Labour's New Economics Conference: Part Five, Local Democratic Economic Strategies

by Tom Gann

This is the fifth part of our write-up and analysis of Labour's New Economics Conference on alternative models of ownership. The "Alternative Models of Ownership" report is available here, and our analysis of the report here. This part focuses on the "Local Democratic Economic Strategies" breakout session. You can find our recap of the introductory session here, the digital breakout session here the housing session here, and the Co-op session here

Andrew Gwynne, Shadow Secretary of State, Communities & Local Government

Andrew Gwynne, chairing the session, noted that we can’t wait until the next Labour government to provide relief from austerity and that there is a clear role for local government. This helps open up the questions of local democratic economic strategies on four levels.

  1. (What Gwynne was referring to) What can Labour councils do now with existing powers and within quite serious given constraints, and also what role the movement, in its current state can play both in pressurising councils and carrying out aspects of a programme.
  2. What sort of movement do we need to build both to nurture and pressure for a wider, more radical practice around local democratic ownership and to carry this out.
  3. What does a Labour government have to do nationally to empower councils more generally to carry out these programmes.
  4. To reverse the terms of the question, what local practices could be scaled up to national level.

Matthew Brown, Preston City Council

Matthew Brown began the session proper with a discussion of the “Preston Model”, starting with the opening of the new municipally owned market and the announcement of Labour’s new Community Wealth Building Unit. He went to give both the national and, indeed international, as well as the local context for what has happened in Preston.

For Brown, Labour’s interest in community wealth building is part of, following a claim from Jeremy Corbyn, politics finally catching up with the 2008 crash and its implications. For Brown both 2008 and its aftermath represents a systemic failure, most notably in the post-crash attempts of macro-economic policy to desperately prop up an obviously unviable system. In terms of the specific Preston context, the most important event was the final abandonment by in 2011 of the £780 million Tithebarn city centre regeneration project (for comrades in Haringey and Southwark, the villainous role of Lend Lease will be notable). The failure of this conventional capitalist, developer-led regeneration project forced a radical improvisation.

Brown then outlined the main features of the model

  • The anchor strategy- the encouragement of major local institutions like the hospital and university that are rooted in Preston (while capital is mobile, some institutions are not) to spend more of their budgets locally.
  • Use of local government pension funds, £100 million is now invested locally.
  • Using council procurement- “procurement is more interesting than you think”- to support co-ops, including farming co-ops and IT co-op for university graduates (it’s worth noting here that it’s not just capital that is sucked into London and the South East but people).
  • Building a Community Bank
  • Establishing a housing development company and co-operative energy company, the latter in conjunction with other Lancashire councils.

Brown continued, pointing to examples from the USA that suggest the possibility of doing some of this on a greater scale. The Bank of North Dakota has 70% of citizens’ savings deposits and this cushioned the impact of 2008 much more than in other US states. Alabama has successfully shifted pension investments towards local investment, which not only proved socially useful but has provided more stable returns.

Brown concluded by noting (and this would be part of what I’ve described as “hard predistribution”) the egalitarian tendencies in the model, with Preston now having the lowest percentage of workers paid less than the living wage in Lancashire. Brown also regretted how far local government is presented as managerial and limited.

Heather Wakefield, UNISON

Wakefield echoed Brown’s conclusion, noting that particularly given the post-2010 tightening constraints on local government, Labour in local government has not felt transformative. However, even in the context of the limits placed on local government there are aspects of the situation that can be worked on. 64p in every pound spent by local government goes into the local economy, at least in the first instance, which gives considerable potential power through procurement. Potentially even more significantly, outside London, 60% of the council workforce live in the local authority area, earning and spending money locally and using services, this gives them an overlapping set of interests in their towns or cities.

These overlapping interests in a place also bear on the spatial implications of exploitation of council workers, particularly those whose jobs are outsourced. Underpayment of workers, for example in care workers not being paid for travel time, not only deprives them of money they should be receiving, but sucks money in the form of profits for shareholders that should be decent wages being spent locally out of the area. A similar leaking is present in pension funds: pensions are deferred pay, which could be invested locally, but instead security in retirement is mediated through various forms of speculative investment. In addition to this loss of potential investment, the capital in pension funds is not subject to democratic or ethical oversight, often being used for arms production or trade or bolstering environmental destruction. What all this amounts to is a situation where workers are alienated from where they live and from each other.

Wakefield went on to identify a number of issues or challenges in building local democratic economic structures:

  • The necessary central role of workers and trade unions alongside the need to democratise unions.
  • The need to transform local government industrial relations systems so that they become more than merely a means of managing cuts.
  • With local government playing a central role, issues of representation, especially the under-representation of women in councils need to be addressed, including through developing more participatory democratic forms.

