Building a more decentralised economy

‘Capitalism has become more and more centralised… and as power becomes centralised, ordinary individuals feel as if they have less and less influence over critical decisions… and that when decisions are made, they are not responsive to local situations and local needs’

The man who said this was Professor Gary Hamel, described by the Wall Street Journal as ‘the world’s most influential business thinker’. He succinctly describes a phenomenon also raised by all sorts of people from regeneration practitioners, community groups, the Occupy movement and economists; one which is at the root of social and economic exclusion and inequality across the world, and certainly here in the UK.

Addressing these problems, Birmingham based think tank Localise West Midlands has recently won funding from the Barrow Cadbury Trust – an independent, charitable foundation, committed to supporting vulnerable and marginalised people in society – to research how to build a more decentralised economy in which more people have more of a stake, increasing social inclusion, economic diversity and income equality.

Research into such economic solutions often deals with the development of micro-projects, treating community economic development as marginal to the mainstream; and often good practice exists only because ‘wilful individuals’ make it happen, isolated from local and national policy and from economic development practice.

Instead Localise West Midlands will be exploring how community economic development and stronger local economies can be much more integrated into the macro and mainstream economy: what are the conditions needed for local economies to be built around SMEs, social enterprises and community groups with support from public sector and larger private companies; and what is needed to ensure that this can become the ‘usual’ approach of economic policy at local, sub-national and national levels so that the greater redistribution and diversity impacts of localisation approaches can be maximised?

Case studies from within Birmingham and the Black Country will help identify the barriers to localisation approaches. Some, such as Birmingham wholesale markets, are ‘accidental’ good practice, where the markets and their customers are a diverse range of suppliers, middlemen and buyers making up an informal network that is essential to the more accessible, affordable and diverse parts of Birmingham’s food supply.

Others such as regeneration in Atwood Green and Castle Vale were planned to grow the local economy through developing local supply chains, businesses and skills, and to involve local people. Meanwhile Sandwell is well known for its good practice in local food strategy, both in local procurement and in food sector economic development with multiple objectives around health, environmental and economic wellbeing.

American evidence shows that while all growth in private sector jobs has come from expansion of local companies, the emphasis in most local economic development policies has been to attract large ‘footloose’ companies who at best have just transferred jobs from one area to another.

Better approaches include the development of networks of home-grown companies and only seeking to attract those highly-mobile companies that would genuinely attract new jobs. This combined with a skills agenda that meets local needs, community identification of economic opportunities, analysing and developing local demand, supporting business development so as to create dynamic local supply chains, and harnessing public and corporate procurement for local returns, would create a stronger local economy based on the strengths of the region.

Localise West Midlands has been developing localisation approaches through its consultancy activity for the last ten years, including being one of the two organisations behind the award-winning Birmingham Energy Savers project. The current research project will run from this month to January 2013 and will also feed into Birmingham’s Social Inclusion Process, which will engage with people across Birmingham to explore how issues of exclusion and poverty can be addressed more effectively.