We’ll be at “Boom Bust Boom Bust: Why Economics is for Everyone” next week

Boom Bust Boom Bust: Why Economics is for Everyone
31 Mar – 2 Apr 2015, Manchester

Steady State Manchester is pleased to be part of this event of alternative approaches to economics organised by the Post Crash Economics Society, a now famous counter-course initiative of students sick of the narrow curriculum of neo-classical economics. Neglected approaches in mainstream economics include ecological economics, Keynesian economics, Marxism, feminist economics, and post/de-development, all of which have informed our own approach.

So we are delighted to both support the event and to be offering a highly participative workshop in the very first session:  “An Economy for planet and people?”.

Do come along!

Here is the conference website: http://boombustboombust.com/

And the programme Unconference-Programme-final (as at 25 March – the programme on the conference website doesn’t render properly on all browsers so that’s why we’ve put the pdf here).

The Viable Economy serialised – Living Well and its measurement

We continue the serialisation of our intervention, The Viable Economy, this time with Chapter 12, “About Living Well and Its Measurement”, in which we ask what the economy is for, and how we would know if it was working well. In this we purposely avoid problematic terms such as “progress” and “development”.  In seeking measures of economic, social and ecological well-being, we recommend ones that express the interconnection among these three spheres.
Y
ou can download the whole pamphlet as a pdf file, here.

If you like it, why not make a donation towards our work. Our costs are modest, but we are unfunded.

About Living Well1 and its measurement

The problem

Just as the unviable economy is organised around the pursuit of aggregate economic growth, its economics uses the size and growth of the Gross Domestic Product (GDP) and the related statistic, Gross Value Added (GVA) as measures of economic well-being2. and they are even used as a proxy for social well-being too3. GDP is calculated by adding together the monetary values of all the goods and services produced in an economy. Doing this involves a lot of assumptions and estimates4.

A focus on GDP growth, then, encourages us to value the amount of goods and services that are exchanged for money rather than their value to people and society. Economic growth as measured by GDP fails to distinguish between economic costs and benefits, or to account for uncosted things such as environmental destruction and unpaid work, for example looking after family members, neighbours and sustaining community.

These measures have two problems. Firstly, it is only clear to specialists what is actually being measured and this means that changes in GDP, although taken to indicate changes in economic well-being, do not necessarily indicate anything of the sort. GDP rises with cigarette advertising, armament sales, house prices, the credit-funded purchase of imported goods, encroachment on the green belt and traffic congestion, but it does not reflect those things that really matter to us. Desirable economic changes, such as a reduction the proportion of people in poverty, or the increase in real incomes, are not picked up. Secondly, the narrow focus on GDP determines economic policy: since success in steering the economy is judged in terms of changes in GDP, its increase becomes an end in itself with devastating impacts on the environment, as the 2014 IPCC report makes clear5.

The viable alternative

The viable economic approach uses statistics that reflect key aspects of economic, social and ecological well-being. Rather than treating each of these three domains separately, though, measures are chosen that reflect their inter-connectedness. So, the proportion of money spent and re-spent within the local economy indicates the success of that economy in protecting its wealth, its success in promoting local activity and jobs, and ultimately its ability to source things locally rather than from across the globe, with the associated carbon emissions. The share of income going to the poorest 10 per cent of people indicates their relative prosperity while also reflecting the level of economic inclusion. A more equal society in income and wealth also means less trivial consumption of high-energy goods and services (since the richer strata disproportionately spend their surplus on these things).

Some viable policy ideas

  • Consider developing a ‘genuine progress indicator6‘, or similar, for the city region to measure and direct economic development towards social and ecological viability. This should include social and ecological measures such as well-being, inequality, work/life balance, commuting times and carbon emissions per person.

  • Develop integrated reporting on economic, social and ecological well-being.

  • Devise measures that capture,

  • The bio-regional multiplier (money spent and re-spent in the region)

  • Income and wealth distribution

  • Credit and investment, broken down by sector

  • Employment, unemployment and working hours

  • Resource use and re-use

  • Energy use – carbon generating versus carbon-neutral

  • Estimates of carbon release and sequestration

  • People’s use time, contrasted, for example with working time and work-servicing time (e.g. commuting).

  • Unpaid work which contributes to individual and social well being.

  • If presenting figures on growth, always break them down into component areas, e.g. manufacturing, agriculture, property sales, domestic consumption, etc.

1We might have used the word “progress”, but that is almost irrevocably associated with a linear approach that disparages other cultures and implies the dominance of people over nature? See our pamphlet Living Well: Practical Solidarity and Steady State Economics. http://bit.ly/1bTpEyx

5See note 5

6See our commentary http://bit.ly/1xoToLE

Solidarity with Syriza

Syriza swept into power in Greece

Syriza swept into power in Greece

Last month I attended a Syriza solidarity meeting hosted by the recently formed Left Unity. Guest speakers at the event included Joana Ramiro, journalist at the Morning Star and Kevin Ovenden, journalist and political activist and member of the Respect Party’s leadership. Both Ramiro and Ovenden covered the recent general election in Greece. Syriza are of course the left wing political party that gained 36.3% of the vote in January, despite only being founded in 2012, and who now govern Greece in coalition with ANEL.

