development

Urban Futures Podcast – Tackling City Decline with Andy Pike

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In this second edition of the Urban Futures podcast we talk to Andy Pike, Professor of Local and Regional Development and Director of the Centre for Urban and Regional Development studies, at Newcastle University about recent work he and his colleagues have carried out into city decline in the UK.

You can download the podcast on soundcloud and itunes.

The Declining Cities report, analyses city decline in the UK and reviews international experience for learning. The research seeks to address a gap in urban research agendas that have tended to focus on successful, thriving cities rather than the situation of and policies needed in cities coping with relative decline. The report develops an index of city decline and a typology of relatively declining cities which is used to measure the scale and nature of city decline in the UK. It also includes a review of UK and international literature on policy responses to city decline as well as an assessment of the implications of the evidence for declining UK cities.

Urban Futures Podcast – the Grounded City with Karel Williams

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We are delighted to launch CURA’s “Urban Futures” podcast series with this edition on the “Grounded Citymanhattan-67474_960_720” with Karel Williams, Professor of Accounting and Political Economy at the University of Manchester.

If you use iTunes click here to listen and download the podcast, otherwise you can use soundcloud – and remember to leave a rating / comments!

Some more information below.

In his and his colleagues work on the “Grounded City” Karel argues that the dominance of theories of urban agglomeration in urban policy making reflect a belated recognition of “the urban” by neo-liberal economists. However, Karel and his colleagues argue that there are fundamental deficiencies in the agglomeration approach which rise from the imperialism, and hubris, of classical economics in social science. The “Grounded City” offers an alternative policy imaginary which is interdisciplinary in nature but draws principally on the urban historiography of Fernand Braudel and other scholars such as Charles Tilly – literatures which agglomeration theories simply fail to recognise.

 

Baltimore: Governing Two Cities in ‘Crisis’

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GIF RGB 150 Pixels with BorderMadeleine Pill reports on findings from a second round of research in Baltimore  carried out as part of the collaborative governance under austerity project, sponsored by the Economic and Social Research Council as part of its Urban Transformations Network, and led by Prof. Jonathan Davies.

Baltimore exemplifies the US conception of ‘urban crisis’ – our focus on the crises of welfarism resonated with elites and citizen activists engaged in or seeking to change the city’s governance.  They cited the challenges the city faces in terms of its ‘fiscal squeeze’, compounded by population decline, poverty concentration and the resultant struggle to provide even basic services, aggravated by very high levels of public safety / police spending shrinking funding for other priorities such as education and job training.  But an underpinning narrative about Baltimore’s racial division and the resultant trauma was also clear – heightened by the ‘uprising’ in the city in April 2015.  This had disrupted the city’s governance, interrupting ‘business as usual’ – but did it herald change?   Looking at the spatial and institutional manifestations of the city’s divisions shows that whilst its governance has seen a degree of adjustment in style and tone, the goals and fixes largely remain the same.

Baltimore’s Spatial Governance

Evoking ‘a tale of two cities’ when talking about Baltimore is a cliché with good reason – it helps navigate the deep divisions so fundamental to understanding the city’s governance.  Lawrence Brown’s two Baltimores – the White L and the Black Butterfly – capture their most stark spatial expression.  Initial research found that the uprising after the death of a young black man following injuries sustained in police custody was perceived as a pivotal moment in seeking to overcome the city’s divisions.  The emphasis on social justice since the uprising was widely regarded as having increased but views differed on any meaningful changes in practice.  Many of the elites perceived the problem in terms of lack of resource and insufficient economic inclusion, with ‘workforce’ development measures regarded as a significant step.  But an advocacy organisation echoed the institutional racism cited by others, relating the uprising to:

‘[The] ton of unhappiness and dissatisfaction in the black community with the black leadership and the extent to which the black establishment has really been acting in the interest of black neighbourhoods, poor black residents’

 The two neighbourhoods talked about by nearly all those interviewed – Port Covington and Sandtown-Winchester – illustrate the persistence of ‘twin track’ Baltimore and demonstrate that in the ‘fiscally squeezed’ city, neighbourhoods only gain attention when they intersect with the priorities of city elites.

Port Covington is the city’s current waterfront megaproject.  The developer, Sagamore, is owned by Kevin Plank, CEO of “Under Armour” (a sportswear company) whose corporate headquarters will anchor the development.  It has received approvals for $660 million of tax increment financing, the biggest financing package in Baltimore’s history and subject to much city-wide debate, protest and advocacy.  Elites did acknowledge that the development raises ‘gentrification and race issues’.  It was also cited as an example of developers’ becoming more ‘socially conscious’ since the uprising.  Citizen activists and advocacy organisations in contrast were clear that the development was ‘tone deaf coming on the heels of the uprising’ and another example of where ‘we’re disinvesting from places that need it the most… and the benefits promised don’t materialise’.

