Monday 11 November 2013

Markets vs Planning

Free market capitalism works in silos. Someone sees an opportunity in a particular sector; identifies resources to apply profitably and tries to grow a business in that sector. The enterprise relies on the pre-existence of infrastructure, skills and media which enable their success. The business thrives or fails. The infrastructure remains. Simple.

But the world is more complex than this. Those pre-existing conditions on which the entrepreneur relies; and those resources which may be brought to bear for the enterprise do not just happen. The free market did not create them.

The Industrial Revolution brought people together into conurbations which became the markets of the last 2 centuries. The movers and shakers of those communities invested heavily in roads, rail, schools and communications infrastructures to serve their cities. Those great Town Halls of Leeds, Manchester, Birmingham and many other cities are metaphors for that community investment. Trade demanded that these be linked too, so energy, railways, canals and roads were a part of their plans for prosperity. For 200 years or so, these investments, updated and complemented by the welfare state, formed the basis for enterprise to flourish, especially around making things, using the combination of new technologies and mass labour.

But the post-Thatcher, post-manufacturing era saw not only the demise of the great employing businesses but a doctrinaire departure from the idea of planning which had created the means on which enterprises were built. Thousands of businesses failed and their skilled workers were cast aside as industrial waste. Without planning in place to re-use them, whole communities have never been able to recover fully. Yes, today there are more people in work than there were then; but this work is different, as desperate people have been forced to apply themselves to work which may be less skilled and less financially rewarding. The important sectors of the future may be different and not need to be in the conurbations with their ready infrastructure, Care for the growing seniors population; ICT and web-based supply; leisure and retailing are the 21st century equivalents of ship-building, textiles and widgets; and have different needs and locations.

We argue that instead of looking at enterprise as the starting point for recovery, planning is required which prepares the way. Local authorities need to understand how their local economy can thrive in future: what resources they uniquely have or can develop; what skills are inherent in their workforce; what opportunities may exist, This local plan (and local can mean regional) can then lead to a clearer understanding of what skills may be needed and where in order to make for a thriving economy. The mapping of people to training to jobs to housing and transport can then drive that investment that no entrepreneur will make, no matter how clever they may be, for it is beyond their silo. Instead of planning being seen as a dirty word, representing the dead hand of bureaucracy, as portrayed by the Right, let it be embraced as the facilitator of work, community and prosperity, so that the right infrastructure is in the right places for the people of the country; and for the future's entrepreneurs to make us of.

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