For this episode of ‘Principles’, we have a topic which more-or-less continues on from the train of thought we were left with with the principle of decentralisation.
First of all, what we must acknowledge is that this next Principle we are advocating is strictly not to be confused with Communism or an allegiance to any ethnic group, vis-a-vis India. What we are doing here is speaking strictly in terms of an economic structure; an economic principle which allows us to elaborate on the poignancy and practical benefits of decentralisation, in the aim of helping to rebuild long-forgotten communities: the direct opposite principles involved in either of these two confusions.
The basics of decentralisation in “Principles 1” explained the effects of current trends, the need for a synthesis of local authority-based investment into the real economy exclusively involving actors and institutions who play by the rules. This episode of the basics of communalism will explain possible avenues to the implementation of this approach.
The communalism of which we speak is merely what we see to be an antidote to the problematic trends that I have outlined so far in the Introduction and the ‘Principles 1‘ episode of this blog. We are not looking for a utopian solution to capitalism – this is not a utopian blog. We appreciate the structural incentives of capitalism which allow for a unique blend of dynamism and innovation which if it were for any other structure of incentives would hardly exist.
What we are doing here is realising these benefits, but also realising (as we have underlined in the Post #1 – The gist of it) with a fetishisation of a certain kind of capitalism, alongside a growing number of trends – that the best side of capitalism, and in some cases even the basic tenets of capitalism have not been nurtured. Furthermore, what we are also doing here, is underlining that these basic tenets, and the best side of capitalism can eventually be rejuvenated. Rejuvenated through the appropriation of these trends which have so far worked in a regressive fashion, into mechanisms which will allow us to shape economic frameworks into equally beneficial structures of economy which work for everybody.
In our episode of decentralisation, we have already mentioned the growth of the shadow economy through the hyper mobility of capital arising from the trend of interconnectivity (globalisation). This interconnectivity however, is almost primarily due to the trend of technological advancement.
With the advancement of technology and interconnectivity, what has also happened so far is that the global economy has shifted the focus of the majority of economic activity into pockets of oligopolies, monopolies and highly concentrated areas of gentrification. This top-down approach, especially with its focus on large institutions heavily involved in the shadow economy such as large retail banks and corporations has meant that economies are to too much of an extent built upon the insecure, risky foundations of large personal and public debt. It has also meant that the search for employment for people outside of these pocketed areas has become more of an occupation in itself. Left outside of this narrow scope of opportunity, and private-centralised system, individuals find themselves unable to cope with a universal cost-of-living eschewed by this economic inequality.
The advancement of technology has worked so far in this regressive fashion, however it also can and should be used as a remedy to these state of affairs. It is a force which as of yet, has not so much been used, but can be used as the ultimate tool to cultivate an economic environment which is equally dynamic and innovative as it is socially conscious, responsible, inclusive and horizontal; and better yet, used to place everything under a better framework of democratic accountability.
An example of this two-sided coin and the many side-effects of technological development is the fact that great diversification has occurred in regards to the creation and change of sectors of modern economies. Self employment has now become something regular for many individuals who use the internet to pursue their own small endeavours for extra income. Younger generations pursue their careers as something which is an extension of their activities online. If you have a passion, it is increasingly becoming the case that the wisest thing to do is purchase a domain and increase your activity on social media.
What can be done about this is to understand that these endeavours have the potential to create a wide range of new local, small businesses. With investment into these projects which have large potential (providing that conditions are attached so that they abide by the rules of repayment to the local economy) huge degrees of neglect in terms of infrastructure, underinvestment, scarcity of opportunity and self-sufficiency for these communities can be reversed. The negative of diversification can ultimately be turned on its head; from something which is in some ways the signifier of insecurity, and an effect of top-down economics within societies, to something which can be the bedrock of bottom-up, grassroots, inclusive regenerative economics.
What else is similar that has occurred and which can be redeemed, is that under this dichotomy of a real and shadow economy, competition has become utterly eschewed beyond for example Adam Smith and many free market advocate’s wildest nightmares. On this uneven playing field, businesses in the shadow economy are untouchable. For many free marketeer’s benefits of the principle of competition to come to fruition, what must be possible is that any entrepreneur can challenge the established frameworks, undercut established businesses with different ideas and innovations. This is blocked by the overwhelming market power that these established institutions already have, and established frameworks already allow. This also can be reversed.
Making the most of this diversification, through the building of local, real economies. Businesses and individuals within these new frameworks can develop new dimensions of comparative advantage in competition with businesses in the shadow economy. This is what we mean by communalism. Building local (real) economies means building an equilibrium between globalisation and local communities, retaining innovation and the effectiveness of free market competition within capitalism.
In ‘Principles 1 – Decentralisation’ we already referred to a few articles with regards to the benefits of a communal banking system such exists in Germany. This concept of community banking is another example which typifies the general principle behind the kind of communalism we are supporting here. It is one of the ways in which it this kind of decentralised economy with a specific focus on community can ultimately start to be realised.
To elaborate on this. Consider how one of the main problems in the UK economy is the imbalance between the general cost of living, and of loan sharks – ‘payday loans’ companies, large retail banks charging extortionately large rates of interest from their customers. While sucking demand further out of local UK economies, a local economy based on this environment of lending means that the risk involved is incredibly high. This is compounded by the fact that there is almost zero interaction between these companies and their clients. The larger these company’s sphere of influence becomes, the less of a relationship they have with their customers, and the less informed their decisions are. Without even mentioning the consequences of too-big-to-fail banks overall. Both of these issues are problems which can be immediately improved by community banking, and the overall benefit of there being a limit on the size of financial institutions.
A quick end, although hopefully by now you can see the link between decentralisation, the general principle of communalism, and with a tenuous link to granting more democracy within communities – how these principles can correct larger contextual issues.
More will be explained in the next post.
But until then.