The other space of the city most mentioned was Sandtown-Winchester in West Baltimore – Freddie Gray’s home neighbourhood and the epicentre of the uprising after his death.  It became the symbolic location for the launch of Project CORE, a State and City demolition initiative which counterpoints the Port Covington development by focusing at the other end of the spectrum – the city’s ‘stressed’ neighbourhoods with the highest levels of vacant and blighted properties. Elite and citizen activist perspectives on the initiative were unsurprisingly bifurcated.  A major non-profit saw it as an example of where there is now at least more ‘talking about listening to communities’ and other elites agreed it was not ‘business as usual’.  But community activists based in West Baltimore related it to practices of institutional racism, lack of community say, and saw it as a gentrification strategy clearing low income residents:

‘It’s insensitive of our community… not even considering the issues that gave us blocks and blocks of blighted properties… this is a low income neighbourhood so you’re proposing all this demolition to lure developers…. it’s a slow gentrification process’.

What about other neighbourhoods?  Some benefit from elite attention where they are able to gain leverage from the proximity of anchor institutions, notably Johns Hopkins university and medical system.  The Central Baltimore Partnership gains support and resource given its proximity to Johns Hopkins’ Homewood campus and its Community Partners Initiative.  This encourages other resource flows (such as from the State’s neighbourhood initiative and foundation and bank support for its new development fund).  A focus of the city’s major community organising coalition, BUILD, on the east-side Oliver neighbourhood levers on its proximity to Eager Park (an earlier city megaproject), anchored by Hopkins’ hospital.  Some see such prioritisation as ‘common sense’, the path to pursue when resources are limited.  Others made explicit that neighbourhoods that don’t offer opportunities are ‘written off’ with a West Baltimore anchor institution official describing it as being located in a ‘containment area’.

Civil Society? Citizen activism and the ‘non-profit industrial complex’

The bifurcation between elite and citizen activist views of spatial governance priorities underscores the city’s institutional divisions as well as its exclusion of the citizen from governance.  Citizen activists contrasted their embedded work in communities with Baltimore’s ‘non-profit industrial complex’.  A government official agreed, critiquing the ‘whole infrastructure here of non-profits and others’ that ‘co-opt community voice and say, this is what the community wants’.  In stressing the importance of relationships with ‘key community leaders and activists’, a major non-profit alluded to its instrumental need for consensus by getting ‘diverse neighbourhoods to think collectively’.  Overall, the research revealed the stark schism between the city’s mostly white-led non-profit sector and its activist community, particularly its younger African American members.  The racial (and spatial) disconnect between larger, grant-receiving organisations and target communities was emphasised, undermining ‘the development of independent black institution building that’s so necessary for communities to actually have the power needed to address a lot of these problems’.  The role played by the city’s non-profit (and foundation) sector is imbued with the contestability and mutability of ‘civil society’ as a Tocquevillian counterbalance to, or Gramscian integrated part of, the state, one activist pithily explaining that ‘one of the biggest issues that we have in Baltimore… is a condensation of non-profit and foundation forces that then are allowed to produce policies’.

Most found some reasons to be hopeful about the city’s future.  Some stressed the need for consensus, ‘ways of partnering in a positive manner’, others stressed the need for transformational, systemic change.  What was clear was the growing voice of black, young activists ‘trained outside of the local non-profit formula’.

The two city analogy remains popular, activists envisaging ‘two parallel tracks’ – one ‘like Port Covington, a neoliberal city’, contrasted with their ability to produce a ‘parallel structure, a parallel narrative… [a] vision of community empowerment from the grassroots up, as opposed to seeing black folks as appendages of a neoliberal wave’.  Others alluded back to the uprising in stressing the need for improved police-community relations to redress trauma as a prerequisite for other change in the city.  In so doing the city’s divided spatial governance was reiterated:

‘Actual police reform… without change in the structure, the policies, the way they actually work in Sandtown… is the very first steps to actual change… even with this huge Sagamore and the TIF [Port Covington]… it gets diminished as soon as something happens with the Police Department’. 

The research – which has involved 40 interviews with city government officials and members, citizen activists and those in the city’s foundations, universities and non-profit sector – points to the critical need to reconcile divisions within the city as part of any transformative change in its governance as a response to crisis.

Dr Madeleine Pill is Lecturer in Public Policy at the University of Sydney.

Labour-Centred Development in Latin America: Two cases of alternative development

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The_hand_that_will_rule_the_worldIn todays post, Adam Fishwick offers an overview of the main arguments and highlight some of the key empirical findings of research published recently in Geoforum. Co-authored with Ben Selwyn, the article discusses alternative models of development that go beyond the neoliberal and statist paradigms that dominate debate, and is based on two cases– the cordones industriales in 1970s Chile and empresas recuperadas in Argentina today – of “labour-centred development”.

The rise of the ‘Pink Tide’ of progressive left and left-of-centre governments in Latin America briefly offered us a set of seemingly new alternative models – from buen vivir in Ecuador to ‘Socialism in the 21st Century’ in Venezuela to ‘growth with equity’ in Argentina.