The pre-election context in Greece which was described by Ovenden at the solidarity meeting was eerily reminiscent of the type of economic depression last seen in the western world during the 1930s. There has been a 30% reduction in the Greek economy, 60% youth unemployment and 200,000 Greeks are said to have left Greece during the financial crisis. Ovenden described how it had been common place in Greece, as has been the case in majority world countries for the past 50 years, for Greek families to get together and select the eldest son to emigrate to Australia, the US or UK and remit their wages back to their families who have stayed behind. It is in this context of course that Steady State Manchester stands in solidarity with emigrants, like the people from Greece, who are forced to move thousands of miles in order to sustain themselves and their families.

What also became apparent during the course of the meeting was that the stunning election victory by Syriza would not have been possible without the mass mobilisation of the working poor preceding and during Syriza’s election campaign. There had been 35 general strikes in Greece during the last 5 years. One example of this truly heroic action which particularly stayed with me was that of the nearly 600 women cleaners who camped out at the Ministry of Finance. These women were suspended in September 2013 and later dismissed as part of the public sector cuts demanded by Greece’s creditors. These women had camped outside the Ministry since May during their court case to become reinstated and became an emblem of the discontent with austerity which underpinned Syriza’s victory.

The point is that without this collective action Syriza’s stated renegotiating the terms of the bail out with the Troika of the IMF, ECB and European Commission would not have seemed plausible, that is, without a large portion of the Greek people fully participating in social mobilisation and defending public services. I suspect that a similar paradigm shift is needed in Manchester if we are to move towards a radically different economic model.

Of course Syriza is not without its problems and they should be acknowledged. The move to enter into coalition with ANEL, a far right party has caused controversy at the outset of Syriza’s tenure and perhaps already shows a certain sense of pragmatism. Syriza’s cabinet is also almost exclusively male and the party is, for now at least, committed to an increase in GDP growth (although as noted elsewhere, there are people at the centre of Syriza working with a de-growth perspective. Moreover, Syriza itself was nurtured by the development of the alternative, solidarity economy, under hyper-austerity in Greece). However despite these issues Syriza’s advocacy of an end to austerity, confronting the Greek humanitarian crisis and promoting tax justice should be fully supported by all those on the left of UK politics.

Greater Manchester Pension Fund: some positive moves but more ambition needed.

Mark Burton and Ben Irvine at MCC FInance Scrutiny Committee

Mark Burton and Ben Irvine at MCC Finance Scrutiny Committee

What kind of a job are the city region’s investments doing in securing a viable future for the region – economically, socially, and for our living planet?

Back in September, 2013, we wrote to the then chair of Manchester City Council’s Finance Scrutiny Committee to request the committee examine the investments held by the city, and those in which the city has an interest. Our interest was the extent to which the choice of, and management of these investments was guided by ethical as well as merely financial considerations. In this we are following in a tradition of lobbying on local authority pension funds that goes back at least to the work of the Campaign Against the Arms Trade on divestment from munitions companies. Two meetings in 2014 looked at Manchester City council’s bankers and at its other investments, and began a consideration of the Greater Manchester Pension Fund, which is the huge fund responsible for the pensions of council workers in the whole of Greater Manchester. You can read about the two previous discussions on this site HERE and HERE.

On Thursday, 12 March, the committee again considered GMPF’s investment strategy. We were able to review the papers provided by the City treasurer, based on information from GMPF. We prepared a response to this which was circulated to members and GMPF before the meeting. You can read this detailed report HERE: it contains links to the relevant GMPF documents and other sources. In brief, we argued that,

1) While the Fund has been a leader in making direct investments in the local economy, “the Fund should consider more direct investment in schemes that deliver local prosperity, through job creation while bringing measurable environmental benefits, for example in housing retrofit and renewable energy generation”.
2) While encouraged to know that the Fund is actively engaging with companies over ethical questions, we questioned the effectiveness of this strategy on its own. We suggested that “the Committee may wish to consider its position on the fossil fuel investments held by the GMPF. At the minimum it may wish to know what the fund managers’ strategy is in relation to ‘un-burnable carbon’. They may also wish to recommend full or partial disinvestment.”
3) The GMPF’s approach to ethical investment, which dates from 2007 is that it is becoming outdated. It rests upon assumptions about the nature of fiduciary duty that have been challenged in recent years, not just by activist outsiders, but from within the financial services industry itself. Indeed, “it may be a breach of fiduciary duties to fail to take account of environmental and social governance considerations that are relevant and to give them appropriate weight”. We therefore suggested the need for a review of the Fund’s Responsible Investment Policy.
4) Most of the Fund’s investments are in traded Stocks and Shares. Aspects of this portfolio should raise concerns. Just looking at the largest investments, there are multiple causes for concern. In addition to Shell and BP (£530M or 4.5 per cent of the Fund, at March, 2014), three mining companies and an armaments manufacturer. All the extractive companies have been implicated in human rights abuses, some as recently as last year (see our annotated chart in Appendix 3 to the report: Nestlé, Hewlett Packard (both the subject of boycotts), and Canadian Tar Sands, one of the most environmentally damaging enterprises on earth).

