Sunshine State or Resilient Region?

Those of us who are active in Transition Towns have been disappointed by the government's inability to respond to the impeding food crisis that will result from the exhaustion of oil supplies. So I was surprised, I'm not sure whether or not it was a pleasant one, to find that the Department for Business, Innovation and Skills employed some consultants in 2008 to develop a range of scenarios in response to the need to radically reduce our national use of energy.

The scenarios are based on a series of 2 x 2 matrices arising from two ‘axes of uncertainty’. The x-axis ‘describes the significant uncertainties in the global political and economic context in 2050’, while the y-axis ‘looks at the type of innovation which attracts investment’. On the x-axis are represented possible assumptions about the extent of co-operation between nations, while the y-axis marks out the continuum between investment in optimising existing systems or developing wholly innovative solutions.

This process results in four possible scenarios: Green Growth, Carbon Creativity, Resourceful Regions and Sunshine State. Two of the scenarios have commonalities with a bioregional future, although both are based on this relocalisation as a response to a failure of global solidarity which is by no means the basic assumption of a more regionally based economic future. In the first, the Resourceful Regions, ‘The key distinguishing feature is that English sub-regions have a high degree of autonomy, matching Scotland and Wales’:

‘The countryside is used more intensively than in the past, for food production, mining
and other activities. Within built up areas, retrofitting rather than new build is the
preferred approach. Any new buildings are increasingly built in a local vernacular
style, and there is considerable emphasis on urban green space to tackle overheating. People in this Britain like to think they are self-reliant, and are proud of being British, even though the country is closer to breaking up than any other time in the previous century. Their living conditions vary widely as regions have their own economic structures and differing levels of economic success. But acceptance of the situation is underpinned by strong regional identities and the effectiveness of most regional government’s moves to support vulnerable groups and public services such as public transport.’ (Foresight, 2008: 14)

In the Sunshine State scenario, ‘Government has fostered an emphasis on localism to respond to energy problems’ and there are other aspects of the imagined future that could find resonance with a bioregional approach: ‘There are more local shopping streets and other community resources, partly because of planning decisions intended to promote local autonomy and partly because of municipal enterprise.’

I cite these examples not to support their vision of the future, which I think is limited by the nature of the underpinning assumptions, as well as the method used, but to indicate that government is considering the future design of economic systems that must result from rapid reductions in energy use. Policy focus has been most strongly on the Green Growth scenario, with profit-driven companies providing technological solutions, and to a lesser extent the more co-operative Carbon Creativity approach, but these are political choices. In a democracy, visioning the future is a job for all and these scenarios make clear that a bioregional future of the sort I am proposing frequently on this blog is a realistic possibility already under consideration by policy-makers.
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Waking the Dead

The proposed changes to the UK parliamentary constituencies have brought to light some interesting political debates that usually lie under the surface. The presumption behind the review was that the previous system was biased in favour of Labour, since the constituencies they held contained fewer voters, on average, than those held by Conservative MPs.

Labour MPs have objected to equalisation on the grounds that their constituents are more deprived and therefore require more time from their MP, compared to comfortable voters in the Tory shires. This seems a bizarre example of special pleading, and lends support the unhelpful ideal of the MP as gold-plated social worker rather than respected legislator.

Emily Thornberry in the Guardian makes a more congent political point, arguing that in her Islington constituency 10,000 of her potential 'constituents' are not included in the count because they do not have British nationality. This represents more than 10% of her potential electorate and makes clear that changes to the law on nationality and citizenship are more pressing than revisions of constituency boundaries.

But how about other people who can't vote because they are dead? I have been wondering how constituency boundaries, not to mention elections themselves, might change if Labour and Conservative voters had the same life expectancy. A couple of years ago the Scottish Daily Record reported that men living in Glasgow east end have a life expectancy of 54. This compares with the 82 years that men living in the prosperous constituency of Lenzie can expect. That represents an additional 28 years of voting.

These huge health disparities can be assumed to have affected the outcome of the Scottish parliamentary election, benefiting the SNP, whose voters are more affluent compared to those in Labour's industrial heartlands. And what about if we compare Hartlepool's expected 76 years with the 85 of Kensington and Chelsea? How are these health inequalities, and the additional voting years they represent, affecting the outcomes of elections to the Westminster parliament?

Danny Dorling and colleagues published an article in the BMJ questioning the relationship between the way health inequalities had widened under Labour and the outcome of the 2010 election:

'National statistics show that the gap in life expectancy between the worst and best local authorities in the United Kingdom grew from under nine years in 1997 to almost 13 years by 2007. This suggests that during the period of the New Labour government the “political participation expectancy gap” between these local authority areas grew—because of differences in mortality—from roughly two to three general elections.'

