local autarky. Foundational services generally have to be locally delivered, and there is scope for increasing local food production, though most manufacturing finished products and their inputs are long-chain and should remain so. We cannot realistically go back to the 1950s when large western European companies supplied more than 3/4 of their manufacture from domestic factories. But it is ridiculous to be importing essential personal protective equipment for medics from China. Here it is sensible to have shorter chains and not transactional but relational procurement with preferred suppliers whose output does not go to the highest bidder. On more sophisticated equipment, the solution for the 2020s has to be Euro regional with a small number of EU suppliers agreeing to supply the EU market without profiteering or home market preference. Thus, procurement would become less transactional and more relational within one politico-economic area.
8) Every city, town and peripheral rural area should develop a live/work transition plan within nation-state and EU-enabling frameworks. Politics is local and foundational provision is grounded in territories, hence the importance of plans which engage local specifics and are developed with input from citizens using innovative ways of engaging them. Assemblies, citizens juries and such like will produce mixed messages but are essential supplements to representative democracy because we need to understand what matters to citizens. At the same time, the climate emergency requires changes in how we live and work because housing, transport and food account for more than half of emissions; and we need local participation if we are to reconcile liveability and sustainability without provoking political reactions through clumsy prohibitions and deterrent pricing.
9) Rebuild technical and administrative capacity at all levels of government. Political scientists debate the post-democratic state where the apparatus and institutions of democracy continue but decisions are taken by a politico-economic elite. In foundational thinking we fear the post-administrative state where we have government departments which combine the managerialist rhetoric of strategies and mission statements with an inability to administer anything effectively or efficiently. The problems are particularly acute in local government because capital budget cuts and the privatisation and outsourcing of many activities leaves local government in many jurisdictions without personnel and technical capacity. Technical and administrative capacity needs to be rebuilt at all levels of government so the collective provision of essential foundational goods and services can be reorganised effectively.
10) European countries need to accept some responsibility for completely inadequate foundational systems like health care in adjacent regions like the Middle East and North Africa as well as undertaking a Marshall Aid type programme for reconstructing the tradeable sectors in those regions. This would be very different from the military interventionism we have seen in Libya and Syria or from French neo-colonialism in sub Saharan Africa. Increasingly, economic underperformance, political instability and the environmental crisis in the Middle East and North Africa produces economic migrants and refugees. Building the European equivalent of Trumpian walls to keep migrants out is in the long term as futile as the old Soviet bloc attempt at walls to keep East Europeans in. Taking responsibility for others will increase the expense of any foundational agenda but doing the right thing may well be politically and economically cheapest in the long run.
These ten points are all practical ones which could be taken up by politicians, interest groups and civil society activists. The platform is intended to indicate not so much where we stand as a direction of travel with start and finish points which would be very different in different places across Europe. They set out an agenda for meeting basic human needs and securing the wellbeing of current and future generations in the Covid-19 crisis and its aftermath, while also addressing the broader nature and climate emergency and the failure of social cohesion.
Read the full ten-point platform at: www.foundationaleconomy.com/covid-19-report/
If you would like to contribute to developing this agenda, or you are working on it already in some way, please get in touch at: foundationaleconomy@gmail.com
The foundational economy collective includes the following members:
Filippo Barbera, Oriol Estela Barnet, David Bassens, Lavinia Bifulco, Andrew Bowman, Luca Calafati, Joselle Dagnes, Sarah de Boeck, Marta de la Cuesta, Joe Earle, Ewald Engelen. Jessica Ferm, Julie Froud, Colin Haslam, Sukhdev Johal, Ian Rees Jones, John Law, Adam Leaver, Kevin Morgan, Stefano Neri, Andreas Novy, Leonhard Plank, Angelo Salento, Wolfgang Streeck, John Tomaney, Karel Williams