Foundational Economy
= "concept developed by Manchester University’s Centre for Research on Socio-Cultural Change (CRESC), which underlines the often overlooked importance of the ‘everyday’ economy. This is the backbone of the regional infrastructures". [1]
Description
1. Justin Reynolds:
" the Foundational Economy concept developed by Manchester University’s Centre for Research on Socio-Cultural Change (CRESC), which underlines the often overlooked importance of the ‘everyday’ economy. This is the backbone of the regional infrastructures that employ a third of the workforce in England and Wales, and encompasses sectors such as care, health, education, retail, hospitality and food processing." (http://www.citymetric.com/politics/could-preston-provide-new-economic-model-britain-s-cities-3243)
2. Andrew Bowman, Julie Froud et al. :
"Rather than hoping forlornly to recover what’s lost in British manufacturing, it would be better to start by thinking about what’s left in the foundational economy of mundane activities which sustains the infrastructure of everyday life. This idea of the “ foundational” introduces a new way of thinking and classifying economic activity, so we can begin by answering three questions: what is included in the foundational? Why does it matter? And how is it ubiquitous, persistent and policy relevant.The foundational economy provides the infrastructure of everyday life. The largest component of the foundational economy in the UK and elsewhere is health education and welfare because high incomes everywhere increase the demand for eds and meds. This demand is supplied in the UK by the state sector and a growing para state of publicly funded private employers in care homes,nursery education and such like. The other key component of the foundational is mundane activities like utilities, retail and food processing which produce necessary everyday goods and services which are used by everybody regardless of income or social status. In Britain, the utilities like water and electricity were privatised under Thatcher and joined supermarket retail and food processing in an augmented private sector.The foundational matters because it is the single most important determinant of our collective welfare and because it has a huge employment base of ten million or more. On a broad definition, some 30 % of the national workforce are employed in health, education and welfare with another 10% or more in the utilities, retail and food manufacture. At national level, the leverage of foundational policies on outcomes is much stronger here than in manufacturing where employment is declining towards two million; and, significantly, the largest sector in manufacturing by employment is the foundational sector of food processing which employs nearly 400,000 and is crucial to managing import penetration.Regionally, the foundational share is close to half of all employment in the depressed ex industrial districts of Wales so any foundational policies have anexplicit spatial dimension and are crucial to managing the growing gap between the regions." (http://www.scribd.com/doc/122563517/The-foundational-economy-rethinking-industrial-policy-Andrew-Bowman-Julie-Froud-Sukhdev-Johal-and-Karel-Williams)
Characteristics
"In a Manifesto for the Foundational Economy and subsequent work, CRESC researchers have proposed an alternative approach which focuses on how the sheltered sectors of the economy can be reorganised in ways that generate welfare gains and diffuse prosperity. This work develops the idea that governing is a form of experimenting, and argues that since 1979 the UK has been the victim of a dogmatic, centralised, flawed, and substantially failing experiment in promoting competition and markets; with success measured in terms of job creation and GDP growth
This approach grows out of, and informs our work, with non-academic partners, such as Enfield Council and Federation of Small Business (Wales) in loser areas where local politicians, interest groups and NGOs are increasingly convinced that orthodox policies cannot resolve their worsening problems. Our alternative approach can be summed up in three key propositions:
1. The mundane 'foundational economy' is vital but neglected. The UK has lost much of its manufacturing but retains its 'Foundational Economy'. This is the sheltered sector of the economy that supplies mundane but essential goods and services such as: infrastructures; utilities; food processing, retailing and distribution; and health, education and welfare. The foundational economy is unglamorous but important because is used by everyone regardless of income or social status, and practically is a major determinant of material welfare. In the UK the foundational economy employs around 10 million people or 35% of the working population; whereas current industrial policy focuses on manufacturing which employs just 8 per cent.
2. The foundational economy aim is pervasively mismanaged because it depends on destructive point value thinking. Short-term profitability is important, but so too is the broader social and economic context. Current UK economic orthodoxy does not sufficiently attend to the latter. Private companies and public organisations focuses instead on a 'point value' logic, seeking the ‘best value’ of most profit or least cost in each individual transaction. This kind of point value is destructive because it undermines the mutuality which is necessary to sustain productive capacity along supply chains, and dangerously narrows ideas of innovation.
3. Alternative policies can work by developing social franchises which aim to re-territorialise and build grounded regions. Most foundational activities involve branches and networks with some degree of natural monopoly reinforced by implicit or explicit state guarantees. CRESC suggests that the state should use this leverage to treat such activities as ‘social franchises’ and thereby increase the local benefits for the communities whose purchasing power sustains foundational activities Under social franchises, large public and private foundational organisations would be obliged to offer social returns such as: supporting local communities and firms; living wages; sustainable supply chains; import substitution; and/or energy and resource sustainability." (http://www.manchestercapitalism.co.uk/foundational-economy)
Discussion
On the Foundational Economy as pluralistic and non-perfectionist
Filippo Barbera, Nicola Negri, Angelo Salento:
"The FE approach does not embrace this (localist, territorialist) perspective and nurtures a trans-scalar conception of economic regulation. It acknowledges the importance of the local dimension, yet avoids the local trap, or the idea that scale is a fixed property. The fact that FE goods and services are organized through branches and networks allows regulatory intervention on a local scale: even the urban scale is relevant (Engelenet al. 2017). However, albeit rooted in local territories, the FE is not merely focused on the local economic sphere, or on the economy of the territory. The FE requires a trans-scalar approach: it is both possible and neces-sary to produce regulatory interventions on different levels and scales. No single regulatory level can be considered optimal and prioritized as such. All in all, the FE approach is pragmatic and it has no ideo-logical prejudices or particularly heavy moral pre-requisites. It does not propose any «final choices», «changes of paradigms» or easy «recipes». It does however underline the need for continual adjustments. The FE is a space in which these adjustments are most urgent, and at the same time, feasible." (https://www.academia.edu/39673506/From_individual_choice_to_collective_voice_Foundational_economy_local_commons_and_citizenship?)
Source
See: Towards a New Vision of Citizenship based on the Foundational Economy of Local Commons
* From choice to collective voice. Foundational economy, local commons and citizenship. by FILIPPO BARBERA, NICOLA NEGRI, ANGELO SALENTO.
More Information
- A brief overview:
- Andrew Bowman, Julie Froud, Sukhdev Johal and Karel Williams (2013), 'The foundational economy - rethinking industrial policy'
- Karel Williams and Sukhdev Johal (2013), 'Rebuilding the Regions', 31-33, in John Cruddas, One Nation Labour - Debating the Future.
- Four key readings:
- Justin Bentham et al. (2013), 'Manifesto for the Foundational Economy', CRESC Working Paper 131.
- Andrew Bowman et al. (2012), ‘The Finance and Point Value Complex”, CRESC Working Paper 118
- John Law and Karel Williams (2014), 'A State of Unlearning? Government as Experiment', CRESC Working Paper 134.
- Andrew Bowman et al. (2014), The End of the Experiment, Chap 5 pp 115-46, Manchester: Manchester University Press