Category Archives: Knowledge Ecology And Economy
These photographs taken in 2010 on 20 June and then on Midsummer Day, 21 June, reflect our times as city regions like Liverpool’s move into the new millennium. We have here derelict industrial plant in the Cheshire plain, a vast refinery in Runcorn, and finally a painter absorbed in his art whilst others hustle and bustle between the Albert Dock and the new retail centre of Liverpool.
Summary: The Big Society so far is no fun at all. I seem to be spending my time (voluntarily) offering www-style tea and sympathy all round. Almost daily emails arrive from hard-working and committed contacts, saying that their job is coming to an end and they have no clear idea what will happen next. Grim policies mean unemployment stats will get worse still, but much more is being lost than is measured. There’s no provision to retain core knowledge or maintain legacy.
What will be the fundamental ‘currencies’ of the future? What, if we are serious about global sustainability in all its forms, should these currencies comprise now? It’s likely, if we collectively are ever going to achieve a level of long-term viability for the human race, that we will have to shift the emphasis from money (or the gold standard) to the really basic requirements for life on earth – carbon, water and nitrogen, plus knowledge of all sorts to keep the whole show on the road.
The Economist magazine has had an online debate on the proposition that ‘We’re all Keynesians now’. The outcome was not encouraging. By two-to-one that proposition was rejected in favour of a free-market position. Perhaps some economists have yet to learn that the current day physical realities of the context itself keep shifting, and that the science of human behaviour is in the end an art, with outcomes that depend on how we handle the interaction between fact and feeling.
In 1936 the British economist John Maynard Keynes (1883 – 1946) pointed out that in a downturn the economy is operating below its potential, so expanding demand can create supply, which will in turn give people jobs and more prosperity, thus creating (to quote the view in 2009 of the US economist James Furman) an economic ‘virtuous circle’.
That, says Furman (along with many others) is ‘the paradox of economics in a downturn. Normally, the only way to grow the economy is the old-fashioned way: delaying gratification through reduced deficits and increased savings to encourage more investment. But in a downturn, these steps would just compound the problem and worsen the vicious circle of rising unemployment, underutilized capacity and falling consumption.’
We can argue the toss about how much economic ‘growth’ we should pursue in a world which already uses far, far more than it should of environmental resources, but intentionally causing devastating poverty by restricting government and other large-scale spending – the preference of the free-marketeers and monetarists – won’t help.
Socio-economic expectations and sustainability
Sustainable futures depend not only on what will in theory happen next, but what’s happening now.
There is a cost attached to severe recession: the people whom it hurts on a daily living basis get very upset. And upset people become disenfrachised and disaffected – which is in no-one’s interest.
Those of us engaged in regeneration and renewal know only too well, despite the apparent logic of the free market position, that this cannot be the way forward.
The Economist debate
The Economist debate on the theme that ‘We’re all Keynesians now’ is therefore timely; but disappointingly it transpired to be very largely a discussion – or so it seemed – between a cohort of people who work in the financial sector, mostly in the USA…. and who also therefore have huge influence on the lives of us all.
Doing his best for the Keynesians we had Prof. Brad DeLong, professor of economics at the University of California at Berkeley, a research associate of the National Bureau of Economic Research, and in the Clinton administration a deputy assistant secretary of the U.S. Treasury.
Those opposing the Keynesian position were led by Prof. Luigi Zingales of the University of Chicago Booth School of Business, co-author of Saving Capitalism from the Capitalists, acclaimed as “one of the most powerful defenses of the free market ever written”, and co-creator of the Financial Trust Index, an indicator of the level of trust Americans have in financial markets. Prof. Zingales’ position was to defend the idea of the Free Market.
Money or men and women?
There was little discussion in the Economist debate of people as people, and almost none about the extraordinarily complex issues we now face in our global physical environment.
Money and Monetarism or at least the Free Market (themes favoured by the Chicago School of economics) were the positions which, from my reading of the proceedings, ruled the day.
But when we start to disaggregate socio-economic outcomes and impacts in respect of the diverse downturn experiences of different people (gender, age, physical state, cultural background and other factors) it is very hard – in both the intellectual and the affective sense – not to go for Keynesianism.
Haves and Have Nots
Other, more austere, approaches may seem attractive in the long-run to people who won’t in the interim really go without; but surely even they recognise that the legacy of a deeply disenfranchised social hinterland – under-educated and sick children, depressed and impoverished families without focus, and all the rest – will not be an advantage in times to come?
We have to keep people in work as far as possible (preferably eco- and socially sustainable schemes), or we risk more than we may gain. It’s how the Keynesian approach is handled that really matters.