    GMPF top holding annotated
We argue that the approach of leaving most decisions to the discretion of Investment Fund managers is insufficient. It should be possible to both avoid investments in companies with damaging practices, and to positively favour those that are relatively benign or even positive in their impacts, without putting all the Fund’s assets in one sector or type of investment vehicle.

GMPF representatives were also there to present their approach. This is what happened at the meeting, although you can watch the recording of the meeting HERE – the relevant bit starts at 11.52 (1.52.57 into the meeting).

Councillor Kieran Quinn, of Oldham council, who is the Chair of GMPF began the discussion. He is also the Chair of the Local Government Pension Forum, which is also the collective voice of local government pension funds, and which has lobbied various companies. He made a brief resumé of the history of the Fund, in which he rightly noted its responsibility and effectiveness in delivering a good return on investments (the Fund itself has grown in value from £9.5Bn to 17.3Bn since the Great Financial Crash of 2008) so that pensions can be paid without an additional burden on local councils. He then addressed some of our points.

1) He asserted the value of the local infrastructure investments, such as the South Manchester development (with which we agree) and 1 St Peter’s Square (which we are less enthused by) for the local economy and local people. Our point about the need for clear criteria for environmental benefit was not addressed, although it was picked up to some extent in later discussion.

2) He asserted the value of dialogue with companies and the danger of losing the ability to influence as a result of disinvestment. An example he cited was the ability to influence health and safety practices in the Bangladeshi clothing industry. While we had suggested that the outcomes of intervention with companies were usually classed as dialogue, he rather strangely suggested this was disingenuous of us, in that “dialogue” covered a lot of very positive work.

3) He pointed to the Fund’s investments, current and in the pipeline, of some £150M in renewables (anaerobic digestion, wind and biofuels), social investments, SME’s.

At this point the acting Chair of the Committee, Cllr. Latchbury, apologised for not being aware of the agreement that we speak to the item and invited Mark Burton to contribute. (see video recording, 2hrs 9 min in) He drew attention to SSM’s report and responded to Cllr Quinn.

Firstly, he welcomed the focus on supporting the local economy and the work on engagement with companies, but said that while agreeing with the general direction here, and the need to ensure good returns for beneficiaries, Steady State Manchester was advocating much greater ambition from the Fund. On the ethical front.

Secondly he argued that while being a stakeholder allowed leverage with many companies, in some cases it was unlikely to make a significant difference: oil companies exist to exploit fossil fuels and yet we now know that the larger part of these reserves is un-burnable if the world is to avoid runaway warming – most of the oil must be left in the ground. Therefore in these cases a strategy of active divestment must be pursued as part of the rapid de-carbonisation of the economy that is needed to achieve net-zero carbon emissions. No less a figure than the Governor of the Bank of England, Mark Carney, has reiterated the message about stranded assets of the oil companies in the last week.

Thirdly, he drew attention to new thinking on fiduciary duty, arguing that the Fund’s policy needed an update and that it was problematic to outsource, without strong ethical guidance, so much decision making to Investment Fund Managers (who incidentally appear to charge a figure that is nearly 6% of the income from equities, net of any trading costs – an issue picked up on BBC Radio 4’s File on 4 programme this week).

It was perhaps a little unfortunate that SSM’s contribution took place before GMPF had finished. The next contribution was from Allan MacDougall, Managing Director of PIRC, not the Public Interest Research Centre, but Pensions & Investment Research Consultants Ltd, “The Voice of responsible Shareholders” and “Europe’s largest independent corporate governance and shareholder advisory consultancy”.

He noted that SSM recognises that GMPF is a leader in responsible investment. (We might not go quite that far, although we do acknowledge good practice). After what might be described as a rather whingey point about local government pension funds being a target for social and environmental activism, he asserted that “dialogue” with corporates is a robust form of engagement and that it is only in this sector that Fund Trustees engage face to face with companies. He argued strongly against divestment, suggesting that this would open the path to investors such as a Chinese investment bank (actually China is now doing more than most economies to shift to low carbon). This rather ignored the argument that divestment not only has the potential to hit companies through withdrawal of capital but also through creating a climate whereby societal priorities do indeed shift. This is what happened over apartheid (see this article by financial commentator Brett Scott who argues for a two track approach to what is above all a moral question).

However, Mr MacDougall did say that the fund wanted to raise its ambitions and that it was frustrating that despite dialogue, “companies fall back on unacceptable practices” despite promises made at shareholder meetings, something Councillor Quinn himself has been confronted with in the case of Barclays where legal sophistry was used to evade a commitment made.

On fiduciary duty, he cautioned that although there is now much opinion, there is limited case law, and he referred back to the NUM case that has set the frame for the conservative approach to the matter in this country. He recommended study of the Law Commission’s paper. Here is Share Action’s view on the matter – significantly it argues that the Law Commission was wrong in declining to issue statutory clarification on the interpretation of the duty.

The floor was now open to committee members. Councillor Nigel Murphy thanked SSM for “keeping us on our toes” and suggested that it would be appropriate for GMPF to update its Responsible Investment Strategy.