Yet with the stagnation and apparent collapse of these models, critics on the Left have begun to highlight the many underlying contradictions that the Pink Tide failed to address.

Whilst the ‘neo-developmentalist’ strategies adopted throughout the region have seen a growing level of state intervention favouring increased growth in domestic industrial sectors and some social welfare improvements, they have embedded deepening relations of exploitation, blocked and co-opted social movements that brought these governments to power, and sustained a socio-economic order over-written by neoliberal macroeconomics.

Put simply, the statist strategies of the last decade have – despite limited gains in distribution, welfare, and industrial restructuring – made little progress in overcoming many of the regressive features of the neoliberal development strategies of the 1980s and 1990s.

From this starting point, then, we offer a critique of Elite Development Theory (EDT) as it informs the neoliberal and statist political economy paradigms in Latin America (see Selwyn 2015, 2016 for a wider critique of EDT in development studies). Second, we present two cases of what we term labour-centred development (LCD) in its nascent forms.

Regarding the first, elite development theory can be identified with two dominant trends that run parallel to and have to some extent informed the last three decades of Latin American development.

The emergence of the Washington Consensus formalised in the 1980s and 1990s much of the emerging practice of development across Latin America, bringing with it a firm commitment to reducing states’ welfare spending and the removal of ‘labour market inflexibilities’. The result was a sharp reduction in redistribution towards the labouring classes and the direct and indirect repression of their capabilities to mobilise collectively across Latin America.

The response of Statist Political Economists to this position offered a stark challenge to the Washington Consensus that, for many, offered a real alternative model for development.

But the progressive claims of these statist approaches are problematic. Alice Amsden (1990), for example, describes how South Korean state-led development relied on ‘the world’s longest working week’ and ‘cheap labour’, also noting how ‘labour repression is the basis of late industrialization everywhere’. And, in his comparison of Brazil, South Korea, India, and Nigeria, Atul Kohli (2004) notes the significance of strict workplace discipline.

Recent state-led development in Latin America can also be seen in this light. Although led by left and left-of-centre governments, it often remains reliant on the restriction of workers’ mobilisation in the service of a state-led national development strategy.

Alternatively, then, we propose a view on development that directly privileges the agency of labour in pursuing and constructing what we term labour-centred development:

‘the core concerns for LCD analysis are not those of capital (how to secure accumulation), but those of labouring classes. These include workers’ ability to reproduce their wage labour outside work (i.e. to earn enough wages and have enough time to secure the basic necessities of life and to engage in culturally-enhancing activities such as socialising and education), extending to more free time (shorter working days) and more decision-making ability within the workplace (to reduce the burden of work)’ (Fishwick & Selwyn 2016)

We distinguish our perspective from the two strands of EDT inasmuch as we perceive the interests of the labouring classes as the starting point for alternative strategies of development. We highlight the often invisible and obfuscated dynamics of labour’s collective action and its role in producing unique developmental dynamics from within what Michael Lebowitz (1992, 2001) has termed ‘the political economy of the working class’.

Second, the two cases of LCD we discuss are drawn from distinct contexts – the revolutionary moment of the Allende government from 1970 to 1973 in Chile and the deep crisis and recovery of the Argentinian economy from 2001 to present – but both are demonstrative of the capability of labouring classes to construct real alternatives from below.

In assessing these cases, we highlight four factors: (1) growth and productivity (2) employment data (3) workplace organisation (4) production priorities. In each of these we analyse the contributions made by workers themselves, as well as the limitations that derive not from the internal failings of these cases of LCD, but from capital mobilising against them.

The cordones industriales in Chile were a powerful example of LCD that emerged under the socialist government of Salvador Allende in the early 1970s. Comprised of a small occupied factories and large plants incorporated into the state-led nationalisation programme – the ‘Area of Social Property’ – they saw workers organise against a growing employer boycott to establish new forms of control over process of production and distribution.

Mobilising under the Communist Party-inspired ‘battle for production’ slogan, they revitalised output and productivity levels in a range of leading industrial sectors, transforming work, the workplace, and the priorities of production in the process.

Drawing on examples from the textile sector with data gathered from a range of trade union publications and political pamphlets from the time, we show how large and small plants saw increased levels of output under workers’ control, raised employment and wage levels, and even the establishment of facilities aimed to support workers and their families.

Strict Taylorist and paternalist management hierarchies were rapidly replaced by participatory forms of organisation, with workplace assemblies and councils building on the participation programmes promoted by Allende to produce genuine worker participation and control over decisions ranging from output to supply and credit to production priorities. Factories even transformed their produce in direct service of the poor communities and neighbourhoods from which their workers came and which surrounded these workplaces.

Nevertheless, despite these embryonic forms of LCD, pressures both from the socialist government of Allende and pressures from outside restricted the expansion of these strategies. And, on 11 September 1973, they were directly targeted as nascent ‘Soviets’ by the military as it violently reversed many of the gains that had been achieved in these years.

