DEBATING THE FOUNDATIONAL ECONOMY.
| Author | Heslop, Julia |
The idea of the Foundational Economy has the potential to radically disrupt dysfunctional old assumptions about economic development strategy. It is already being used to do so in places like Barcelona and Swansea, where it works with trends to remunicipalise public services, build local wealth through anchor institutions, and promote mutualism. The Foundational Economy offers a new way of conceptualising the very purpose of economic development, and how it can improve the lives of the many, not just the few.
Fixing the economy from the foundations
It is widely agreed that the relationship between growth, jobs, prosperity and wellbeing has broken down. But the search for a new paradigm of economic development that widely shares wealth and opportunity, and safeguards ecosystems and communities, is far from complete. A range of concepts and practical experiments compete for attention. This editorial explores a key contribution to the search for a new paradigm - the concept of the Foundational Economy (FE) - and introduces a set of articles on the topic. We situate the FE in relation to other emerging ideas and initiatives that share similar concerns, and argue that thinking about the FE holds out the possibility of radically reconceptualising the purposes of economic development.
The debate about economic alternatives has tended to be dominated by debates on industrial policy that privilege notions such as mission-oriented research and innovation policies - systemic public policies which draw on frontier knowledge to create value ('big science deployed to meet big problems'), and which are contrasted with forms of development that facilitate value extraction and rentier capitalism. (1) These approaches to industrial policy provide a powerful challenge to neoliberal claims that markets are inherently good and governments invariably bad. They also offer the possibility of models of innovation that create forms of public value and, more fundamentally, pose the question: what kinds of economic activity add value to society and what structures best promote these economic activities? These new industrial policy approaches also represent an advance on existing models of economic development because they transcend the tired state-versus-market binary, highlighting the need for collaborative processes of co-creation.
But what is most problematic about the new industrial policy debate is that it leaves unanswered questions about the fate of the vast majority of people and places that do not figure in the world of mission-oriented innovation policy. It is in this space that the concept of the FE makes its contribution because, far from being socially and spatially exclusive, it has something to offer everyone everywhere, in the sense that the FE constitutes the infrastructure of everyday life.
The promise of the foundational economy
The FE refers to the basic requirements of civilised life for all citizens irrespective of their income and location. It includes material infrastructure - pipes and cables and utility distribution systems for water, electricity, retail banking, etc - and providential services - education, health, dignified eldercare and income maintenance. Conventional ways of theorising and measuring the economy render the FE invisible and overlook its contribution to development. Orthodox thinking is fixated on the contribution of hi-tech, knowledge-based industries and property-led regeneration to increases in GDP. But growth in GDP is not translating into improvements in living standards for many households and provides only a narrow and desiccated index of progress. Understanding the FE is essential to thinking about alternative forms of economic development, because it is welfare-critical for those with limited access to private provision; it underpins household consumption; and it is a large employer in sectors like water, energy and eldercare, which typically are sheltered from international competition. Moreover, neglected mundane activities, such as going to the supermarket, provide everyday necessities and can be lynchpins of local economies. In current discussions about industrial strategy, with a few exceptions, the FE is rarely mentioned, but the supply of these services is critical to rising living standards and social wellbeing. (2)
From the mid-nineteenth century, local...
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