Councillor Quinn said that GMPF had already changed its ethics to include Environmental and Social Governance issues (it was a bit late to tell us this!). Indeed the tone of much of GMPF’s input was of the “we are already doing this” ilk. It would be good to see this revision, since (as of the time of writing) it does not appear on the GMPF website (incuding an initial search of Fund committee meetings).

Councillor Rabnawaz Akbar, who represents Manchester City Council on the Fund’s Advisory Panel also thanked SSM for the paper: it was encouraging that residents are making this challenge. He was confident that the Fund would take advantage of the emerging ethical market.

Disappointingly, other than councillors Murphy and Akbar (who did not speak as a member of the committee), Finance Scrutiny members showed little interest in the discussion and the committee did not pick up our suggested recommendations for the Fund, despite Ben Irvine from SSM explicitly drawing attention to them. For the record, they are:

  1. The interpretation of fiduciary duty: to recommend that the Fund’s ethical investment policy is revised in the light of contemporary thinking that widens the scope of fiduciary duty.

  2. Divestment: To recommend that full or partial divestment from fossil fuels is pursued with a proportion of that investment redirected to renewables and energy demand reduction.

  3. To recommend that the proportion of the fund devoted to local investments is increased by a specific amount and the strategy for selecting such investments is renewed to assess whether it is robust enough to support environmental and local economic benefit.

  4. To recommend that the Fund should actively support community owned renewables development in GM, that a statement of intention is published and a contact process for projects seeking funding is established.

In summary, our view is unchanged. Local government pension funds are relatively transparent and accountable players in the world of investment and finance. But that transparency and accountability is relative, obscured by layers of bureaucracy and delegation of responsibilities. While some of that is inevitable in a multi-million pound enterprise, we still need to call for greater transparency and accountability to the real interests of people and planet for a viable economy in Manchester and beyond. For that reason we reiterate our calls for a more ambitious approach to investment selection and management that meets socially and environmentally responsible criteria, not least the facilitation of a rapid decarbonisation of the economy and investment in projects locally that build real prosperity that stays in the region, while not damaging the living planet we depend upon.

2It is argued that holding equity in large UK banks reinforces the lack of diversity in the Banking sector, and entails new risks in the event of bank failure due to new ‘bail in’ rules. http://gallery.mailchimp.com/c9b157c9d89ca0bdb156c5128/files/MYM_ToolKit_Final.pdf

3Extractive companies: those whose primary focus is mining, quarrying, or other mineral exploitation (e.g. oil and gas).

Has the UK decoupled carbon emissions from GDP growth?

post updated with further links and minor corrections, 11 March, 2015

What has happened?

According to the Carbon Brief website, UK carbon dioxide (equivalent) emissions fell by 9.2 per cent in 2014. They base this on an analysis of UK government data, using a method with a likely error of no more than 0.5%1.

In the same period, they note, UK GDP rose by 2.6 per cent (ONS figures)

Why is this important?

We, in keeping with ecological economists generally, have argued that the evidence suggests that emissions cannot be decoupled from economic growth. More growth means more emissions, even if we are getting more efficient in our use of energy. So does this mean that, after all, it is possible to decouple carbon emissions from economic growth?

To answer that question we will look in turn at first the reduction in emissions, and then the rise in GDP.

Why have UK direct emissions fallen?

Carbon Brief are clear about the causes of the very large fall in emissions.

1) The use of coal fell by 20% – a fifth compared to the previous year. This is good, and it brings down the consumption of this dirtiest (most carbon-intense) of fuels to levels not seen since the 1850s (when of course other fossil fuel use was negligible). However, it is less than the rise of 26.4% in 2012 and it brings us back to the position before 2012 when more gas was being burnt than coal, something which has accounted for a large part of the UK’s direct emissions reduction since 1990.

Why was less coal burnt?

There are four reasons. Firstly, volatility in the price of coal, which fell from 2011 and is now rising again. This has meant the substitution of gas, although less gas was burnt too than in previous years.

Secondly, there were fires at two coal-fired power stations, so they stopped generating (and burning coal).

Thirdly, the huge Drax power station has been progressively switching its fuel from imported coal to imported wood pellets. This is part of the UK’s de-carbonisation strategy, and not necessarily a very sound one, although DECC sees this as a transitional measure. And fourthly …..

2) The warm weather meant less use of all types of fossil fuel for heating.

Carbon brief estimates that without this factor, emissions reduction would have been 4.9% rather than 9.2%. So taking out the correction for warmer weather (but is that the new normal, given climate change?), the reduction in emissions still appears greater than the rise in GDP. Incidentally, a cold January and February this year could yet mean a higher emissions figure in 2015

3) Energy demand in the UK is falling. Carbon Brief reports that this is by 7% across all fuel types, a trend repeated across the EU.

These falling energy use trends are a result of the installation of building insulation, improvements in product energy efficiency, vehicle fuel efficiency standards and changes in the structure of the economy.”

This is of course good news, although we need to be alert to this efficiency causing increased consumption elsewhere (rebound).