The empresas recuperadas in Argentina are a crucial contemporary example of LCD, in which several hundred workplaces have been transformed into legal and semi-legal cooperatives by workers pushed to the brink of unemployment. Often established following a long period of struggle with first the original owner and later the state, these enterprises first emerged en masse in the aftermath of the 2001 financial crisis in the country.

Typically involving workers with little or no political experience or affiliation, the transformations to work and the workplace have been profound – from the introduction of equitable pay to cooperative networks of financing and supply to the transformation of work.

Drawing on a range of sources and data gathered by the Open Faculty Programme in Buenos Aires, we show how, in recent years, there have been some significant improvements in productivity and output under workers’ control, how wages and employment have improved in most these workplaces, and how, most importantly, workplaces have been transformed.

There has been an increase in democratisation on the factory floor, whilst the introduction of job rotation and new divisions between labour processes and the organisation of the working day have ‘humanised’ these workplaces. Links established between the factories and the neighbourhoods, moreover, have had a tangible impact on the lives of the labouring classes across these communities, as well as contributing to the defence of factory occupations.

Nevertheless, despite these important gains, pressures on the initial formation of the empresas recuperadas, as well as the ongoing influence of their relationship with the wider capitalist marketplace points to the limitations of these examples of LCD. There have been attempts to overcome these through new networks and institutions, but they remain in their early stages.

To conclude, then, in our paper we show that the paradigmatic perspectives on development fail to capture these important dynamics that can – and, as we show, often do – provide fertile ground for genuine alternative development strategies favouring the labouring classes.

To identify these processes, and to correctly situate and overcome their limitations, we argue for the need to look beneath both the regressive logics of neoliberal development and the ostensibly progressive strategies pursued by states. By identifying the independent practices of workers in seeking to shape their own world around them, we can begin to identify how a real ‘political economy of the working class’ can emerge in theory and in practice.

Adam Fishwick is a Senior Lecturer in Urban Studies and Public Policy in the Department of Politics and Public Policy and a core member of CURA at De Montfort University.

This post was originally published on the ‘Progress in Political Economy’ Blog and has been re-published here with their permission.

Post-Brexit Devolution: What Should it Look Like?

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brexitIn this post Paul O’Brien argues that after Brexit devolution should  empower local government to deliver a localised industrial strategy.

Councils could be forgiven for wondering if Government remains as committed to devolution and decentralisation of power, post Brexit, as it appeared to be before June’s vote.

What started well and seemed to have support at the highest level of Government, with George Osborne’s zealot like enthusiasm, doesn’t appear to have the same prominence with new cabinet figures, indeed some fear that the agenda could simply fizzle out.

It would be a major policy U-turn to cancel next year’s mayoral elections for the big three combined authority areas of Greater Manchester, Liverpool City Region and the West Midlands, however it doesn’t appear that many other deals are close to completion with almost daily stories of negotiations collapsing.

Whilst some find the idea of having an elected mayor forced upon them objectionable, others have concerns over whether you are really going to get what you signed up for in terms of funding for projects or powers, given the economic uncertainty that exists post Brexit.

Given the financial crisis local services face, decentralisation is exactly what is needed. It’s clear the public feel that they are not getting their fair share of resources. APSE’s recent opinion poll, with Survation, found 77% of the public want more of their taxes spent locally, rather than elsewhere.

There now appears to be a consensus amongst Government that the UK needs a new industrial strategy with national infrastructure projects at the heart of it. However, what is really needed is for local government to be recognised as the key to driving a localised industrial strategy, and given the powers and funding to deliver it. One that can draw in investment and stimulate local growth, which will have an immediate impact now, rather than in fifteen years time.

Devolution to date has been about individual authorities combining and going to Government asking for funding to undertake initiatives that are ‘unique’ to their area but in reality when you examine many of the Combined Authority Orders there are common themes running throughout. So is it really necessary to painstakingly go through the process of putting these together and then spend months negotiating back and forth with civil servants on the detail? Is it not time for the sector to get together, as a whole, and ask Government for a devolution package around local industrial strategies, including borrowing powers for housing, transport and roads infrastructure, employability and skills development?

In the current climate of uncertainty we may just find a Government that is willing to listen to creative solutions to problems, which they are struggling to find answers for.

Paul O’Brien is Chief Executive of APSE (the Association for Public Service Excellence) and a member of the Centre for Urban Research on Austerity

Heathrow expansion: Six reasons why it should be seen as a failure of government

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2000px-heathrow_airport_map_with_third_runway-svgIn today’s post Steven Griggs and David Howarth outline six reasons why the decision to build a third runway at Heathrow airport represents a failure of government, that will be hotly contested and continue to generate controversy well into the future.

In his statement announcing the UK government’s decision to support a third runway at Heathrow, the transport secretary Chris Grayling said that the decision was ‘good for Britain’ and that the new proposals were ‘best for our future, and best for the whole country and its regions.’ The ‘truly momentous’ decision to expand Heathrow, it is claimed, will improve the UK’s connections with the rest of the world, while increasing international trade and creating jobs.

