Three interventions to create clean growth?
Now there’s a challenge, but that’s the brief, so let’s give it a shot. However, first there is a crucial foundation for all of it – we need to accept there is now a giant gap between ‘economics’ and ‘economic development’.
What do I mean? Well, we’ve lived through a period in which economics became very heavily ideological in nature. What should have been propositions became doctrine – free markets always produce the best possible result, regulation is the enemy of enterprise, efficiency is always good, you can never stretch a supply chain too long, wages are a cost to be minimised, economic success is a function of the brilliance of individuals and so on.
This was all fine for economics because economics used incredibly blunt measures of success, primarily aggregate GDP. Once people realised that the finance industries, stock buyback and rent-seeking could make GDP rise and great ‘growth’ without productivity or jobs it all became a self-fulfilling prophecy.
My experience of economic development professionals on the ground is that they are often highly sceptical of this religious zeal based on the fact that they were working in a real place in the real world and the experience of all that growth at a local level did not match the promises.
We need to free ourselves of this way of thinking. This set of tools is far too often counterproductive at anything other than an aggregate level. As is the concept of growth, which often did not improve lives. The current soaring ‘GDP growth’ in energy markets is as stark an example as anyone needs that bigger and better are not the same thing.
But my frustrations with ‘degrowth’ as a concept are similar. The irony is that ‘degrowth’ fetishises size in exactly the way ‘growth’ does. I use neither term any more. It isn’t about bigger or smaller, it's about better. If it gets better and we ‘grow’ – great. If it gets better and we don’t – great. And if it gets better and we actually shrink, that’s great too. Nowadays I only refer to development. We need economic practices that make things better. It’s that simple.
So what does that mean in practice? Here are three broad themes.
If you can make it, make it
There are a clutch of problems which revolve around the same root cause. The problems are environmentally-damaging products, low-pay jobs, balance of payment weaknesses, low productivity, low rates of innovation, short-termism and wealth concentration. And all emerge from a simple reality – we don’t make enough domestically and so are over-reliant on imports.
Britain tried to become a service-based economy and high-skill services do add real value. The problem is that a lot of it turned out to be desperately low-quality service sector jobs. We have an army of retail workers beavering away to sell you products which are low quality and designed to have a short life.
We can’t keep throwing resources into landfill. We can’t keep making things from materials we know never biodegrade. We shouldn’t ‘just expect’ that our products will break. We need to make, build and grow much more of what we consume, and thereby generate the productive, well-paid jobs that entails. Strategic public procurement that supports start-up manufacturing industries with the security of a steady order book can kick-start the process.
What that means will look different in different places; in Scotland we have such abundant energy and land resources that advanced manufacturing based on organic materials ought to be a no-brainer. From advanced wood products to bioplastics to hemp or bamboo-based fabrics to hempcrete, we have a range of options for displacing the environmentally unsustainable products we import.
We need to stop thinking of a world where we reach for things and assume they will always be available – because they won’t. The water table beneath the land that grows our avocados is collapsing. Climate change will wipe out entire crops for years on end. But we can grow anything we want indoors under artificial lights – hangers with avocado orchards outside Sheffield or giant tomato factories near Swansea. Again, these are productive jobs.
This is three things in one. Yes, it is a bit of protectionism and there’s nothing wrong with that – our low-pay workers need some protection for a change. But it is also about preventing environmental collapse. And increasingly it will be a matter of national security – check out our ‘food liquidity’ (how long if exports were cut off before Britain has no food). It’s about five days.
We need to stop thinking of ourselves as rich westerners with the power to buy our way out of trouble. We have to think of ourselves as an advanced modern nation which is capable of looking after itself and its population. If we can make it, we should make it.
Growth without growth
But that is going to cost more, right? Perhaps, but only because our current economy is a false promise. You get a washing machine for £20 cheaper than you otherwise would by accessing cheap labour via long supply chains made possible only because externalities are not captured in the cost.
Yet it is a false promise because these products are cheap, lower quality, and far too difficult to repair. In technological terms there is quite literally no reason to own two washing machines in your life, but the £20 you save means you will be buying another one in eight or ten years at best.
So you pay more to get a worse washing machine and we destroy the planet in the process. But what if we made good washing machines that lasted, were maintained and could be repaired? They’d cost more, right? Well, not if you lease them. If you have a washing machine that is easily capable of a 25-year lifespan because it is designed to be repaired and you lease it and service it regularly, you end up with a better washing machine at less cost and massively less environmental damage.
That is the circular economy. If we pursue that model then there is absolutely nothing stopping us repatriating manufacturing jobs. We can replace an army of low-pay sales assistants with an army of high-pay repair engineers.
And you can have much more with less. Think of children’s toys – which of course they primarily like opening, not playing with. If you leased say 10 kids’ toys which they could play with and return when they are bored, able to choose another one at will, you save space and money, they get everything they want – and again the environment is saved.
By facilitating circular economics at a local level and linking it to collective purchasing power, skilled maintenance jobs and skilled manufacturing jobs we can develop our economy such that people have access to more and better stuff at less cost. This is quality of life growth without GDP growth.
We assume that economic activity is a leaky business – but it needn’t be. The leaks are put there deliberately, and they can be sealed. Let’s take a simple model, taxis. Many people assume that Uber is the only possible future – increased casualisation, more of the value of the industry extracted by corporation and so on.
But it needn’t be the future because predatory behaviour can be challenged or replaced. A regional economic development body is perfectly capable of producing a regional ‘ride-hailing app’. It would be a mutual model, potentially owned by both drivers and passengers, existing only for the purpose of maximising the proportion of profits going to the people doing the work.
You may assume that shopping is now a monopoly practice but it can be mutualised too. Modern food cooperatives can use technology to put customers directly in touch with suppliers without middlemen extracting profit. Turn up at a stylish, modern food coop, shop, scan your goods like normal and leave – you needn’t worry that your payment has been sent directly to the producer (minus the minimum possible facilitation fee).
There has been too much acceptance of economic development being something that you do via corporations rather than for communities. Community Wealth Building approaches began to turn the corner on that idea and now it must be extended, our thinking must be stretched further. If someone has their hand in the process, taking wealth out not for adding value but for facilitating convenience, take them on. Mutualise the facilitation as a public good and back the productive producers, the people we ought to be backing.
So much to do, so little time...
We all know things have to change. We all know we can’t keep behaving towards the environment like we have been. We all know we can’t keep wasting finite resources. We all know that we can’t sustain this level of economic inequality if we want to hold our democracies together. We all know we should simply not tolerate poverty in a rich country. Which means we all know there is much to do and it isn’t going to be the same as what we did the last time.
So let’s get on with it. Let’s rethink what we’re doing with the practice of economics. It must shift away from the strange obsessive abstractions that we’ve become used to and return to being a practice of making things better for people in the communities in which they live. It isn’t anything like as hard as some might think – but then the time available to get this right is almost certainly much shorter than a lot of people assume.
Think different – or fail the same. Those are our options.
Robin McAlpine is Founder of Common Weal. Robin is delivering a breakout session on ‘Delivering Clean Growth – Interventions Required Locally’ at the IED Annual Conference 2022. Book your place here.