Economics Where People Matter

As I have stated in previous articles I struggled at school, so much of what I studied I found hard to relate to the real world. It was not that I didn’t see subjects like Mathematics and Chemistry as important. I did; it is just that I had a mental block and the use of formulae and abstract concepts filled me with dread. It was Geography, in particular Economic Geography and Economics that opened up a whole new world – subjects that focused on the real world and its current problems.

They introduced me to politics and sociology, subjects that not only give you a picture of the current, the past and potentially the future but, what is more, give you the tools to question the way society is structured organised and financed. Others would say that subjects like philosophy, history and literature would also shed light on many of these issues, something I would not disagree with. What I would say, however, is each to their own and one person’s spark is another person’s damp squib.

What, you may ask, has this to do with the current topic of discussion ‘poverty’? When I started studying economics I began to see what a wealthy country the United Kingdom is and that sadly much of that wealth was built on the back of the poverty of others. The sociologist A.G Frank talked about this in his analysis of the development of the western industrialised countries, seeing them as being dependent on the underdevelopment of so-called developing countries. Although this may be seen as an oversimplification of global issues it does begin to focus our attention on wealth and poverty being two sides of the same coin.

If we begin to look closer to home we can see that historically the U.K. has been one of the wealthiest countries in the world for many years, and yet alongside huge wealth has always been horrendous poverty. Seebohm Rowntree’s studies of poverty in York published in 1901 caused real shock because they showed the extent of poverty and were the spark that changed people’s view, providing the foundation stone for the setting up of welfare state later in the twentieth century. The nineteenth century view of government was very much one of ‘light touch’ in which the economy was left ‘to get on with it’.

Again, if we look at history, we can see that the beginning of the second half of the twentieth century heralded a degree of optimism that we could begin to eliminate world poverty. The 1960s was period in the west when many thought we could change the world, albeit other non-industrialised countries would have seen it differently, with grinding poverty for many and huge inequalities between and within countries. The 1970s, however, signalled an economic crisis and a changing political perspective in the U.K. about the role of the state and welfare provision. The current debates in the U.K. about the repositioning of the economy have, in my opinion, to be located in the 1970s – changes that were started in the 1980s during the years of Conservative government were continued through the years of New Labour, albeit with a ‘community twist’.

Some may argue that there are always going to be people living in poverty, because as a country gets wealthier there will always be those that are relatively poor in comparison to the rest of the population. There are a number of things, however, that trouble me with this argument. First, the numbers in poverty have remained stubbornly large; second, the inequalities in the country have increased; third, social mobility in the United Kingdom is not significant; and fourth, the public sector cuts that are now occurring are going to impact most severely on our most disadvantaged communities because it is these communities who are most dependent on the public sector for work.

The coalition government has placed a significant emphasis on trying to restructure the U.K. economy away from the public sector and also away from what is perceived as being an over-reliance on the financial sector. In this analysis there is a focus on the private sector as being the one to step into the gap, revitalise the economy and develop the jobs for those who will be forced to leave the public sector. History sadly would suggest that this readjustment is not likely to happen quickly and the consequences for some will be huge.

The coalition argues that they need to reduce the public sector deficit and at same time free people up to take responsibility with a focus on empowering communities. The emphasis on localism and the Big Society is part of this narrative. Although there may be some merit in what is being proposed there will remain many people who are not equipped for the new age because they do not have the right skills or they may be unskilled and have significant problems that may need to be addressed before they are even ready to apply for work. Within this mix are young people who are swelling the numbers of unemployed at an alarming rate. In this context people lose hope and feel excluded, because poverty is not just about a lack of wealth and income but a lack of hope and a future.

In our work at the University some of us are critiquing these issues. In addition we are working with communities using an approach that starts from a point of strength, adopting an asset-based community development approach that focuses on the assets and skills within a community using the information gathered to see what is needed for that neighbourhood. It focuses on people’s knowledge and lived experience rather than starting from a point of deficit and problems, developing creative approaches and solutions to social problems. Within this approach social enterprises are being developed, organisations whose focus are on social issues.

Studying for my A levels at a college of further education in Middlesbrough I started reading more widely and was introduced to one of the most readable and influential books, a seminal text called Small Is Beautiful by an economist called Fritz Schumacher. It was a critique of the current economic thinking at that time. People remember the first part of the title but forget the rest which is Economics As If People Mattered. The focus is on small operations and connecting technology to the needs of people.

For what it is worth, my view is that policy makers could learn a great deal from revisiting this book because it moves away from an obsession with size and short-termism to focusing on the real needs of people – economics with a human face.

I am not a twenty-first century Luddite and I am not advocating destruction of new technologies, but want a real focus on sustainability that connects people and communities, allowing them to develop their skills, expertise and quality of their environments. Some may argue this is ‘tree-hugging’ nonsense but, unless we do something that engages people, we are going to be left with estates that are populated with people with no hope – separate and excluded communities.

In policy terms we need to have a government (both local and central) which has a vision to put in place structures that facilitates development. This is not a nineteenth century call for a free-for-all, because in this approach all sectors have a crucial role to play. Within this analysis government plays a crucial role in development. What we can see from the successful city regions in Europe is that it is those areas where all sectors of the economy work together which truly empower communities, with local government playing a crucial role by showing political vision and the strength to implement the vision.

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