Toward the Well-being Economy
There is a growing debate about the economic, social, environmental and cultural desirability of growth. Interest in this subject is certainly not new, J. S. Mill, for example, in his Principles of Political Economy, raised the prospect of the ‘steady state’ in 1848. Rapidly growing socio-economic inequalities have however, imbued the issue of who benefits from growth with stark contemporary relevance.
Added to these considerations is the increasing urgency of the need to prevent further global environmental degradation, which has been exacerbated by the growth oriented nature of economic policy. It is to this debate that my and Terry Marsden’s recently published Discussion Paper Rethinking Growth: Toward the Well-being Economy sought to contribute. Undertaking a general review of Wales as a case study, it considers alternative non-growth oriented approaches to measuring success, as well as the likely policy impact of recent Welsh well-being legislation, which places a sustainable development duty on all devolved public bodies. Although in our paper we refute extractive growth, we suggest that a model of socially and ecologically positive and sustainable growth might be developed on a place-based model.
Neo-liberalism has failed to deliver its much promised ‘trickle down’ effect. In their 2016 report An Economy for the 1%, Oxfam highlighted that globally 1% of people now have as much wealth as the other 99%. Kevin Gulliver in his 2017 Human City Manifesto has identified the scale by which this inequality has grown over the last 20 years: in 1997, the wealth of the richest 1% in the UK was 18 times that of the bottom 90%, by 2017 it was 60 times greater. Despite these trends and the consequential inequality, it continues to be asserted that growth will benefit poorer communities as well as the wealthy. Within the current growth orientated economic policy agenda, the narrative is heavily influenced by a concern with the need for places to compete. Alongside this emphasis on place competition, has been the growing influence within the growth orientated paradigm of what has been termed ‘New Economic Geography’, which is essentially concerned with the spatial agglomeration of industries to secure the conditions necessary for growth. Those who advocate place competition nevertheless continue to call for significant public sector infrastructural investment and often, direct financial inducements, to create the conditions for competitive success.
London is often highlighted as an economic success story, but this success is clearly underpinned by significant public sector expenditure. Those who call for a reduction of public expenditure in ‘failing places’ often fail to question whether the ‘success’ of places like London can be attributed, at least in part, to significantly higher public sector expenditure over a prolonged period. A model of publicly funded Neoliberalism appears to have been developed. The differences are that in ‘failing’ places public sector expenditure is usually referred to as regeneration funding or regional aid, whereas, in areas of ‘opportunity’ it is referred to as ‘investment’. The place-competitive nature of current economic policy has led to circumstances where Neoliberalism is publicly subsidised. Scarce public resources are expended on the things that are either demanded by, or which are believed to secure, large-scale ‘investment’ of international capital. This often has little relation to the things that are necessary for local well-being, where public resources are required to deal with the most extreme implications of socio-economic inequality.
A more distributed model of the economy is clearly desirable for spatial equity, but well-being, rather than growth, should be the objective and key metric to measure success. Simply moving the location of desired growth may not be enough to achieve social and economic equality, and is unlikely to secure environmental sustainability. In Wales, the Well-being of Future Generations Act (2015) places a legal duty on all devolved public bodies in everything they do to safeguard and improve the economic, social, environmental and cultural well-being of Wales. The Act therefore raises a series of issues relating to Wales’ economic policy direction, and requires devolved public bodies to adopt a place-based approach, which assumes that every place has different set of challenges and opportunities. In our Deep Place Studies Dave Adamson and I have attempted to demonstrate how place-based approaches to well-being might be developed.
Classical economic theories tend to have a systematic expression of growth, but an ignorance of social and ecological problems associated with it. These perspectives continue to dominate policy discussions, and economists and policy makers tend to assume that the purpose of economic policy is to secure growth. They rarely ask, ‘what is the economy for?’. Asking this question permits a broader consideration of what economic priorities should be, since clearly the economy is not just for an extractive form of growth. Only a more open and democratic policy arena, where there is greater scope to consider the fundamentals of economic policy-making, is likely to permit such a dialogue. Growth should not necessarily be dismissed if a sustainable model can be developed, which can spatially redistribute rather than extract to achieve ecological and social well-being. Local growth, which does not add to the burden of overall unsustainable national or international economic activity, could contribute to spatially rebalanced well-being. Well-being itself however, should be determined at a place-based level using a sustainable development principle, and with the full involvement of communities.
Rethinking Growth: Toward the Well-being Economy is a discussion paper co-authored by Mark Lang with Professor Terry Marsden, Director of the Sustainable Places Research Institute, Cardiff University. You can download the paper by clicking here.
Originally an article for New Start, September 2017.