Sustainability is no longer a given
Yet most commentators continued to debate as though everything ‘except’ the economy will stay the same. It won’t; and the versatility of neo-Keynesianism surely helps us here more than the strictures of the Chicago School .
Gas /oil, carbon, water… one or more of these will become the major financial ‘currency/ies’ of the future; and my guess is that the new gold-standard currency will soon be simply knowledge.
If economics can’t take account of these factors in meaningful, rather than soul-less, ways, we’re in for a rougher ride even than needs be already.
Keynes was creative
Nor did I see much about John Maynard Keynes the person in this debate.
Wasn’t Keynes a man with a wide range of interests, a member of the Bloomsbury Group (that intellectual and progressive force in the London of the 1930s), married to the ‘Bloomsbury Ballerina‘ Lydia Lopokova, a talented Russian ballet dancer?
Wouldn’t Keynes have been worried to read about the sterile dehumanised theoretical models which continue to be proposed by the Monetarists and Free Marketeers? What if anything, he might have asked, has been learnt in the past eighty years?
Imagination in the face of multiple challenges
Only Keynesian-style approaches accommodate the changing realities of life across the globe for millions upon millions of different people (men and women in many diverse cultures, all cruelly hit by the credit crunch) who simply can’t live without jobs of some sort, because they have no resource other than their daily labour.
Surely Keynes would have urged us to use imagination as well as mathematical models, to try to resolve the dilemmas we now face.
How can we cope, all at the same time, with economic crises, climate change, famine and much else, unless we seek the application of intentionally humane and decent economic frameworks?
Decision-makers and destinies
It’s worrying that so few of the Economist’s debaters looked outside their models to the contexts in which we actually live. They are after all also generally the people in the private sector (and in right wing governments) who decide what to do with ‘their’ economies.
The Free Market folk undoubtedly believe they have incorporated human motivation and behaviours into their models. The problem seems to be that – the behaviour perhaps of economists themselves apart? – rationality has little to do with behaviour in reality; and in any case the language of the Chicago School does belies an understanding of the human condition for ‘ordinary’ people.
Perhaps – could it have been said before? – such people simply don’t count in the face of the Free Market?
Humanity and economics are inseparable
Recent experience in developing sustainable communities has seen those in regeneration forced to understand it’s not just logic which influences how people behave; we ignore their humanity and need for stakeholding and inclusion at our peril.
The same applies in the face of terrifying outcomes if we get the economics wrong. A lot more insight into the day to day realities of the human condition is required.
Read more articles about Economics Observed.
John Willman is UK Business Editor of the Financial Times, so his take on the UK economy was an important contribution to the NWDA 2008 Annual Conference in Liverpool. His message, whilst analytically cautious in the present market chaos, came over as generally upbeat. Would that Tim Leunig, the academic who advised the economic emphasis should Go South, had seen things in the same light. Better surely for the North and the South of England, if we face the UK’s regional (and centralist) challenges, than if we run away?
The headline message from John Willman‘s talk came over to me as: Tim Leunig is mistaken. And the UK economy is fundamentally strong.
Leunig’s recent staggering judgement (in the report Cities Unlimited, by the free market leaning independent think tank Policy Exchange) that in general developers should abandon the North of England for the delights of the Golden Triangle – he suggests more development around Oxbridge, which will supposedly realign the North-South markets – in my view takes some beating for silliness. John Willman appeared to be of a similar mind.
The great Victorian cities
Far from suggesting, as Leunig seems to, that Greater London should become even more overheated, Willman made the case that the ‘great Victorian cities’ are the best equipped for the new ‘global living’. There is, he said, a Kit: some combination of conference centres, art galleries, a four-star hotel, some culture and festivals, and maybe a port.
In these respects the major English cities of the North (of the Core Cities, only Bristol is South) have the edge on continental European cities such as Bordeaux and Porto. They’re also great and fascinating cities (as I too can attest), but they’re probably 15 years behind their parallels in Britain: Their docksides have yet to be developed for the new leisure economies, for instance.
North-South divide: London ‘vs’ the rest
The debate about the North-South divide, Willman told us, is sterile. It’s useless to ‘blame’ London. The UK capital is a truly global city; in this, the North can never expect or even hope to compete. It’s just not a realistic objective to close the gap.
And London, with the mayoral model which elected mayor Ken Livingstone provided, showed how a ‘get things done’ city can operate.
The national and global economy
Despite the panic, only 3% of UK mortgages are in default. Willman judged that Britain is still doing pretty well as the sixth largest manufacturer in the world, a supplier of very high quality products.