4) Renewables have increased, now accounting for 15% of the UK’s electricity generation, although there is debate about whether all the biomass generation should really be termed renewable. As Carbon Brief again point out, it depends.  As one of our associates pointed out,

A note of caution: Carbon Brief’s calculations (based on government figures) don’t include any emissions from extraction, cultivation and manufacture overseas, nor shipping and aviation, as we’ll discuss below.

What about the growth in GDP?

Just as we need to understand the composition of the emissions figure, so we need to understand what’s behind the bald GDP growth figure. Firstly, it depends what measure we use. The quoted 2.7% is the gross increase. But it makes more sense to correct that for both the growth in population and for changes in prices. Doing this, we find that GDP Growth per capita purchasing power parity was only 1.03%2.

But then, what is causing this growth in GDP? We reviewed this 14 months ago, concluding that,

The ‘recovery’ of GDP growth is based on a return to the old ways of consumer credit-based consumption and house price inflation. Companies are extracting profits, but they aren’t investing in rebuilding the UK’s broken economy, which remains dependent on, or rather in hock to overseas exporters.

and the picture has not changed very much.

The TUC Economic Quarterly for February 2015 characterises UK growth like this:

Crudely characterised, even while manufacturing saw some gains, UK economic growth seems dependent on a consumer and housing expansion, booming times for employment agencies, the private sector expansion resulting from outsourcing, and some of the usual business services ….. and is increasingly reliant upon a small number of sectors (which are susceptible to unsustainable booms) for growth, along with gaining from deteriorating conditions of employment. An economy which can only grow as private debt rises, house prices rocket and employees’ conditions are eroded is neither sustainable or strong.

What this means is that UK GDP growth relies overwhelmingly on,

  • Consumer expenditure, increases in which are funded largely by credit or dipping into savings to buy largely imported goods,

  • House price inflation – especially in the South East., and

  • Administrative activity of various kinds.

None of this can be expected to generate a lot of emissions growth, here in the UK. What emissions it does generate will be overseas, where things we use are made, and in the transportation of those things to this country.

Incidentally, the same goes for the emissions from fossil fuel extraction and distribution, whether Polish coal or US wood pellets.

Yet again, we are only looking at relative decoupling, not the only decoupling that counts, absolute decoupling.

And this is the elephant in the room, you can’t understand the relationship between economic growth and its consequences by only focussing on direct, territorial emissions. Because the UK, like other largely post-industrial economies, outsources its production, it also outsources its emissions (fifty percent of them, according to the government, see also this from the UK Energy Research Centre), and that hides the impact of our economic activity on worldwide emissions.

For every unit of economic growth in the UK, expect a consequence in emissions beyond our shores. And since the atmosphere is shared, it’s our problem too.

An afterthought. If there is light at the end of the tunnel, it might be coming from China, where in 2014 there was a reported 1% drop in emissions from coal, and possibly a 0.7% drop in overall carbon emissions. China is certainly beginning to take emissions mitigation seriously. However there are two notes of caution here. Firstly, to what extent can we believe the figures produced by this profoundly undemocratic State Capitalist power? Secondly, given that China is still aiming for 7% annual GDP growth, how secure is this reduction?

For Manchester, even though the reduction in national direct emissions will be reflected in progress towards the city’s carbon emissions target, this all means that we cannot let up on the move towards a Viable Economy, where radically reduced energy demand, a shift to renewables, and a refocussing on necessary consumption are key elements in the post-growth future.

Mark H Burton

Steady State Manchester

1On the basis of previous work – see the article.

The Viable Economy serialised – About Consumerism

We continue the serialisation of our intervention, The Viable Economy, this time with Chapter 11, “About Consumerism”, in which we make it clear that our opposition is not to individual people as consumers (calling for behaviour change), but to the system that demands excessive consumption (calling for transformational system-change).  You can download the whole pamphlet as a pdf file, here.
If you like it, why not make a donation towards our work. Our costs are modest, but we are unfunded.

The Problem

The unviable economy depends on continued ‘excess’ consumption: without this, the economy stagnates. In order to maintain consumption a variety of strategies are used, by firms and governments alike:

  • Built-in obsolescence: there are disincentives to producing durable products, or products that can be easily repaired.

  • The development of entirely new products, together with the creation of false wants, through marketing, advertising, and related means.

  • The encouragement of a consumer culture and the language to go with it (e.g. “retail therapy”, “shop ’til you drop”, “must-have gadgets”) and the focus on those with high consumption lifestyles in the media.

  • In the context of declining real wages, especially for those on lower incomes, credit is offered, itself a highly marketed product.

  • The conversion of once free (e.g. children’s recreation, access to heritage sites, wild foods and their processed products, areas of urban space), or publicly owned assets (e.g. utilities, aspects of health-care) into products that have to be bought on the market.

  • Expansion into new markets.

  • Outsourcing of production to countries with lower labour costs (higher rates of exploitation), including sectors such as tropical prawn production and semiconductors where indentured and forced labour are integrated into the supply and manufacturing chain.

  • The creation of status insecurity, at all levels of income distribution, through the growth of inequality1, in concert with the long working week, means identity and status is often asserted through the mechanism of consumption.

