This week Collaborate Intern George Fraser looks at how collaborative and innovative approaches to social inequalities can potentially reinvigorate communities in the process.
With all the swagger of a fresh faced stock market trader Britain boldly grants itself the status of ‘developed economy’, soaring high above those around the world still trying to find their way to the promised-land that is economic prosperity. The title reassuringly projects an image of the finished article, a job well-done. At this point it would seem all that remains is to make a final decision on the embossed business cards, and to go about the task of whittling down the list of plaudits to those most gratifying.
The desperate clutching of this reality had been succumbing to ever more sweaty palms for years leading up to the 2008 financial crisis, at which point the elephant in the room finally had to be acknowledged – and this time without so much as a dismissive chuckle, or hopeless smirk in sight. People have found themselves working longer and longer hours, in less and less fulfilling job roles, and spending more and more on basic amenities. All just to enable them to go about the daily task of keeping calm and carrying on. At such a point, being told that the public services they are routinely charged for haven’t got enough money even to maintain current standards, let alone improve, comes as quite a kick in the teeth. It seems there may be plenty of room for the development of this economy after all.
The idea that Britain’s GDP is dependent on the success of its largest companies is almost certainly true, but what has become increasingly clear is that Britain’s economy and Britain itself are no longer running down the street hand in hand. There is a real feeling today that where there seems to be money around to pay for bankers’ bonuses, for footballers’ absurd wages and to warrant the development of luxury apartments all over London, when it comes to maintenance of society all of a sudden the piggy bank is empty. So why is there such a contrast? If people are working as hard as ever, where is all the money being spent?
Here in lies the issue of our reliance on the banking system, one that has made it abundantly clear that it is, under no circumstances, to be treated as a servant of the public. By relying on banks to invest our money, we relinquish to a certain degree the ability to support the things we think are important in society. As a ‘nation of home-owners’ we were encouraged to take out mortgage loans in order to get on the property ladder as soon as possible. The financial might of our banks made it possible for many with already relatively affluent backgrounds to purchase property and, seen as a smart investment, taking on this form of debt is positively encouraged. The problem however, is that with the banks directing vast sums towards the property market year after year, we have seen a speculative property boom focused on London. A boom that has made those who own property very happy and left those who don’t stranded in the wake.
With rapidly rising property values as a result of continual investment, we can really see the magnitude of effect the government can have when it commits to targeted spending. The problem is that this money is now locked into an asset bubble, offering no support whatsoever to the improvement of society and its increasingly over-stretched public services. For those members of the public trying to make ends meet as part of society, this represents just another area where rising costs of living are dwarfing wages. The end result of all this is that we are left with an increasingly disjointed society where social mobility is massively inhibited.
How then can we reverse this trend? How can we contribute to our own community just as our ancestors had done for hundreds of years without even thinking? Luckily this is a question many have been asking recently, and a wealth of exciting new ideas has sprung out of this necessity. Perhaps one of the most notable examples is that of the Brixton Pound scheme launched a year after the financial crisis in September of 2009. The idea was that, given a currency that can only be spent in the locality of Brixton, those consumers that possessed it would be encouraged to spend their money in shops and businesses that would accept it – namely local enterprises rather than supermarkets or big chain stores.
For every Pound Sterling that we spend on the high street in Britain today, an estimated 85 pence of it leaves the local economy immediately. On a small scale up and down the country we see the effects this has on communities, or rather on what’s left of them. Gone are the days of the butcher, the baker and the candlestick-maker, we are now faced with the choice between the same major retail chains on every high street, all of whom syphon the vast majority of their profits away to head offices over the hills and far away. The small independent shops have found they need to bend over backwards just to compete with such economies of scale employed by the big boys.
It could be argued that these big supermarkets offer jobs to locals, and this cannot be disputed. But these are jobs serving custom that already existed, only this time workers are paid less to satisfy it and with less association to their community. People have always needed to do their weekly shopping, but now they do it at the convenience of a single building. The service is no longer personal, the quality of food cannot compete with individual specialists, and the act of a weekly shop is now mostly seen as a tiresome chore. Convenience is simply the order of the day.
What then does this have to do with banks investing our money? With the realisation that most businesses are underperforming the government has made huge attempts to make it easier for small and new businesses to survive and grow. However, the reality is that this type of investment in small businesses brings with it a high degree of risk for a bank. Between the year 2000 and the year 2007 the money supply in Britain doubled as money was created out of thin air for borrowing, and by 2011 85.5% of consumer bank lending was being secured on mortgage loans for houses. These loans guaranteed by assets are inherently safer prospects for banks, but for society they are completely unproductive. By comparison only a miniscule percentage is set aside for new and small businesses, just the type of businesses that are integral in defining local communities.
A familiar story of big business trumping small may seem a bit redundant these days, but it is actually more importantly a case of foreign business trumping local. The huge inequality visible across the country, and even across single cities, is as clear as ever. Many areas in London are victims of this problem, where almost all the hard-earned money spent by inhabitants is routed out of the area. When it comes to giving back to local economies people have started to kick up a fuss regarding big chains, but the response is so often nothing more than lip service. A smoother pavement here, a new set of street lights there. Even so, these cases tend to be few and far between, and almost never in communities that are the most vulnerable.
Like most social issues, the longer it goes on the more resigned its victims become. The potential of every locality in the country to take back control of its own economy and thrive as a community is there, but the will to unlock it is fading by the day. We often wonder about the causes of social disorder, crime and poverty. We spend millions and millions to keep it at a manageable level. Yet the answer is already known and the solution right in front of us. Local businesses breed a sense of community, with a sense of community comes social responsibility, and with social responsibility comes harmony. It’s not a mystery to us, but the change will only come from the ground up.
Of course there won’t be an easy transition, the type of ground level devolution needed will have to endure a path of trial and error like everything else. The Brixton Pound is not without its critics, and five years later questions are still unanswered about its real effects. But the fact that citizens want to fix the problem and ideas are being conceived should inspire hope. The truth is these schemes, created by real people, need the same type of confidence and commitment that the banks failed to make in order to really work. The difference is that when it’s in your own backyard, the risks of disregard are far more frightening. With the recent advent of crowd sourcing websites, where the general public can decide to invest as little as £10 of their money in any small business idea that they like, we can see a real loss of confidence in government commitment to investment, and a real statement of intent to take back the economy. The community spirit is still just about alive, though in serious need of resuscitation.
George Fraser is currently interning with Collaborate as part of his MA in International Studies at Goldsmiths University of London. He has experience working for the Department for International Development at the British Embassy in Jakarta, dealing with Indian Ocean earthquake and tsunami relief in Banda Aceh. His interests include political journalism and the role it plays in shaping government policy.