How and why the idea of the foundational economy is radical.

This short article introduces a developing body of thought and practice about organising economies for citizen well-being. The argument is developed in three sections: the first section explains why foundational thinking is disruptive; the second section describes how this leads towards an innovative foundational practice and provides some Welsh illustrations; the third section and conclusion consider the implications of the foundational approach for Westminster Labour and the English city regions.

Why foundational thinking is disruptive

The foundational economy is now widely recognised (like circular economy or doughnut economy) as a descriptive label. It denotes a zone of the economy producing daily essential goods and services which underpin the well-being of all citizens.

It challenges the idea of a singular economy and argues for multiple economies wherein the tradeable and competitive is not the only, or the most important, zone. Hence the immediate need to refocus industrial policy and recognise that foundational activities need to be revalued and better managed; this argument is easier to make now that COVID has highlighted the importance of the 'key workers' in all our foundational systems.

The radicalism of foundational thinking comes from the way this key idea about multiple economies is fused with two other concepts: heterogeneity and the careful practice of radical policy.

Heterogeneity: The foundational economy (FE) consists of reliance systems delivering goods and services in various places. The providential systems of health, education and care, and the material systems of utilities, food and retail banking, include within themselves many organisational forms, including specific ownership and business models and consumption practices. Equally, places do not have unitary economic identities which can be captured in per capita GVA or GDP; in both 'successful' and supposedly 'failed' places, our research discloses a mosaic of residual incomes varying according to household type and housing tenure.

The careful practice of radical policy: Fixing the FE for liveability and sustainability is a complex task, because we have to rethink and adequately fund personal services like health and care, clean up high carbon-footprint systems like food, housing and transport and build new systems like a wood economy (from productive forest to construction). Because of the limits of knowledge and capacity this often requires socio-cultural learning through prefigurative experiments. These need to be combined with clear recognition that scale economic effects usually depend on coordinated interventions at many separate points across a reliance system.

The implication is that policy must be not generic but system-, place-and period-specific, so there are few transferable models. Differently organised reliance systems in the UK now require diverse multi-point interventions, e.g. to countervail forces like financial market governance of pipe and cable utilities, or to shift constraints like tax funding. Effective interventions move between and connect the two scales of prefigurative experiment and co-ordinated system intervention; and this will in due course require an upskilled state which can accept deliberative input and work participatively as an enabler in alliances with non-state actors.

How foundational practice is innovative (in Wales)

Foundational practice means promoting both volume-economic projects and socio-cultural projects, while being clear about their different rationales and respective limits so that our practice aims to bring them both into a dynamic interactive relation.

In current multi-level government and governance systems, it is extraordinarily difficult to relate the two domains. The immediate obstacles are a deskilled and under-resourced central and local state and executive agencies which lack the...