In these respects the UK economy is well placed for the globalised world; as is North West England, with its emphasis on the service economies, life sciences, media and creative products and the current / forthcoming energy industries (including nuclear energy) .
The Wimbledon effect
The UK is an open economy, which in some senses punches above its weight. Britain demonstrates the ‘Wimbledon effect‘: we don’t necessarily take the headlines, but we do host the event.
In fact, the consultants Saffron Brand recently reported that perhaps the UK sells its story ‘too well’ – some of our cities are actually more highly rated than cold analysis suggests they might be.
A strong basic economy
Willman’s overall judgement at the NWDA 2008 Annual Conference was that UK economy is ‘so much stronger than 30 years ago’.
Perhaps some of us continue to see the elephant in the room – climate change and environmental sustainability – as an critically important challenge, still to be adequately (and very urgently) addressed.
Whatever… Would that Tim Leunig and others like him were as willing as Willman, on the basis of the evidence over many decades, to recognise that people everywhere have to believe in themselves to make their economies work effectively at all.
Read more about Regions, Sub-Regions & City Regions
and about Economics Observed.
Are the Natural and Physical Sciences squaring up for inter-disciplinary combat? Each requires huge sums of money to maintain research momentum, but who decides what research offers best value? How can we measure Particle Physics ‘against’ say, environmental technologies? With their vast ‘pure research’ budgets to secure, perhaps the Physicists will now also discover that evaluating research investment regenerational impacts supports their case.
The rumblings of dissent between the physical and natural scientists are getting louder. There is a view abroad that investment in areas like Particle and Theoretical Physics is too expensive, when we need urgently to develop sustainable, ‘One Planet Living‘ technologies.
Applied or fundamental research?
Today’s Guardian newspaper (6 September ’08) has an article about the Large Hadron Collider (LHC) – a facility (apparatus or laboratory) in Geneva which will cost £5bn over the next 20 years – which adds substance to these rumblings. Prof. Sir David King, previously the UK Government’s Chief Scientific Adviser, argues that ‘big’ money for scientific research is best spent encouraging top scientists to address climate change and related environmental issues; Britain has so far contributed about £500m to the LHC.
The Physicists however argue that thus far we know about only 5% of what constitutes the universe; we cannot stop exploration of the fundamental nature of matter.
Both perspectives are valid. But which will hold sway?
The environmental research argument is compelling to people who know little about science, as well as many (often including natural scientists who feel short of funding) who do. The fundamental, ‘science for the sake of knowledge’ position is also persuasive, but perhaps only really to those who already perceive the deep intellectual challenges of exploring the nature of matter.
It was probably alright to leave science decisions to the scientists a century ago, when the Haldane Principle decreed that political involvement in research decisions was unacceptable. But things have changed, and science is now infinitely more expensive than it was then.
How, on behalf of UK plc, should the Government allocate its cash? Decisions on specific scientific programmes are still made by the Research Councils; but overall allocations are decided by the politicians.
The socio-economic case
Some while ago, practitioners in the Arts and Culture began to espouse the ‘socially useful’ position: what they do should be supported because it helps community development and regeneration generically, and makes jobs.
My expectation is that, finally, the physical scientists may catch on to the same notion.
Currently, there is little of any discussion about how investment in Big Science – the large research facility programmes – impacts on the locations in which it is placed. In the future this may change.
Jobs and infrastructure
Some 10,000 scientists are employed by (and were attracted to work in) the LHC; and that’s before we get to the armies of scribes and other support staff required for such a programme. This, inevitably, must have a huge impact on the various economies in which LHC is embedded.
Scientists until now have held the idea that ‘value-added‘ – the additional socio-economic regenerational (as opposed to simply business) impact of research investment, over and above its scientific value as such – is irrelevant to their decisions about which proposals to support. Research funds may be from the public purse, but regenerational impact, we are told, is irrelevant to decisions about where programmes are located.
This high-minded dismissal of non-science-related socio-economic impact, I predict, is about to come to an end. Many technologists and natural scientists, like their more arty colleagues, now make compelling cases for how useful their work will be to society, within quite short time spans.
This is the only way practitioners in the more abstract and fundamental physical sciences can go, in terms of short-term impact. They will have to begin, however reluctantly, to acknowledge the legitimacy of questions about the ways their huge budgets can, alongside unravelling the mysteries of the universe, provide improvements to local economies, infrastructures and regional regenerational prospects.
You read it here first.
Science, Regeneration & Sustainability
From Regeneration To Sustainability: A Northern Take On Knowledge