Most business leaders and unions welcomed the long-anticipated decision, stressing its vital role in stimulating economic growth, especially in a post-Brexit world. Politicians across the divide, apart from the Greens and Liberal Democrats, rallied to support the government. Ominously though, Zac Goldsmith resigned his Richmond Park seat and collective cabinet responsibility has been loosened to accommodate dissenting voices, most notably Boris Johnson and Justine Greening. Meanwhile, Jeremy Corbyn and John McDonnell remain firmly opposed to expansion, though once again they stand opposed to most of their parliamentary party.

There is no question that more airport capacity at Heathrow and Gatwick is demanded by powerful forces and vested interests. The airports are running at 98% of their capacity, and the demand for more flights shows little sign of waning. For many commentators, economic growth and global connectivity will no doubt be fuelled by the expansion of the UK’s only hub airport, though precise levels are disputed.

But once the dust has settled, and the flag-waving and trumpeting ended, what are we to make of the decision? Is this truly a triumph of strong leadership, an end to ‘dithering’ and the confident action of a government of ‘builders’ committed to ensuring Britain’s future? Perhaps a little less spin and a little more caution would not go amiss. In reality, the May government’s support for Heathrow expansion is the outcome of a series of government failures and policy reversals, which is likely to end in tears. Here are six reasons why.

First, the belated decision to expand Heathrow is a failure of political leadership. It represents the inability of the Coalition government to keep to the line agreed in May 2010, when it declared a moratorium on Heathrow expansion. But the Conservative government has chosen not to stick with David Cameron’s ‘No ifs, no buts’ promise that there would be no new runway at Heathrow. Instead, appearing to buckle against an intense pro-expansion campaign led by business, supporters of Heathrow and London First, the Coalition agreed in 2012 to set up the Airports Commission and thus to reopen the case for more expansion. Indeed, the terms of reference of the Commission directed Sir Howard Davies to examine where the new expansion should be – Gatwick, Heathrow or even “Boris Island” – and not whether there should be expansion in the South-East of England at all. Finally, the aviation industry’s demand for hub capacity made it difficult to advance any serious consideration of spreading expansion across all London airports; not just Heathrow, but Gatwick and Stansted, as well as regional airports.

But, secondly, the Davies Commission failed to deliver ‘an evidence-based consensus’, which it was hoped would take the politics out of this controversial decision. If anything, the conflicts between different airports, between airports and their surrounding communities, amongst politicians (within and across parties, and between tiers of government), and between many environmental groups and business representatives, has intensified and looks certain to continue.

And, thirdly, seen in a longer historical perspective, it is the failure to recognise that the wrong decision was made to build Heathrow in the 1940s. Because it’s in the wrong geographical location, causing untold misery and suffering of noise pollution for all those residents and households languishing under its flightpaths, further expansion can only exacerbate such detrimental effects. In fact, the decision might be seen as a failure of path dependency and institutional inertia, which goes to the heart of the British state and system of government.

Here one only has to think of the Roskill Commission inquiry into the third airport at London in the late 1960s and early 1970s, and the delays surrounding the inquiry into Heathrow’s planned fifth terminal. Roskill’s findings were ignored by government in favour of a new airport at Maplin, only for government to abandon this plan, when the 1973 oil crisis hit the aviation industry and local MPs threatened to rebel. The upshot has been a reliance on the production and dissemination of a ‘fantasmatic’, have-your-cake-and-eat-it narrative – we can have airport expansion and environmental protection – in which the horrific threat of not acting, and thus falling behind our foreign competitors, is bolstered by the beatific prospect of adding billions to the British economy, if and when the new runway is actually built.

A fourth failure of the new scheme relates to the problem of air quality, which is the cause of major respiratory problems and premature deaths. The problem of meeting legally binding air quality targets in London (and surrounding areas) was not properly addressed by the Davies Commission and government plans to meet its 2030 air quality targets are highly contested, as the recent court case by legal campaigners, Client-Earth, goes to show. The idea that a reduction of car emissions in and around the airport, for example, will enable the expansion plans to meet the required air pollution targets looks wildly optimistic.

Fifthly, and crucially, the plans constitute a failure to tackle the problem of climate change. The anti-expansion coalition that successfully challenged New Labour’s 2003 Air Transport White Paper, which promised major airport expansion, put the problem of aircraft emissions and our international commitments to curb climate change at the centre of their campaign. Indeed, in setting out a broad consultation exercise about airport capacity in March 2011, the then Secretary of State for Transport, Philip Hammond, dismissed the previous thinking as ‘out of date because it fails to give sufficient weight to the challenge of climate change’. The previous Labour government had ‘got the balance [between environmental protection and expansion] wrong.’ Yet once again environmental considerations have been shoved into the background, both by the Airports commission and the wider public debate that has ensued.