Ted Howard, Democracy Collaborative

Howard began by talking of the “pilgrimage” from the USA to Preston, and how Preston had now eclipsed what had been achieved in the US. He then outlined the principles of Community Wealth Building.

  • The priority of labour over capital, particularly in a crisis, with continued stable employment more important than capital’s profits.
  • The need for local and broad-based rather than absentee ownership, as the basis for asserting what interests are valued.
  • The importance of active democratic ownership contrasted with the passive, consumer model of neoliberalism.
  • The central role for multipliers and internalising the circulation of money with investment sticking rather than capital being extracted.
  • Economic development understood not as a partnership between the state and business, in which the state is unaccountable and subordinate, but as a multistakeholder process.
  • Place matters, direct investment in neighbourhoods, particularly neighbourhoods of colour is necessary, trickle down particularly into these neighbourhoods cannot be relied upon.
  • Systemic change, the current system destroys the environment and produces inequalities so it’s necessary to move beyond amelioration to build systems that produce different outcomes.

Howard concluded, with the properly Marxist-humanist insight, “people made our systems, we can remake them” (or, “if there’s been a way to build it, there’ll be a way to destroy it, things are not all that out of control”).

Questions, Challenges, Extensions

The session was extremely encouraging, especially alongside the announcement in the week before of Labour’s Community Wealth Building Unit. The following points are intended less as criticism, more as areas where further exploration may be useful. These questions range from considering how far a struggle within Labour may be necessary to spread the model to how unique is Preston and therefore what aspects could be generalised to what sort of unions might we need to develop and implement programmes to what could a Labour government nationally do to expand on possibilities for local democratic economic strategies. The piece concludes with a brief consideration of the 1985 GLC London Industrial Strategy [1] as an exemplary local democratic economic strategy to suggest that, long-term, we need to be thinking about what it would it take to get us to a point where versions equal to its scope and radicalism were possible in all kinds of different areas.

Generalising the Preston Model?

If there could be an area of criticism, however, it could be in a slight vagueness about the political struggles necessary to generalise something like the Preston Model to other Labour councils. Questions were posed from the room, particularly in the wake of struggles in Haringey, over the role of party members in pushing for policies like those in Preston and countering possible resistance from sitting councillors, but these were brushed off by both Gwynne and Brown, with Brown suggesting “a friendly debate about ideas” may be all that’s required. Of course, there are relatively sensible pragmatic reasons for not attacking existing Labour councils in this sort of forum and, largely, the transformation of local councils is the task of local members. Moreover, although it seems likely that the Community Wealth Building model probably requires imaginative left leadership able to grasp and be responsive to local needs while not accepting the narrow constraints of existing capitalism particularly in its spatial impacts, there is no reason why its drawing together of communities and obvious practical orientation shouldn’t be able to draw in other sections of the Party. Here, a certain impatience with factional concerns whilst retaining the attentiveness to local needs and practically oriented critique of capitalism may well be a prudent part of a hegemonic strategy. However, the importance of developing a radical movement including one that pushes imaginative people on the left (and Howard emphasised that there is an important role for visionary leadership in community wealth building) into leadership positions.

Relatedly, and overlapping with some of these concerns over generalising the model, the question needs to be asked: how specific is Preston? Why has it not (yet?) been imitated to any great degree? Here, there may be a range of geographical, economic and political issues that intersect and reinforce each other. Equally, then, the question could be posed, what adaptations would be required to do Community Wealth Building in a larger city, a London borough, or London as a whole, or a rural area, or on the level of a devolved government- what would such a strategy look like in Wales?

One major factor, of course, in building broad support was desperation after the cancelling of the regeneration project, and Brown commented that was exceptionally easy, as a result, to bring anchor institutions into the project. Preston is certainly not unique in terms of failed, capitalist regeneration projects but this certainly is a major factor in allowing space for improvisation. A more general point could perhaps be made here, drawing on Neil Smith’s notion of the Catch-22 of gentrification (places that have suffered long periods of disinvestment need significant investment but the cost of that investment is greater integration into capitalism, social cleansing and destruction of communities [2]) or to slightly transform the saying, is the misery greater in a place capitalism wants to exploit or in one it does not want to? This bears on the political aspect of the question too: would a place that capital had more interest in (and this doesn’t necessary mean a rich place; big capital has, for example, a greater interest in Liverpool than Preston) have been able to develop the model without interference, including interference mediated through Labour councillors? Finally, for the specificity of Preston, would the model work (or what adaptations be required) in a larger city, or in a impoverished but widely dispersed rural area? As Wakefield argued, London boroughs may lack the majority of people with the overlapping interests in a place that come from working and living, and therefore, relying on services, there. Furthermore, do anchor institutions operate in a similarly rooted way in a larger city, or are they less reliant on the well-being of their surrounding area as a whole? Perhaps a final critical point that merits investigation would surround how does Preston stand not only in global and national capitalism but how does the strategy relate to its neighbours. On the one hand, projects like a Lancashire Community Bank, would probably, depending on control and the allocation of investment benefit neighbouring areas as would support for food co-ops with the rural hinterland, one the other, however, how far does the attempt to root capital in Preston damage surrounding areas? Stopping a leaking of resources to London and the South East or even to international capitalism is one thing, stopping a “leaking” of resources to Blackburn quite another.

