May 20, 2009
Regions, meaning the city and networks of cities (the pool of people and jobs) are called upon to play a growing role in a globalized system. It is at this level that we can organize economic, social, and environmental cohesion in a knowledge society. A real regional economy means that each region is equally capable of organizing internal exchanges in order to make the most from its assets, and for this, it must know about and control its external exchanges. This is not at all incompatible with the organization of honest competition between economic actors, since everyone must submit to the same rules. On the other hand, it is a profound revision of the fashionable economic doctrines in favour of those where economic and social progress means organizing free exchange between producers and consumers at the European and Global scale. In the current system, consumers are ignoring the entire system of production that leads to the goods and services they purchase. This knowledge alone can lead us towards a sustainable society.
Economics: The art of managing the collective household
The concept of economics comes from the etymology of this word. It refers to the rules of management for a common household. and is particularly applicable to regions. This sense of the word has been progressively removed in favour of today’s dominant economic doctrines which feign the objectivity we have come to assume in the natural sciences. What a bunch of hot air! The famous botanist Carl von Linne (1707-1778) defined economics as the art of preparing natural things for man’s use and of making good use of nature’s bounty. We need to understand regional economics as a way to make good use of tangible and intangible capital, both human and natural,.by maintaining and developing it. It is the art of extracting every last drop of mobilized energy. Nothing in today’s regions is more scandalous than seeing empty hands dangling from unused arms while creativity lies fallow alongside our unsatisfied needs.
But, in reality, considering the abstract and de-territorialized character of our economy, a region can ignore all or almost all of its own organic processes. A big modern city knows infinitely less about its actual functioning – internal and external trade flows, energy and resource consumption, the state of its tangible, intangible, human, and natural capital – than does the traditional Chinese village of 2000 years ago. This is simply because , for this village, knowledge of its metabolism is necessary for its survival. Today, our large public institutions and big business have no such need to produce this information. They are however essential if society wants to understand itself. From this point of view the Euro, beside its formidable advantages, adds slightly to the ignorance. VAT, which if it was thoroughly analyzed would give us detailed elements about local value added, is not exploited at this scale. Nothing in the current tax system prompts anyone to substitute services – that is human work and therefore know-how, to the costly products of energy and natural resources. Regional economics implies taxing the consumption of non-renewable resources.
Carrying the new economy
Putting regions at the centre of European economics in the 21st century does not mean massively developing the capacity for direct action from regional organizations in the economy, nor does it mean reinventing the socialist municipality. The English Community Interest Company (CIC) offers a pragmatic model of the creation of new hybrid actors, lending certain traits to the private sector and others to the public sector. A declaration of general interest allows, like the English legislation says, a reasonable person to certify that the activity is of general interest. Capital is locked in to ensure the objective is not deviated from and certain limitations are placed on the distribution of profits to shareholders.
We propose the naming of a Local Economic Development Agency, in a generic way, as the pivotal actor or the institutional organization to promote local economic development. This actor would not work alone, but would be the architect of new institutional organizations that could simultaneously mobilize businesses in the social economy, including private and public actors. Such an agency would have knowledge of the regional economy as its primary purpose; knowledge of capital at the region’s disposal and their usage, of flows of employment, energy and internal resources as well as the way they are exchanged locally or externally. It would also have the purpose of verifying that different categories of goods – those that are destroyed when you share them, those that are divided when you share them, and those that are multiplied when you share them – are managed in a way that conforms to their nature and which assures that human resources and territory are put to the best use. It could equally serve as an investment fund for local savings since it is the future prosperity of a community that is the only real guarantee of the development of savings. The creation of a European network of Local Economic Development Agencies would permit Europe to share the lessons learned in this new form of sustainable economy.Author : Challenge for Europe