  • The erosion of popular participatory culture in favour of passive consumed culture.

The consequences of the endless creation and practice of consumption (even though there are many whose personal ecological footprint is within their fair allowance) as a way of life are devastating for the planet’s ecosystems on which we rely, through over-use of non-replaceable resources and habitat destruction, and the dumping of pollution (including emissions) into the atmosphere, the soil, watercourses and oceans. At the same time it encourages a lifestyle that may be superficially satisfying, with high levels of stress and the breakdown of social bonds between an individual and the community as a result of long hours in alienated work and high levels of personal and household debt. To cap it all this economy is not viable in its own terms since its dependence on high levels of exploitation, fragile supply chains, and mushrooming credit, all can and do lead to chronic instability and periodic crashes.

In case of doubt, though, we are not blaming individual consumers here, but the system that turns our needs and aspirations into the motor of individualised consumption. This cheats people who will never be satisfied within a system that generates dissatisfaction, while cheating those in low wage economies who make the products, often in dire conditions.

The viable alternative

The viable alternative seeks to act on the causes and the effects of rampant consumption, through simultaneously developing economic and cultural alternatives, and addressing the systemic drivers of the consumerist cycle: excessive profit accumulation, false wants, inequality and the personal credit balloon. Much of this requires action at the national and international level to change the very basis of the economic system, but at a local and regional level much can be done to pioneer alternative approaches in the spheres of production, distribution, marketing and culture.

Some viable policy ideas

  • Reducing inequality – see section 8.

  • Reducing working hours – section 9.

  • Combating consumer culture through promotion of authentic, participative popular culture.

  • Valuing subsistence activities such as growing (and sustainably foraging) our own food, or making and repairing our own furniture and clothes.

  • Rebuilding a money system that does not depend on high levels of personal debt (see section 7 on investment and money).

  • Promoting product durability, modularity of working parts, re-use and recovery-recycling, through procurement policy and practice, and business stimulation.

  • Prohibiting advertising to children2.

  • Banning commercial advertising in public spaces3.

  • Campaigning for public broadcasting to abandon its craven acceptance and promotion of celebrity-competition-consumption.

1 Wilkinson, R., & Pickett, K. (2009). The Spirit Level: Why More Equal Societies Almost Always Do Better. Harmondsworth: Penguin.

2Williams, Z. (2006). The commercialisation of childhood. London: Compass. http://bit.ly/1B0f8m0

3As in Brazil’s megalopolis, São Paulo http://www.newdream.org/resources/sao-paolo-ad-ban

Our Priorities for 2015; Get Involved and Help us Achieve Them

In 2014 our focus as an organisation was developing our ideas for how to bring about a more fair and sustainable economy in Manchester and the wider region. We launched the Viable Economy, building upon our previous interventions, it is a pamphlet and a manifesto for an alternative approach to how the city and region could develop, in a way that is viable in all three of the social, economic and ecological domains.

This year, we will build on this by concentrating on sharing ideas for a Viable Economy with others, with a view to creating and advocating for policy, and promoting and learning from practice and examples which demonstrate aspects of the viable economy in action.

We aim to be more outward facing as an organisation, increase and broaden our public visibility and impact and connect with more and more diverse groups of people. In addition to having an impact in key areas of our economy and society.

Our core aim remains unchanged: to engage with decision-makers and the wider public within Greater Manchester to promote and support the understanding, and ultimately the implementation, of a Steady State Economy and Society.

This year we plan to:

Generate more interest and understanding of the viable economy

  • Increase the reach of our communications and engage with a broader range of groups, promoting understanding and debate about a viable economy.
  • Use available data about the GM Economy to communicate its flaws and how to pursue more viable economic development.
  • Develop a systematic strategy for influencing decision makers in GM.
  • Better develop how a viable economic strategy for the city region connects to social policy and specifically social care.

Generate more action around the viable economy

  • Follow up our scrutiny of the ethics and viability of Manchester City Council’s investments and explore mobilising funds for local/viable/ecological investments, including how fossil fuel divestment can be linked to re-investment in community owned energy.
  • Develop a spatial vision and agenda for developing the economy as a garden city and identify levers to bring it into being.
  • Influence improvements in working conditions and connect these to viable economic development.
  • Explore and help to facilitate the possible development of a local currency.

Measure what matters: economic, social and ecological well-being

  • We will make use of available data to report on the city regions well-being and prosperity and promote the use of better prosperity indicators by Local Government.

Develop as an organisation

  • Become more participative, open, inclusive and diverse.

If you’d like to see these goals come to fruition and would like to get involved, in one or more of them, contact us: steadystatemanchester@gmail.com, we’d love to hear from you.

Is #DevoManc a missed opportunity?

 

wasted opp

What’s happening?

