A Resilient Local Economy

Unpublished article written October/Novembr 2020

Introduction

The Town Hall People’s Assemblies that were organised by the Town Council’s Climate Emergency Working Group came up with some useful ideas, some of which have been put into practice, but the assemblies were not equipped to propose or implement the creation of a genuinely resilient community in any comprehensive sense. Such a wide-reaching project would be better discussed and planned by a Citizens’ Assembly (1), though that would require financing. However, it is possible that a small group of experienced community activists could produce an outline plan in order to begin the process; it is on this basis that the present draft has been produced.

This paper is essentially a manifesto, for putting in place a development programme for a genuinely local economy as the basis for a resilient community.  This – the economy – in a material sense appears to be the place to start. Other ideas that came up at the People’s Assemblies included localising the economy: reducing travel rather than trying to create a ‘green’ version of the existing transport system, producing what local people genuinely need rather than what capitalism wants to feed them, and scaling down economic activity to fit within a local market economy. Other ideas that have been discussed in similar circles include local currencies and creating a local investment fund.

‘Plugging the Leaks’

The American writer and community activist Susan Meeker Lowry recommended as her starting point ‘plugging the leaks’, keeping money circulating locally (2).  She discusses this as a principle without giving it a quantifiable target. This was provided, at least as a ‘rule of thumb’, by the Native American activist Russell Means. One area of his work was in attempting to develop the economies of Indian reservations. His starting point was that money should circulate seven times within the community before being spent outside. Seven times: to achieve that would mean that 87.5% of all money spent – by everyone, including by businesses on their stock and equipment – would need to be spent locally.

Business expenditure is the most significant, given that domestic expenditure depends on easier choices, and also will tend to follow what the local business community can provide. An instructive case study is available for The Old Clinic Ltd (3). This is a company based in a local property, and which is entirely owned and run by local people. Nevertheless its Profit & Loss account shows only 39% of its outgoings going to local suppliers and tradesmen.

The company does have outgoings beyond the P&L account however: principally dividend payments to shareholders (who are local), corporation tax (which for small businesses is money extracted from the local economy), and capital repayments on a loan (which was originally spent more locally than elsewhere, and the repayments have been divided in the same proportion). When these are all included in the calculation, the balance is shifted: 69% is spent locally, 31% outside. This is encouraging, but would still require a strong and deliberate strategic policy to achieve the notional target of 87.5% being re-circulated within the local community.
This exercise could be repeated with a variety of local or locally-based businesses, as a step towards designing a local investment fund, with one of the criteria for providing finance being to produce a business plan that includes a strategy for achieving a target of 87.5% of outgoings being local, within a given time-frame.

Local Investment

There is considerable experience of targeting investment to support the growth of a local economy, though mostly in the United States (4). In Glastonbury there is already the Glastonbury Trust, which is taking an active interest in regenerating the local economy using local resources; and there is also the West Mendip Credit Union, though it can provide only small loans. Creating a full-scale local bank is a long way off, but for a community the size of Glastonbury we already have a very good start towards creating meaningful community investment facilities.

Making a start on supporting businesses that have made a commitment to localising their expenditure is already feasible. A next step would be to support new local businesses that could produce goods and materials identified as being required by existing businesses or community institutions.

Local Currency

Glastonbury once had a LETS (Local Exchange & Trading System) and although it is no longer running, most of the technical expertise required for such a project is still here. The advantages are (i) to facilitate local trading where there is currently a lack of trade due to a lack of cash resources, and (ii) to encourage local trading as opposed to buying from outside agencies or chain stores.

Most experience with such systems is that the local currency is traded as an equivalent to the national currency – such as the Bristol £, which has been used with some success for a number of years (5). This is not the only possible approach however; recently I have seen or heard of ideas for basing a currency on local food resources, or for basing it on energy in the form of the sunshine that falls naturally on the area.

The design of such a currency would clearly benefit from further detailed thought and experience. Once established, a local currency could be operated either by a community bank/investment facility, or could run alongside it.

Localising the Economy

The ‘fossil fuel society’ has generated an attitude where road and car use are far in excess of what is necessary or healthy, and is a major cause of carbon emissions. This has to change sooner or later, either through more enlightened policy or through a collapse of the systems that support it. For these reasons, a resilient economy would encourage ‘localisation’, seeking first to reduce travel (rather than trying to create a ‘green’ version of the existing transport system). This would mean encouraging employment closer to people’s homes, which would also reduce the ‘dormitory’ use of a town such as Glastonbury, improving the sense of community.

Achieving this would require an integrated plan encompassing housing, employment, transport, and production of food and other basic essentials. This is beyond the scope of this initial draft, and could be seen as a second stage in regenerating the local economy, once local investment and a local currency are in place. It would involve producing what local people genuinely need rather than what the capitalist economy wants to sell them, and scaling down many aspects of economic activity to fit within a local market economy. This longer-term vision should be given time to develop.

Principles for Regenerating the Economy

The basic theories and assumptions of capitalist economics are being called more and more into question, in particular the central belief in the need for continuing economic growth on a finite planet with limited resources. Indeed, adherence to this belief is leading to the ultimate collapse of the very system that for a time it has upheld. The questioning is coming not only from the radical left, but also from disillusioned economics students and from some established academics and members of the growing ethical banking profession. One such is the Oxford economist Kate Raworth, whose book Doughnut Economics (6) presents an alternative for ‘21st-century economists’ and has become a best seller.