A final and equally telling problem is that in all likelihood the plans will end in another disappointing failure to deliver a mega infrastructure project on time and within costs. Legal challenges by councils and other affected parties, the precise financing of the airport proposals – who, for example, will pay for the required surface infrastructures needed to ensure its feasibility? – coupled, of course, with the inevitable political challenges will invariably delay the implementation of plans – if it happens at all.

Already local councils are preparing to review the decisions and planning procedures in the courts, while local resident groups and direct action campaigners such as Plane Stupid are sharpening their preferred tools of protest. Indeed, we can expect the third runway at Heathrow to become a symbolic battle for environmental campaigners. Heathrow could well up being the next Notre-Dame-des-Landes, the proposed new international airport outside Nantes which continues to attract widespread criticism and protest across the whole of France and Europe.

Steven Griggs is Professor of Public Policy at De Montfort University and a core member of CURA. David Howarth is Professor in Social and Political Theory at the University of Essex

 

The hollowness of GDP: The case of Ireland

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In today’s post Dr Daniel Bailey and Professor John Barry argue that Ireland’s GDP statistics highlight the disconnect between ‘official’ growth and the real economy, and raise questions about the nature of growth itself. This post was originally published by SPERI Comment and republished with their permission.

In the last decade, the prominence afforded to Gross Domestic Product (GDP) in political discourse has increasingly been challenged by a series of social and environmental critiques. These critiques – made by the likes of Wilkinson and Pickett, the Stiglitz Commission, theILO, and the New Economics Foundation – argued that policy-making ought to be sensitised to alternative metrics better suited to the socio-economic and ecological conditions of the present day. Recent GDP announcements in Ireland have only added to the contestations surrounding the political centrality of economic growth in political economy.

The credibility of the GDP statistic in Ireland was strained when the Central Statistics Office (CSO) announced that its growth rate for 2015 was 26.3%; far superior to any of the figures recorded during the ‘Celtic Tiger’ years of the 2000s. This figure was met with widespread ridicule, including by Nobel Prize-winning economist Paul Krugman who described it disparagingly as ‘Leprechaun Economics’.

The drivers of this growth spurt, according to official sources, were a series of ‘inversions’ whereby companies re-locate their official headquarters to Ireland, where only a minority of their business operations take place, in order to benefit from subjecting their profits to Ireland’s low corporation tax rate. This has included companies re-structuring in such a way that sees them legally transfers its assets or its intellectual property to Ireland despite the country only fleetingly hosting the economic activity of these companies. As a consequence, there was a simultaneous boost in net exports in 2015 as these multinational companies contracted non-Irish companies to carry out certain operations.  Such volatility in the GDP numbers is facilitated by the small and open nature of the Irish economy and its reliance on foreign direct investment, and by its 12.5% corporation tax rate which attracts multinational corporations looking for a foothold in the Eurozone.  The Irish Times have reported that Apple – whose exact tax arrangements with Ireland have been under some scrutiny recently – was one company responsible for the rise in Ireland’s capital stock, as well as AerCap in the aircraft-leasing sector. In addition, the robust defence of Ireland’s corporate tax arrangements by the current Irish government, and most of the opposition in the Irish Dáil (parliament), is telling and revealing in demonstrating the alliance and common interests between global corporations and nation-states such as Ireland.

In other words, although Ireland’s 2015 growth rate has some impact on governmental income and the debt-to-GDP ratio, it has only a diminishing connection to the performance of the ‘core economy’ and the reduction of unemployment. Prime Minister Enda Kenny, lost his parliamentary majority in February’s General Election not least because his appeal to the electorate on the campaign trail to ‘keep the recovery going’ was met with a response of: ‘what recovery?’.  The eroding credibility and meaning of the GDP statistic in Ireland was evident in such a debate, and the subsequent data released by the CSO will only further these perceptions.

The susceptibility of the Irish economic model to accountancy practices such as those seen in the ‘inversion’ strategies above mean that further volatility and the financial risks associated with it cannot be ruled out. Indeed, the 2016 economic data thus far forms an ironic postscript to the 2015 data as it shows that the economy has contracted so far this year. The volatility of the GDP measurement – an inherent component of the internationalised Irish economic strategy – means that it is highly problematic for either public spending or deficit reduction to be planned reliably on the basis of growth projections.  The contraction, however, tells us similarly little about economic trends such as the unemployment rate which have become increasingly disconnected from GDP levels; just as GDP has become disconnected from well-being, economic security or global poverty reduction.

Following Tom Healy, the methodological nationalism of GDP is disguising the existence of two economies operating within Ireland today. One is a very high-productivity, relatively low-labour intensive, export orientated and highly profitable economy.  The other is a low-productivity, high-labour intensive, domestically orientated and relatively less profitable economy.  Clearly this is a stylised depiction, but it does capture the misleading character of ‘single country’ and undifferentiated analyses of the ‘recovery’.