Democracy is about representation and participation, not bureaucratic boundary changes. If the Electoral Commission took their job seriously they would themselves be raising these questions and considering how government refusal to deal with the open sore of health inequality is a greater threat to democracy than a slightly misplaced line on a map.
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Two Bald Men Fighting Over a Comb

As we blunder towards another credit crisis, with banks losing confidence in each other and increasingly refusing to accept each other's debt, the inability of politicians to act is extraordinary. This morning's headlines might have read: 'Lagarde says nothing, recommends doing something, not clear what'; 'Osborne demands strongly that something is done'. Tomorrow's headline should read 'Geithner insists on urgent (unspecified) action'.

Everybody is demanding action from everybody else, but all those who apparently have power have given it away and forgotten how to use what they have left. My Ten Point Stabilisation Plan is still available, free of charge, to any who would wish to use it. But while our politicians find themselves incapable of thinking their way around free markets we can expect more blundering and empty performances in the days to come.

While Tim Geithner appears to have no thoughtful content to contribute, the intervention by the US Treasury Secretary adds interest and takes hypocrisy to new heights. Geithner's advice will presumably be to cut public spending harder and faster, this coming from a country whose own debt is so out of control that it threatens to incapacitate the political system entirely.

Thinking back a while we can recall why the Euro was invented in the first place: because the Europeans were tired of the trade advantage the US enjoyed by controlling the world's trading currency. The Euro was intended to compete with this supremacy and become an alternative reserve and trading currency. The US's intervention is thus more evidence of its presumption in favour of its own interest, no matter what the consequences.

But it was no only the Europeans who had grown tired of producing goods for the US and receiving only arrogant pronouncements in return. The Chinese worked their way into such a massive external trade balance that they could buy up the US and have change. Hence their continuing and repeated calls for a neutral trading currency to replace the dollar and the euro. Meanwhile, the growing economies of Latin America and south-east Asia found ways to facilitate mutual trade without using the dollar. The US no longer has anything to support its assumption of a right to tell the rest of the world how to behave.

If this really is a situation of two bald men fighting over a comb it's fairly clear that the comb, like everything else these days, has been made in China, and the Chinese are holding on tight.
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A Reverse Transformation?

Polanyi's work is valuable in denying the priority placed on the market in most economic theory. His account of how we arrived at the situation where most of our needs are met by the market is worth consideration. Polanyi identifies three stages in the 'subjection of the surface of the planet to the needs of an industrial society. The first stage was the commericalization of the soil, mobilizing the feudal revenue of the land. The second was the forcing up of the production of food and organic raw materials to serve the needs of a rapidly growing industrial population on a national scale. The third was the extension of such a system of surplus production to overseas and colonial territories. With this last step land and its produce were finally fitted into the scheme of a self-regulating world market.' (p. 188)

Given that the market system needs to be re-evaluated in an era when our most pressing task as a human community is to ensure the sustainability of our society, we might raise questions about all three of these process of transition. It is taken for granted by most contemporary economists that land can operate like any other resource, that the process of the commodification of land—its bundling into parcels over which ownership rights can be asserted—and of its sale in a market is unproblematic, but recent developments towards land reform across the world, based in the indigenous view of land as having its own rights, argues against this.

Polanyi's second stage of the transition to a market economy he calls the 'forcing up' of production of food and organic raw materials' in response to the movement of the population from the land and its rapid expansion in the industrial cities. What he has in mind here, I think, is the loss of balance between people and their land, which is a nexus of interacting pressures and conflicts rather than a simple cause-and-effect process. This reopens the generally accepted view that economic growth increased population and then put pressure on resources.

While some environmentalists have traditionally taken what can be judged to be a neo-Malthusian stance on the population question, the more nuanced response to the debate is to recognise that the shift to the market broke the connection between people, their need for resources and the land they inhabited. In a peasant community, each new birth represents a mouth that needs feeding from a limited land resource; in contrast, in an economy where livelihoods are based around the labour-market, each birth represents a potential labourer whose time can be sold. Evidence of the extent of child labour in Victorian cities or in the megalopolises of the global South today is greeted with horror, and yet it is a rational response to an economic system where people have no right to land and need their children to guarantee their subsistence.

Polanyi's third point is linked to the second, since once the industrialised country's population were engaged in producing goods for trade rather than for their own subsistence, their basic needs for food and the raw materials to make clothing, had to be met from the work and land of others, and in the colonial era and subsequently this has meant through using the over-priced land and labour of countries of the global South. Extending Polanyi's insight into the present globalised economy we can see the system of the global trade system as a means of enabling the rich Western economies to rent land in the poorer countries, and exchange which cannot be fair while the former's currencies dominate the system of global trade.

Polanyi's central point is that the role of the market as the central and controlling mechanism in economic life is a modern and short-lived one: 'Though the institution of the market was fairly common since the later Stone Age, its role was no more than incidental to economic life.' (Polanyi, 1944: 45). To move towards a provisioning based economy we need to reverse the three stages Polanyi identifies as forming the transition to a market economy. In other words we need policies to:

Decommercialise the soil - perhaps a Land Value Tax is a first step here;
Return to sufficiency via the strengthening of self-reliant local economies;
Limits on global trade rather than hyper-globlisation.
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Neutral Switzerland Joins Currency Wars

There has been discussion in earlier posts on this blog about the role of reserve currencies and of the developing conflict over the value of different national currencies. Switzerland's currency, the Swiss Franc, plays a unique role in the global economy. It is the store-of-value currency of choice, rather than the medium-of-exchange currency of choice, which until very recently has been the dollar.

