The well-being of Europe’s citizens depends less on individual consumption and more on their social consumption of essential goods and services – from water and retail banking to schools and care homes – in what we call the foundational economy. Individual consumption depends on market income, while foundational consumption depends on social infrastructure and delivery systems of networks and branches, which are neither created nor renewed automatically, even as incomes increase. This historically created foundational economy has been wrecked in the last generation by privatisation, outsourcing, franchising and the widespread penetration of opportunistic and predatory business models. The distinctive, primary role of public policy should therefore be to secure the supply of basic services for all citizens (not a quantum of economic growth and jobs). Reconstructing the foundational has to start with a vision of citizenship that identifies foundational entitlements as the conditions for dignified human development, and likewise has to depend on treating the business enterprises central to the foundational economy as juridical persons with claims to entitlements but also with responsibilities and duties. If the aim is citizen well-being and flourishing for the many not the few, then European politics at regional, national and EU level needs to be refocused on foundational consumption and securing universal minimum access and quality. If/when government is unresponsive, the impetus for change has to come from engaging citizens locally and regionally in actions which break with the top down politics of ‘vote for us and we will do this for you’.
An overview of the book’s argument is provided, followed by summaries of the argument of the succeeding chapters. The post-1945 national practice of economic policy has been about making ‘the economy’ work to deliver jobs and growth of market income. In consequence, policymakers have neglected the social infrastructure underpinning everyday activities and practices which are vital to civilised existence and human well-being. This book is about two key advances: the creation of a networked infrastructure of pipes and cables, and the development of the modern welfare state. Together, they have effectively extended the entitlements of citizenship and added more than 25 years to urban life expectancy.
The foundational economy is a matter of everyday routines which depend on a social infrastructure of providential services like health, social care and education and the material networks of pipes and cables that connect every household. This cannot be understood on the assumption that there is a clear divide between a productive private sector and a resource-consuming public sector. The economy is not a system of wealth creation led by the private sector but a system of revenue circulation which is failing to deliver foundational welfare. This is because of underinvestment in systems and over-reliance on distribution of market incomes through employment. There are relatively few good jobs in the high-tech and knowledge intensive sectors; and too many badly paid, precarious jobs in mundane activities.
The period since 1979 is identified as the period when the historically created foundational economy was comprehensively wrecked by a mixture of public policy and changes in business practices. The UK and Italy are used as two case studies of a process which has proceeded by different routes but arrived at the same destructive destination. The histories of privatisation, of franchising, and of outsourcing in sectors as different as rail transport and personal care are examined for illustrative purposes. The chapter shows how shareholder value priorities and the practices of financial engineering have opened the door to a wide range of opportunistic business practices by private firms that now dominate the foundational economy.
Citizenship is shown to be central to the reconstruction of the foundational economy on morally defensible grounds. This is because the foundational economy is, at heart, a system of social citizenship. Reversing the degradation of this system has to begin by linking the reform of the foundational to our present understanding of what is socially required to function as a fulfilled human person. It must also challenge the elision of citizenship with the entitlements of the current inhabitants within the jurisdictional boundaries of the nation state. Rebuilding the foundational economy has to do more, however, than concentrate on human persons. It has to recognise that the business institutions central to the foundational economy are juridical persons, and as such should operate under a developed system of both entitlements and duties.
The book’s argument is for raising the quality and availability of universal basic services (not market income). This renewal depends on four key shifts in the practice of policy which would disrupt established policy agendas: ask citizens about their foundational priorities; extend social influence over business by a kind of licensing of corporate business; while encouraging small and medium enterprise; reinvent taxation to secure foundational revenue and capital investment; and, finally, create hybrid political alliances to drive change because government is not always benign or capable. Radical change does not wait upon alignment of these conditions. It can start tomorrow fin the world as it is with local foundational experiments through which can come learning and political mobilisation