Therefore, alongside the credibility or usefulness of GDP we have to ask a connected but larger and more crucial question for modern political economy: who wants ‘jobless economic growth’? Posing the idea that GDP growth can be compatible with continuing joblessness does open up a possibility of delegitimising GDP growth.  This is based on the idea that for most people their support for ‘economic growth’ is not based on corporate profit-making or reducing government debt-to-GDP ratios, but based on strategies for growth producing jobs, and ideally high-paying, good quality jobs at that.

This is not a problem unique to Ireland. To differing extents, capital flows in many countries distorts the original premise of its ascension in political discourse.  The increasing mismatch between economic structures and the conventional statistical framework developed more than 70 years ago has recently prompted Diane Coyle to suggest that the ‘path dependency’ of the latter is now threatened more than ever by a coalition of interests seeking to develop alternative indicators more suited to the ecological, economic and societal challenges and opportunities of the 21st century.

Ireland, however, is a particularly extreme example of GDP serving an increasingly misleading and irrelevant measurement not only wellbeing, but also for the wealth of the nation. As such, the GDP growth figure has rarely been as ethereal or mythical as it is in Ireland today. But more than that, the hollowness of the statistic for the lives of the Irish people means that it is even more important for Ireland to develop a notion of national prosperity or success which goes far beyond conventional understandings of economic growth.  If ‘jobless economic growth’ is not working, can we begin to move our political economy thinking beyond GDP growth to envisage political economies of job rich non-economic growth?  If the Irish experience of ‘jobless growth’ is a discredited form of ‘Leprechaun economics’ (which should really perhaps be called ‘corporate profit shifting economics’), what do we put in its place in a ‘post-growth’ political economy?

Dr Dan Bailey is a Researcher as the Sheffield Political Economy Research Institute, and John Barry is Professor in Politics and International Studies at Queens University, Belfast.

Restricting immigration won’t pay for working people

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In today’s blog, guest bloggers from the New Economics Foundation (NEF) – Olivier Vardakoulias (Economist) and Marc Stears (CEO) – argue that restricting immigration  will not benefit workers in areas that voted in favour of Brexit. This post was originally published on NEF’s website – see here.

If we have learnt anything so far from party conference season, it is that free movement from the European Union has fewer and fewer supporters in mainstream politics.

When it comes to immigration, Brexit is becoming hard Brexit before our eyes.Politicians of all sides appear to believe the communities that voted to Leave the EU have legitimate concerns about immigration’s impact on their living standards.Immigration restrictions, it is suggested, will benefit working people, especially by significantly increasing their pay.

But this is not true. An increase in immigration restrictions would, in fact, do very little to benefit workers in these communities.

If you look at data from the counties of the UK, you see that there is no correlation between increases in immigration and decreases in real wages of less skilled occupations. And there’s no correlation either between increases in immigration and local unemployment rates.

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Source: CEP election analysis

In fact, we might go even further. Restrictions on free movement may actually reduce wages and workers’ standards.

Because we know from history that immigration doesn’t stop when it becomes harder. Just look at Mexico and the United States. If more EU nationals enter the UK undocumented, they will be working outside official channels, labour laws and the official minimum wage.

And workers who are granted a visa by their employer (the current process for migrants from outside the EU) will be at the mercy of that employer.

Companies will have the power to hire and fire migrants and withdraw their working permit at will, leaving migrant workers with an even weaker bargaining power over their wages and working conditions.

So ending free movement may in reality put domestic workers in a more unfavourable situation than they are in now.

Restricting immigration from the EU is a false panacea for communities who have struggled over the last decades.

Politicians of all parties would do well to avoid selling this snake oil of a solution to the working people of Britain.

Devolution after Brexit: 3 things that need to change

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In this post, originally published on the New Economics Foundation’s blog, Adrian Bua argues that devolution should deliver a genuinely more equal, decentralised and balanced political economy in the UK following the Brexit vote.

Brexit has cast doubt over much of UK economic policy – including the Treasury’s pledged support for a ‘devolution revolution’.

Many areas that voted in favour of Brexit were those left behind by a decline in British industry since the late 1970s and those suffering the most from government spending cuts.

They’re the areas that need effective devolution the most, but they’re also the areas standing to lose the most from a Brexit.

Uncertainty has already hit the manufacturing sector with Siemensdeciding to halt investment in Hull, and it won’t be the last case of its kind. Decisions like this will affect poorer regions disproportionately as their industry is generally more dependent on EU demand.

Moreover, these regions have also benefitted the most from EU regional development funding – and therefore stand to lose the most as these funds are discontinued, especially if the British state decides not to compensate the losses.

All this means that poorer regions will suffer from short term disruption and uncertainty, but it does not mean that such regions won’t benefit from Brexit in the long term. For example, supporters of Brexit such as James Wharton, the Minister for local growth and the Northern Powerhouse, say northern businesses now have a huge opportunity to “go global”.

We are concerned however, that rather than leading to a more balanced economy, Brexit risks turning Britain into a full-on ‘hedge-fund economy’ that works for already global finance firms and the City of London.