As Wakefield suggested, and the point was developed in a question by Hilary Wainwright, a further question about generalisation surrounds what kind of trade unions are required. Wainwright offered a further principle to add to Howard’s that is clearly vital to projects of local democratic ownership and control, around the necessity to mobilise popular knowledge. This clearly then poses the question of how this knowledge is to be organised and made effective, particularly as it is often tacit, embodied in practice, rather than explicit and this poses the question of what kind of trade unions would be necessary to support or even lead this role when it comes to the knowledge of workers. There is also a further question when it comes, for example, to pension funds, which was signalled by Wakefield, that traditional economistic calculations by unions (and the beleaguered state of British trade unionism, given forty years of defeat, certainly adds to these conformist pressures) would challenge (and, it should be added would probably be consciously worked on by capital) efforts to redeploy pensions towards useful local investment, particularly in areas where the overlapping interests in place do not exist, and towards the centring of ethical, peace and ecological considerations. The stability argument may, as with Alabama, have a bit of purchase, but without a trade union movement which goes beyond an immediate, narrow calculation of workers’ interests- in this case in maximising returns of pensions- may well not be enough. One could add to Howard’s observation that this going beyond would require union members having space to act less as consumers of a service from a union, more as active, knowledgeable participants. The question of pension funds may also be key beyond local government as they offer significant resources for useful and ethical investment on a national level.

The next area of investigation would be around precisely what Labour needs to do on a national level to empower and resource councils to develop the local democratic economic agenda. Brown mentioned US councils being able to mandate living wages and bans on payday lenders, and both of these moves as well as being ethically sound also have a spatial implication, with more money to be spent in communities rather than leaking out through profits squeezed through underpayment or extraction of interest. Powers to mandate living wages and ban payday lenders, however, would only be part of the task.

Lessons from the GLC Industrial Strategy

It might be useful to conclude by looking at the 1985 GLC London Industrial Strategy, which Wainwright mentioned, not, as she said, “nostalgically” but as a document that suggests what local democratic planning and control could look like, with a view to thinking about what doing something along these lines would take both in terms of the actions of local government, powers and resources provided by central government and in terms of what sort of movement building would be necessary.

On looking at the strategy, the most immediately striking thing is the huge range of sectors covered, including some that still seem obviously part of what a council should be doing (even if here powers are increasingly limited) like transport and planning for development, “The People’s Plan for the Royal Docks”, to other areas of the economy where it now would be remarkable today to see central, let alone, local government planning, such as furniture, vehicle manufacture, clothing and printing, to areas still not really treated by dominant opinion and practice as economic like domestic work, to areas that challenge and aim to transform the city in an international context, attentiveness to global supply chains and the major chapter on arms conversion.

The two perhaps guiding assertions of the document—both of which would be contested, if even acknowledged, by dominant opinion today—are the centrality of planning, particularly in individual sectors, “detailed sectoral planning can generate feasible, cost-effective and socially beneficial strategies for employment growth” (p. 19) and the central role of popular participation, “the strength of the sector strategies is that they have been subject to consultation and refinement in the light of experience” (p. 21). This establishes planning not as the technique of narrowly defined specialists in obedience to “economic laws” but as an on-going, collective, political, conscious, and consciousness-developing, process (as with much of the new economics agenda it is, in a sense, prefigurative, or at very least the means cultivates capacities that are necessary to the ends).

Notable too, on the level of conceptuality, often, but not always, tacit rather than theoretically articulated, is the wider spatial sense of the city in the world and challenges to the taken for granted spatial splits of capitalism ("Capitalism’s drive to increase surplus-value by enhancing productivity...forces a severe spatial, temporal, and institutional separation between domestic labour and the capitalist production-process"[3]). The city economy, therefore, involves both the international and the domestic, two areas conventionally excluded. This is particularly apparent, especially because the intellectualism fostered by the processes of the women’s movement means that the claims are theoretically articulated, in the chapter on and the strategy’s general understanding of the domestic. This includes a set of challenges through the experiences theorised in the women’s movement to dominant understandings, and the possibilities of a practical challenge to things as they stand,

Work performed in the house, usually by women, is unpaid and largely unrecognised. But it makes an important contribution to the economy and affects how wealth and work for wages is distributed...the boundaries between the tasks that are performed privately in the home and those that are publicly provided or communally performed are not fixed. In the 1920s there were radical versions of communal organisation of daily life (p. 195).