However, by her own admission the policy-makers of 2050 are already at university being taught traditional economic theory; so whether her ideas, or similar ones, can gain sufficient traction in time to prevent the present economic system collapsing rather than evolving seems dubious. Nevertheless at a local level the principles she puts forward are both useful and relevant, and have already been taken on board by some pioneering communities. (7) The key principle is the ‘Embedded Economy’, which sees the economy – rather than as an abstract reality with an existence of its own – as being embedded within society and within the living world.

All the energy and raw materials, without which the economy cannot exist, are therefore recognised as being derived from the sun or as part of the Earth, and any waste energy or material is returned to the Earth. It is therefore understood as fundamental that the economy is of necessity circular, and ‘waste’ is recycled as materials. Beyond that, the economy is not seen as a function of ‘the market’, but as the financial flows between four basic elements: the market, the state, the household and the commons. It is worth thinking about these in a local context, which I would suggest is the context from which the economy is most likely to be transformed.

Four elements of the economy in a local context

The market can be visualised as an actual market place and the High Street shops around it. These will include the bank(s) and the community’s financial institutions, and also the space in which trade takes place – trade, that is, in those things for which trade is appropriate. The obvious things on this list are food, clothing, hardware, and the output from craftspeople – most of which could potentially be produced locally.  To this could be added entertainment, and related goods such as musical instruments and books.

There is a lengthy list of things that are not appropriate to be bought and sold on the open market, though many of them have been treated as ‘products’ and transferred from the state to private business concerns. In a local context, ‘the state’ would equate to the Town Council or to a local administrative corporation. Its responsibilities could include housing, power supply, education, medical and psychiatric care, rubbish collection and recycling, sewage processing, local road maintenance, and communication with other communities and the outside world. Many of these functions were in fact the responsibility of the Glastonbury Borough until less than 50 years ago.

The household is naturally and integrally a part of the economy, although it has not been recognised as such and is largely unpaid. It provides what could be regarded as ‘services’, which contribute enormous value to the economy as a whole and ensure its good functioning in many respects. It does not need to be monetised, though its position as a necessary part of the economy needs to be recognised. Representatives of the household and household concerns should be included in any decision-making process regarding the economy, a practice that could begin locally and be built up through regional, national and international forums.

The commons are similarly a natural and integral part of the economy. In many cases they require reinstating, or returning to the status of commons. There are three types of commons: natural commons such as common land or waterways – and locally there could be particular concern for the management of wetlands being returned to their natural state; social commons, typically meaning collective access to created resources such as wells and sports grounds, and also including cultural commons such as language, heritage and traditional knowledge; and digital commons that have come into existence with the internet, such as open-source software and free access to information and knowledge. The latter is not restricted to any local community, but can support it through providing a worldwide network and a contributory place within that network.

Conclusion

Glastonbury is well placed to make a start on creating a genuinely resilient and locally-based economy, which would result in both empowerment for the local community and preparedness for a state of dislocation in the national and/or international economy. The first step would be to establish ways to encourage local self-sufficiency and to plan for limiting the flow of financial resources out of the community. A secondary development would be to localise the economy generally, which could be done step by step once the basic principles of local self-sufficiency and financial integrity have been established sufficiently to be built upon.

Together with regenerative principles such as those outlined in the section above, this would also create a model for other communities to follow, and the potential for being part of a movement towards building a renewed and transformed economy ‘from the bottom up’. This can be imagined in the context of the existing capitalist economy becoming progressively more dysfunctional and less able to maintain its hegemony – essentially, falling apart around us. (8) Preparedness for this scenario is important, initially as a theoretical framework and increasingly in practical ways as the reality of the situation becomes more and more undeniable and obvious.
BG, October 2020

Notes and References

  1. XR People’s Assembly handbook: ‘People’s Assemblies are not to be confused with Citizens’ Assemblies, in which randomly chosen citizens are put through a process of learning by a wide range of experts leading to an in depth knowledge and perspective about a specific issue before voting on it.‘
  2. Susan Meeker Lowry,Invested in the Common Good. The book goes on to cover most aspects of developing local economies ‘for the common good’.
  3. Detailed report available here.
  4. Susan Meeker Lowry,Invested in the Common Good. She also wrote a book called Economics as if the Earth Really Mattered, a ‘socially responsible investment guide’, though I have not seen a copy.
  5. I do not know whether there is any documentation that would be of help to a community wishing to establish its own local currency, but this could be easily researched – and advice sought. SMLincludes a chapter on ‘Ithaca HOURS’ and other experiments in local currencies.
  6. Kate Raworth, Doughnut Economics – seven ways to think like a 21st-century economist. The ‘doughnut’ is an economic model for providing a ‘social foundation’ in which everyone receives their basic physical and social requirements, within an ‘ecological ceiling’ meaning within the capacity of the planet to provide the necessary resources.
  7. See City Think Space, Kokstad & Franklin Integrated Sustainable Development Plan (South Africa): https://issuu.com/city_think_space/docs/kisdp_final_report   Kate Raworth herself has now launched the Doughnut Economics Action Lab (D.E.A.L.), inviting local authorities and grassroots local communities to create a movement for a new economics from the bottom up.
  8. The rationale for this being the likely coming scenario is being more and more widely discussed. I have not included the arguments here, though they are not hard to find (and could be summarised in an extended version of this paper).