Despite a strong global economy at the start of 2020, the Edelman Trust Barometer showed a distinct lack of trust in UK government, business and NGOs, calling for more ethical behaviour by societal institutions. But with almost 70 percent of UK public agreeing that “democracy is losing its effectiveness as a form of government”, how can we meaningfully redress the outflow and upflow of wealth in favour of local people and places?
Community Wealth Building is a model of local economic development that tackles head-on the challenges of rising inequality and creates a more robust and resilient economy for the long-term, creating societal value. The aim is to create distributive flows of wealth, with public and private spending, land and property, finance and employment practices all contributing to a generative and distributive economy, in which investment flows back into this place and benefits our people and communities.
This is a complex problem, to which the solution is multifaceted. In recent months, the Local Government Association and CLES have set out a number of policy asks/enablers related to Localism and Community Wealth Building, including providing fiscal, policy framework and direct support to a locally-led green recovery, reform to land compensation legislation, devolution of powers to shape local labour markets and linking industrial strategy to building the generative economy. MP Danny Kruger’s case for a new social covenant highlights the need to address the gap between market and state, which has been neglected for so long – community power.
Here, three measures are proposed by which to implement some (not all) of the change required – to harness the community spirit lauded during lockdown, using public policy to empower communities to regain control of social, economic and environment justice:
1) Commons and Cooperatives
Traditional understanding of Commons conjures a picture of sheep grazing on a village green, but Commons can mean so much more. Commons have three elements:
1. A resource, such as land, water, minerals, air, other environmental/natural resources and even knowledge and data;
2. A community who have shared and equal rights to this resource, and organise themselves to manage it;
3. Rules developed by that community to sustain it and allocate the benefits. In recent history, Commons have not been protected and so resources been exploited for profit, known as “enclosure”, which has contributed to inequality.
A good example of this is the prevalence of extractive business models that generate profit from land ownership (i.e. rent) or rare resources (e.g. mining) for private investors. To think about Commons, rather than simply resources, is to re-frame our perspective away from short term private gain and sale-for-profit, towards sustainable stewardship, investment in long term protection of living ecosystems and mutual prosperity and wellbeing. This way of thinking prompts the formation of distributive business models, such as cooperatives, in which people to work together for the sustainability of the enterprise and collectively decide how any income should be used.
New legislative bases, such as Community Land Contribution (a form of land value tax), would help to ensure that where Commons cannot be created, communities are at least recompensed for the use and extraction of their resources.
Where Commons cannot protect from extraction, taxation should be proportionate to the detriment caused by any economic of physical development. This taxation would be retained by communities ensuring that it is reinvested to the benefit of the affected people and places. Carbon Tax is an obvious example, but could this model be extended to account for biodiversity, enhancement or degradation of ecosystems, impact on heritage or visual landscapes, or any other criteria valued by communities but often not addressed sufficiently (or too easily subverted) in existing Policy frameworks?
If viewed through this lens, perhaps Kate Raworth’s Doughnut Economics model provides a framework for monetising and evaluating the costs of failing to meet societal needs, failing to operate within planetary boundaries, or both?
The purpose of this supertaxation would be to cut off or substantially limit the accumulation of wealth by the already very rich.
At a national level, extractive business models, such as those which exploit lax data laws to manipulate spending or voting behaviours or those which use resources beyond the ability of planetary systems to replenish them (i.e. unsustainably), would be subject to significantly higher taxation. Ideally, the level would be prohibitive, such that companies would be forced to adopt more social and sustainable practices or cease to operate here. Supertaxation of geographically disparate organisations too would help to promote the perspective of business as part of the community, for example by incentivising capital expenditure on local (rather than remote) premises, and the employment of local people.
There could be an argument that the resulting economic decline following a retraction of economic activity by BigTech would outweigh any benefits gained? I am sure that the argument of Extinction Rebellion in return would be that we and our planet cannot afford not to take that risk.
These suggested measures are not an overhaul of existing fiscal structures and economic policy, but rather a bold repurposing of the familiar, established tools at our disposal to recirculate wealth back into communities and local economies, into social and physical infrastructure, in order to build resilience before future crises strike. So far as public policy change goes, these are high-yield “quick wins”.
All of this would be better enabled by the devolution of democratic powers to a regional level, and by the revitalisation of local democracy. The pandemic has shown the potential and value of the empowered citizen in delivering more economic activity. We must endeavour to hear the voice of citizens and to support and empower our communities to shape their own places for the future.