Greater Manchester is to get an unprecedented devolution of power from Whitehall. These devolved powers from London cover a variety of strategic areas:

  • a new housing investment fund of up to £300m, with the aim of building up to 15,000 more homes over 10 years

  • greater planning powers

  • responsibility for local transport, including power to run franchised bus services and provide Oyster-style integrated tickets

  • welfare-to-work programmes, with a budget of £100m, to help up to 50,000 people back into work

  • control of existing health and social care budgets, which have been pooled by local authorities across Greater Manchester

  • greater responsibility for business support and further education

  • up to £30m a year for the growth generated by its economy

These budgets of around £1Bn will be controlled by a new Greater Manchester mayor, directly elected from 2017 with an interim appointee. There will be a committee of the leaders of the 9 GM councils but unlike London, Scotland, Wales or Northern Ireland, no elected assembly. Not all powers will be devolved: significantly education, but this could, according to Richard Leese amount to some two thirds of public spending in the “city-region”.

 

What’s good about this?

That our region is getting more power over its own affairs must be a good thing, and it is clear that the city’s leaders have worked for this for years. The UK is far more centralised than other countries of similar size. Since the time of the Thatcher governments local government has been, as they say, “hollowed out” with limited autonomy and ever reducing responsibilities: gone are education and housing, and it now seems incredible that it was local government that established our water, sewage, power and telecommunications, as well as part of the health service.

Making decisions more locally, in theory, should make them more responsive and accountable to the needs and interests of people locally, and so give us better policies, plans and actions, improving the lives of all of us in Greater Manchester ……… but will it?

What’s wrong with it?

 The democratic deficit

Until the Thatcher regime abolished it, we once had an elected government at regional level. This was in the first place at the level of the county – something that broke down with increasing urbanisation, and our region being split between former Cheshire and Lancashire (and bits of Derbyshire and Yorkshire). In the 1973 reorganisation, we got the Greater Manchester council (to the consternation of people in Wigan and Saddleworth!), but mainly because of the popularity of the Greater London Council and Ken Livingstone, as a site of radical innovation and resistance, the Tories simply abolished that tier.

The new arrangements give no proper democratic accountability for the regional level. It is insufficient to vest that in one person who can be expected to understand, debate and deliberate over the multiple perspectives and interests of the region’s many peoples. And nor can the gang of nine council leaders, who will represent their own localities and parties, but not directly represent or interpret that diversity. As any systems scientist can tell you, it takes diversity to represent, interpret and act in an environment characterised by diversity but what we are getting is a technocratic-managerial fix, poorly suited (if sharp-suited) to heal the legitimation crisis of our failing democracy. Perhaps the rather strange way the “deal” appears to have been negotiated should be seen as an omen.

And on the same theme, the people of Greater Manchester are not being given any say in these arrangements – although there is a campaign for a proper consultation and referendum. In Scotland that led to a resurgence of interest in politics and to political mobilisation, a kind of renewal of popular politics. Maybe that’s what George Osborne and the Manchester leadership are afraid of.

So that’s the first missed opportunity, that of restoring democracy to our region. That could be a moment of creativity – we could have a small assembly whose members report back to their constituents via regular public meetings. They could be subject to recall. It could be run cheaply: it doesn’t need the glitz of The Greater London Assembly.

What’s the region?

The new deal sticks with the 1974 Redcliffe-Maud definition of the region, that corresponding to the council areas of Manchester, Salford, Wigan, Bolton, Bury, Rochdale, Oldham, Tameside, Stockport and Trafford. We have long argued that this is an inadequate definition of the region. Whether considered in terms of the “travel to work area”, or more creatively in terms of a potentially, relatively self-sufficient eco-region (or bio-region) it makes more sense to think in terms of a wider area, incorporating the city-region’s hinterland. We have argued that the upper Mersey valley watershed area is roughly what we should be looking at.

Consider energy and carbon pollution. Much of the energy that the region needs could be generated in this wider area, whether we are talking about wind, hydro-electricity (and pumped storage), geothermal or (limited) biomass. Connecting with potential sources of tidal power on the coast implies the obvious – an eco-region has flexible boundaries. But we also need to consider positive policies to capture carbon dioxide, and prevent its emission, from the upland areas, via forestation, and from wetland areas.

And what about food? In a world of increased turbulence, climate change and energy crunches and emissions reduction, we need to look at more local food production, and a considerable amount could be sourced within this wider regional footprint. 

Whilst devolution of powers to the region could be a platform for an integrated approach to developing a more resilient regional economy and developing food and energy security and sovereignty, its clear from the content of the deal as well as the delimitation of the area that this is not the priority.

As it stands, the model is disappointingly urban-fixated. As Neil Ward has noted, the city-region concept is a political concept rather than a reality on the ground, concerned with shoring up the settlement patterns of a epoch that is passing.

What priorities?

The dominating concern of both Chancellor of the Exchequer George Osborne and of Manchester’s leaders is economic growth. What we might call city-region boosterism draws on the work of the Manchester Independent Economic Review which was about “agglomeration”, the idea that bigger groupings act as attractors of investment and platforms for economic development (hence the welcome improvements to train connections with Leeds – foolishly called HS3). This all gets reduced to the short-hand of economic growth, notwithstanding the well-understood problems with the concept. The first problem is that such growth destroys the planet and far from enabling us to take mitigating action, it makes it ever more difficult to do so. Instead as we, and others, keep arguing, we need a different model, one that emphasises the local creation of wealth, the conservation of resources and fair distribution, together with measures that reflect these things and not the abstract, opaquely calculated figure of GDP and its growth, which as University of Manchester professor of economics Diane Coyle explains, should be dumped.