The domestic, however, is not only included as one sector among others in the GLC’s politics of production (perhaps it would be better to say production and reproduction), but figures as the starting point of consideration, “for an economics geared to need the household is the starting point” (p. 19). Attention to the domestic a major lever for opening wider questions, grounded in the strategies developed by the women’s movement, involving,

Extension of the sharing of domestic work and caring: within the household, between households, through extended public provision; linking public provision (particularly of childcare, and care for the elderly) to the needs of women as wage workers; further reducing women’s total working time by improved transport and communications, and the decentralisation of public services and shops; changing the structure of wage employment to allow for a better integration between wage work and domestic care. (p. 21)

As suggested by this particular attention to the domestic and women’s oppression, both in the home and in its impacts in waged work, the GLC strategy is attentive to inequalities and forms of oppression more widely, particularly of race (there are affinities here with some of Howard’s remarks on community wealth building against the extraction of resources or non-resourcing of neighbourhoods of colour). The strategy notes disproportionately high unemployment of Black youth (p. 6), creating strategies to develop the power of Bengali clothing workers to challenge discrimination and oppression (p. 137) and particularly focusing interventions in training and childcare on part-time cleaners, who the strategy notes were disproportionately Black women (p. 460).

Spatial questions also implicate how does the local exist within both the global division of labour and imperialist militarism with the strategy attending, on a local level to both global supply chains and arms conversion in a way that should inspire the fleshing out work nationally as well as locally. The GLC strategy, for example, is far in advance of Labour nationally at present on global supply chains and, particularly, on what is now described as defence diversification, with the limitedness of British trade unionism a significant factor in the lack of much of the latter thus far in Corbynism. The GLC strategy, for example, proposes “the GLC will seek to set up links with clothing providers in the progressive countries of the Third World who provide good quality, unionised employment, and will seek to increase trade between London firms and these enterprises” (p. 137). Learning from this and applying it in the circumstances of 2018 would require an ethical and imaginative procurement strategy would be key, and this would require a major challenge to government proposals to ban councils (and not only councils) from divesting on ethical grounds, if these are restarted following the Palestine Solidarity Campaign's successful challenge- the focus has been on opposing BDS but it extends far more widely. The establishment of non-exploitative trading relations is also part of the arms conversion strategy within a critique of government aid programmes that support arms trading and the

Creat[ion] of a market for over-priced and uncompetitive British goods, especially when, as is often the case, such exports are for purposes of dubious relevance to real needs in the Third World, or may actually be harmful.” (p. 300)

The whole agenda whether considering Preston today or London in the 1980s has to have this strong spatial sense around where the local stands in flows of capital, and what it can do about them, and it is perhaps the specifically spatial thought and practice that gives these models their anti-capitalist character and their usefulness.

Finally, there is the theoretical radicalism that brings together all these considerations into general principles for a politics of production. The strategy rejects not only monetarism but Keynesianism particularly because of their focus on national markets and consequent indifference towards the local and to production, let alone to the domestic (p. 59-60). Instead, general principles of a politics of production are set out, which potentially offer a great deal to imagining what a strategy for local democratic economic development might entail.

  • An emphasis on long term strategic production planning of industries;
  • a concern that restructuring in all sectors of the economy should be carried out in the interests of those who work in the industry and use its products;
  • a commitment to the development and application of human centred technology;
  • a strategic concern with improving the conditions and hours of work in the domestic economy, and with improved means of integrating domestic work with other parts of the economy in order to improve the living and working conditions of women;
  • a priority to extending social control over the public economy through increasing political, trade union and user control;
  • a commitment to popular involvement in all aspects of strategic policy making (popular planning) and in the operation of enterprises (enterprise planning).

Clearly we are a long way from being able to formulate let alone implement a contemporary version of the GLC’s industrial strategy, it would require the development of and extension of powers and capacities both legal and institutional and cultural-political in the broadest possible sense. However, exploring what it might take to get to such a place and what can be began now would certainly be worth attention.

Photo: Dr Greg

  1. The London Industrial Strategy, (London, Greater London Council, 1985). All page references are in parentheses in the text ↩︎

  2. Neil Smith, The New Urban Frontier: Gentrification and the Revanchist City, (London: Routledge, 1996), p. 161. ↩︎

  3. Lise Vogel, Lise Vogel, Marxism and the Oppression of Women: Towards a Unitary Theory, Chicago, Haymarket, 2013, p. 157. ↩︎

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