So what does it mean that Swiss francs will now be sold at a price determined by the Swiss central bank? It means that for the first time in around 30 years one of the world's leading reserve currencies is not finding its price according to market forces. Those market forces were driving up the value of Switzerland's national currency to such a degree that it was find it impossible to be competitive. It's central bank is now maintaining a lower level.

Two points are of interest to observers of the global economy. First, this is a historic moment. Those of us who have been ridiculed for suggesting that a system of freely floating exchange rates removes democratic control over national economies, encourages conflict between nations, and facilitates harmful speculation have been vindicated. In currency terms, one of the most powerful players in the global economy now agrees with us.

But more important is the clear need to separate the role a national currency plays in facilitating economic transactions within a nation-state from that of enabling trade between nations. The hegemony of the dollar since 1945 as the global medium of exchange has enabled the obscene consumption of that country's citizens and facilitated its acquisition of military firepower that has allowed it to reign supreme. It has also destroyed that country's domestic productive economy. Switzerland fears similar consequences. It has benefited hugely from being the safe-haven currency, but in this era of instability is paying the price.

The logical answer is clear, and has been a key demand of posts on this blog since its inception. What we need is a global trading currency that is not linked to any national economy. Without this, the currency wars can only grow more intense, and, as we saw in the 1930s, currency wars can lead to wars that are even more destructive.
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Co-operative Enterprises Build a Better World

Here's an image I hope you are going to see a lot more of during the next year and a half. The UN has designated 2012 as the Year of Co-operation and the global trade body for co-operations, the International Co-operative Alliance, has set itself the target of massively increasing the visibility of co-operatives during this year.

The ICA has some extraordinary statistics on the level of participation in co-operatives across the world. Over a billion people are members of co-operatives worldwide, including 9.8 million in the UK and 239 million in India. 1 in 4 Germans is a member of a co-operative, and 62% of Finns belong to their leading co-operative, the S-Group. In Japan 91% of farmers are members of co-operatives, and in Korea it is 90%. In Kenya, co-operatives are responsible for 45% of economic output including 70% of coffee production and 95% of cotton. Co-operatives appear to represent something like 20% of the global economy.

It is easy to ignore co-operatives just because they are under your nose. But in fact this form of economic organisation represents a solution to the crisis in capitalism and a humane approach to the improvement of the situation of the poor world. Co-operatives allow people to work with dignity and without exploiting others. Because they do not need to extract surplus value for shareholders they are also a sustainable way of producing and consuming goods and services.

Why are co-operatives so invisible? Part of the reason is obviously that the dominant global media system is part of the corporate economy and so has no incentive to give space to the co-operative economy. But I think a deeper reason is that mutual activity is so natural to us that we take it for granted: we marvel at the cut-throat competitive capitalist economy partly because it is so exceptional--and not in a good way.

If, as I do, you believe co-operatives represent a way of organising economic life that is just and sustainable, then please organise an event or two in your local area in the coming year. And if you are a co-operative or are involved with one, please add the logo to your marketing for this year. Although the logo is not the most attractive I have ever seen, if it appears on every co-operative-related site, whether virtual or real, co-operatives should have a chance of getting around the corporate media blocks.
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The Value of Land: A Taxing Debate

Here's an issue we shouldn't lose sight of. There are many reasons for supporting a tax on land, and there are noises from various quarters that suggest such a policy might be gaining the sort of support it needs to receive serious political attention.

Well, yes, I know you are not going to take me seriously if I follow up that enthusiastic opening by telling you that Land Value Tax is to be debated at the Liberal Democrats annual conference this year. But it is fairly historic that a government party should debate in public this very radical approach to taxation.

Of course there are many variants of how a tax on land might work and why it might be useful. To liberal economists, those who live from rents are not economically productive, so land tax encourages them to put their land to the most productive use and is thus a stimulus to economic growth. To more redistributively minded conventional economists, the windfall gains from planning decisions should not be privatised to developers but shared with the community: a tax on land values enables this.

But the reason I like land value tax is that I believe it would operate like a transitional demand. While it could be seen to be part of a market approach to the economy, in fact land ownership enables people to escape the market system and meet their needs directly from the land. Hence any move that suggests that land is a public resource, rather than a private one, and implies the value of land as a part of the common wealth moves us towards the non-market society that will maximise human happineess and protect the planet.

If this debate is new to you, you might like to read a special issue of the newsletter Tax Justice Forum which focused on the issue. If you're in the mood for something a bit more rousing and rhetorical you can check out a short speech I gave at the House of Commons during a meeting on the same theme several years ago.
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