So it looks very likely that DevoManc will give us the wrong kind of priorities, those that continue the unviable economy we already have.

Trickle-down and redistribution.

Secondly, the prosperity generated by economic growth does not reach all the population, reinforcing the great inequalities we already see. As Manchester Evening News political columnist, Jennifer Williams, put it:

Years of under-investment in the north is not going to to be fixed overnight. And what investment there has already been has not trickled down. Council figures show those working in the city of Manchester earn 20pc more than those who actually live there.

In other words, the gleaming new towers of the last two decades are still out of reach for ordinary Mancunians.

It is interesting to look at the theory that seems to underpin the DevoManc model (and that of the current city leadership). It goes something like this:

Improve the skills of the people of Manchester, so that they can compete for contracts and investment with other parts of the UK, Europe and the World. That will mean investment in shiny projects in the city and the wealth will spread to everyone.

But that thinking is flawed. Imagine there is a crowd of people watching a sporting event from the edge of the field. The ones at the back can’t see. Nor can many of the ones in the second and third rows. So some of the people at the back get boxes to stand on. But then so does everyone else, except those in the front row, who already have, in their way got boxes already. So the ones at the back, unless they can get bigger boxes, still have the same problem. Meanwhile, the trees surrounding the sports field have been chopped down to make the boxes. And in the case of the global economy, the obvious answer – bigger boxes for the ones at the back, is unlikely to be agreed: the opposite in fact: bigger boxes for those who can already afford the best positions, so to speak.

The theory of agglomeration; attracting skilled workers, the ‘creative class’ and creating the conditions for investment through focusing on infrastructure and promotion of the city as an attractive location, is the expression in regional economic development of failed neoliberal economics. It minimises public intervention in the operations of the market and economy and suggests that only supply side interventions are permissible. They would, the theory goes, make the labour market work better and focus on infrastructure. Investment, employment and growth will all be taken care of by operations of the private market. It falls down not only because of the futility of competition between cities competing for mobile global capital but even when there is moderate success in this endeavour. Jobs, revenue and reductions in inequality do not materialize, as tax breaks to attract investment or easy tax avoidance starves public revenue and hyper mobile skilled workers thwart local job creation in the prized sectors that, after all, represent a fraction of employment compared to the majority, low productivity but fundamentally essential foundational economy which should be the backbone of local prosperity.

A programme for regional devolution should aim to bring about a more viable regional economy, a more equal and sustainable economy, where there is universal access to high quality foundational goods like efficient affordable housing, food without an ecological deficit and adequate care and support for the more vulnerable. Incomes for workers who provide these goods should provide a liveable income standard. It should aim to seal off the leaks from both the glamorous and the foundational economic sectors which make the city a site for value extraction and skewed wealth concentration.

Measures to bring about this change through more regional economic powers and collaboration would include examples from progressive local government in the UK and across the world which constitute active interventions in key sectors of the economy, acknowledging that its not sufficient to leave the creation of prosperity to foreign investment. For example, the public ownership of utilities, like the energy grid in Hamburg, could be a vehicle to support a fair and de-carbonised, distributed energy system. The creation of a public bank, similar to Cambridge and Counties for recycling idle funds into the regional real economy could mirror Germany’s municipal banks.

Actively building fair supply chains which keep value circulating fairly and locally by incubating co-operatives to provide services to the regions Anchor institutions, Universities, Hospitals including the Local Government itself in areas like adult social care, as demonstrated by the Evergreen Co-operatives in Cleveland.

So DevManc is looking like a missed opportunity. A missed opportunity to rebuild democratic legitimacy, and a missed opportunity to create a new kind of region, with an economy that works for all, while not destroying the planet.

What is to be done?

There is a campaign which you might like to support for a referendum on the deal. This is what the petition calls for:

We call for the "Greater Manchester Agreement: devolution to the
GMCA & Transition to a directly elected Mayor" and any other
such future plans for 'devolution' affecting the people of the area,
following a sufficient period of public debate, and scrutiny of the
Agreement, to be put to a Greater Manchester wide REFERENDUM, BEFORE
it, or any other future devolution proposal, is implemented.

Beyond this, and it is sadly not clear whether that campaign will capture a popular mood, it is important that we all keep making the arguments for a devolution that is democratic and focuses energies on making a meaningfully defined region capable of delivering real prosperity and resilience to its people while stewarding the earth systems we all depend on.

Postscript 24/2/15.  It’s worth a look at this blog post by Iain Deas of Univ of Manchester. Certainly more enlightening than the puff pieces in Guardian and Saturday’s (21 Feb) Financial Times.  HERE.
11/3/15.  Colin Talbot, Professor of Government at UofM has a piece HERE in which he suggests that the two biggest errors are the imposition of the mayor and the failure to hold a referendum.

You can also read Mark’s piece on the devolution of health budgets HERE

Mark H Burton and Benjamin Irvine

Steady State Manchester collective.