It’s therefore even more important that the government changes its currently-flawed approach to devolution in the following ways:

1. An industrial strategy for the whole of the UK

The Brexit vote was a loud complaint by those left behind by what Colin Hay has called the ‘Anglo-Liberal’ growth model based on London’s financial services, spending fuelled by private credit and housing price bubbles. This also brought with it the decimation of our public and social services.

We need a new industrial strategy and a plan for regeneration that will boost the incomes and opportunities of these alienated communities that have been left behind.

2. More power to the people

The above, which would include some redistribution of wealth, needs to be accompanied by the redistribution of power.

As Tony Hockley argues, more money and investment can’t reverse the cultural elements of inequality, highlighted brilliantly by Lisa McKenzie’s work on the stigmatisation of working class neighbourhoods in Nottingham, for example.

To tackle this appropriately, as well as offering opportunities for excluded communities to benefit from growth, we need to enable such communities to take an active role in our society and economy. Approaches to ‘Community Economic Development’ such as that being carried out in Preston in their experiment with co-operative industry, have much potential in this respect.

By combining economic development, with the empowerment of citizens, communities can become ‘development makers’, rather than ‘development takers’.

Devolved areas should also engage citizens in forms of participatory public administration, by implementing meaningful and genuine forms co-production in public services, and developing more ambitious approaches to participatory budgeting to give genuine control to people over public investment in their areas.

3. More democratic politics

Our politics also needs to be more responsive to people and the decentralisation of political power needs to occur in political parties and through the electoral system.

Decay in these key democratic institutions is part of what Colin Crouch terms ‘post-democracy’, a condition which I argue elsewhere underpinned many of the pathologies surrounding the EU referendum.

All political parties need a bottom up reinvention based on greater democracy.

How do we do this?

Current attempts by the Labour party to rediscover its roots in social movements are welcome, as are remarks by incoming Prime Minister and Conservative leader Theresa May about a country that works for everyone.

A more proportional electoral system that allowed for a greater plurality of political parties, that could experiment with different organisational models and offer a greater variety of policy platforms without engaging in distracting internal struggles would also be welcome.

Adrian Bua is researcher at the New Economics Foundation and at the Centre for Urban Research on Austerity

Brexit: the Need for a “21st Century Marshall Plan”

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2000px-marshall_plan-svgProfessor Jonathan Davies argues for a new “Marshall Plan” to fix the broken political economy of the UK, and of Europe.

There are long decades when history barely moves.  And there are times when decades or even centuries fly by in weeks.  Political history in the UK is suddenly moving at breakneck speed.  Our relationship with the EU is sundered, the UK itself fractured along a bewildering tangle of lines.  The possibility of Scottish secession looms once more.  Friends are at each other’s throats.  Terrified remain supporters – and a good few remorseful leave supporters – call for the government to set aside or ignore the referendum.  The Parliamentary Labour Party has turned all its fire on Jeremy Corbyn, while the Liberal Democrats court redemption by making a play for enraged middle class progressives.  The Conservative Party is in turmoil as is the repentant architect of Brexit, Boris Johnson.

In this febrile atmosphere, the battered, embittered and disenfranchised working classes forming the backbone of Brexit has been chosen as the chief villain of the piece – although almost half of them did not vote at all.  Stuck between the rock of racism and the hard place of “progressive” middle class contempt there is, as always, nothing on the table for them.  We must be clear that the grind, hectoring, dispossession and punishment of austerity and several decades of neoliberalism before that lie at the root of these fractures, themselves symptoms of the long durée of economic decline.  The exuberant junketing of our elites cannot disguise the feebleness of British economic growth, the illusion of shared prosperity sustained through astronomical levels of personal and private debt. The costs of this model have been imposed – quite ruthlessly – on those least able to bear them.  The realities of UK PLC for millions of people are, structural unemployment, zero hours contracts, sweat-shop labour, benefit cuts and sanctions and food banks. Brexit is the blowback.  Even so, conditions are far worse in Greece and Spain.

If Britain and Europe’s elites were serious about keeping the ship afloat, they would recognise the appalling vista they have created, abandon neoliberal ideology and austerity wholesale and embark on a massive programme of redistribution and investment in working class towns and cities. Britain and Europe would move to initiate a 21st century Marshall Plan – the post-war reconstruction programme led by the USA after WW2.  We live in very rich societies, but with ever-greater concentrations of wealth and poverty.  The very existence of the United Kingdom and European Union could now depend on the political will to reverse that trend.  Enormous ideological and political resources have been expended on neoliberalism, and such a step looks vanishingly unlikely.  It is much more likely that the reverse will happen and an even heavier price will be exacted from the working class.  Moreover, it is a moot point whether such a programme would be enough reverse the decline of late Western capitalism.  Either way, Britain and Europe can certainly afford it.  If they want the genie back in its bottle, they will have to pay the price.

Jonathan Davies is Professor of Critical Policy Studies and Director of the Centre for Urban Research on Austerity at De Montfort University