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From competition to the foundational economy

For thirty years, the British economy has repeated the same old experiment of subjecting everything to competition and market because that is what works in the imagination of central government. This book demonstrates the repeated failure of the 30 year policy experiments by examining three sectors: broadband, food supply and retail banking. It argues against naïve metaphors of national disease, highlights the imaginary (or cosmology) that frames those metaphors, and draws out the implications of the experiment. Discussing the role of the experiments in post-1945 Britain, the book's overview on telecommunications, supermarkets and retail banking, reveals the limits of treatment by competition. Privatisation of fixed line telecoms in the UK delivered a system in which the private and public interests are only partially aligned in relation to provision of broadband. Individual supermarket chains may struggle but the four big UK supermarket chains are generally presented as exemplars because they have for a generation combined adequate profits with low price, choice and quality to deliver shareholder value. The many inquiries into retail banking after the financial crisis have concluded that the sector's problem was not enough competition. In a devolved experiment, socially-licensed policies and priorities vary from place to place and context to context. However, meaningful political engagement with the specifics in the economy will need to avoid losing sight of four principles: contestation, judgement, discussion, and tinkering. While others can be blamed for the failure of the experiments, the political responsibility for the ending and starting another is collectively peoples'.

The Foundation Economy Collective

pressure to deliver (more) shareholder value, which means higher returns on capital, preferably with growth of earnings and profit. Under financial market pressure, the result is a kind of predation which is peculiar to financialised capitalism – a system which is run by self-serving elites directing institutions that are increasingly careless of any social responsibility. In countries like South Africa or Saudi Arabia we have pillaging and looting via elite commissions on private deals and revenue skimming on public projects, which is tolerated by government but

in Foundational economy
Success at the cost of suppliers
Andrew Bowman, Ismail Ertürk, Julie Froud, Sukhdev Johal, and John Law

Chapter 3 Supermarkets and dairy: success at the cost of suppliers Overview Individual supermarket chains may struggle but the four big UK supermarket chains are generally presented as exemplars because they have for a generation combined adequate profits with low price, choice and quality so that these retailers deliver shareholder value and serve customers. This case presents a chain analysis of the sector and tells a rather different story which is both more complex and much darker. The business model of the supermarket retailers is a point value success and

in The end of the experiment?
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There’s more than one show in town
Andrew Bowman, Ismail Ertürk, Julie Froud, Sukhdev Johal, and John Law

challenge generic corporate business models with their commitment to shareholder value, we need to relate sector specifics to a larger economic and political argument. Here again Braudel shows the way. • First, without mechanically transposing his three-­layer descriptive scheme, we can draw on his idea of several distinct zones or spheres of economic life. The idea of an infra economy can be rethought in the context of current British specifics. To do this we reframe ‘the economy’ by talking about a zone of activity which 118   The end of the experiment? we call the

in The end of the experiment?
Under-investment and confusion marketing
Andrew Bowman, Ismail Ertürk, Julie Froud, Sukhdev Johal, and John Law

subsidiary directly responsible for building and managing the UK’s telecoms network, tells a similar story of no ‘step change’ in investment. After limiting investment in the interests of shareholder value, BT’s contribution is to make Openreach, the subsidiary created at the behest of Ofcom in 2006, into a source of distributable cash. This brings in 44   The end of the experiment? 1,300 1,250 1,200 £ millions 1,150 1,100 1,050 1,000 950 900 2006 2007 2008 2009 2010 2011 2012 2013 Exhibit 2.3  BT Openreach: capital investment, 2006–2013 (2013 prices), £m Source

in The end of the experiment?
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Author: David Whyte

This book explains the direct link between the structure of the corporation and its limitless capacity for ecological destruction. It argues that we need to find the most effective means of ending the corporation’s death grip over us. The corporation is a problem, not merely because it devours natural resources, pollutes and accelerates the carbon economy. As this book argues, the constitutional structure of the corporation eradicates the possibility that we can put the protection of the planet before profit. A fight to get rid of the corporations that have brought us to this point may seem an impossible task at the moment, but it is necessary for our survival. It is hardly radical to suggest that if something is killing us, we should over-power it and make it stop. We need to kill the corporation before it kills us.

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’.

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Scott Anthony

, the replacement of what we might term ‘the Tallents tradition’ with a more aggressive, directive and qualitative iteration of public relations practice appears temptingly correlated with the rise of the ‘right to manage’, the coarse emphasis on ‘shareholder value’ and management of the public sector by punitive targets. Both present academic orthodoxy and common wisdom have it that recent decades have seen an alarming erosion of trust in the media, public life and big business.4 After a generation focused primarily on the mechanistic ends of management, it may be

in Public relations and the making of modern Britain
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(Mis-)selling for return on equity
Andrew Bowman, Ismail Ertürk, Julie Froud, Sukhdev Johal, and John Law

competition between high street banks. In our view, the problem is not absent competition but competition of the wrong kind, around mimetic business models which preserve high return on equity (RoE) through property-­based lending and over-­selling of financial products. The starting point is the standard retail banking business model under public limited company (PLC) ownership. This model is some thirty years old and can be dated to 1983–4 when, first, Lloyds Bank set high RoE targets as the basis for delivering shareholder value and, second, Midland Bank offered ‘free

in The end of the experiment?

Karl Polanyi (1886–1964) returned to public discourse in the 1990s, when the Soviet Union imploded and globalization erupted. Best known for The Great Transformation, Polanyi’s wide-ranging thought anticipated twenty-first-century civilizational challenges of ecological collapse, social disintegration and international conflict, and warned that the unbridled domination of market capitalism would engender nationalist protective counter-movements. In Karl Polanyi and Twenty-First-Century Capitalism, Radhika Desai and Kari Polanyi Levitt bring together prominent and new thinkers in the field to extend the boundaries of our understanding of Polanyi's life and work. Kari Polanyi Levitt's opening essay situates Polanyi in the past century shaped by Keynes and Hayek, and explores how and why his ideas may shape the twenty-first century. Her analysis of his Bennington Lectures, which pre-dated and anticipated The Great Transformation, demonstrates how Central European his thought and chief concerns were. The next several contributions clarify, for the first time in Polanyi scholarship, the meaning of money as a fictitious commodity. Other contributions resolve difficulties in understanding the building blocks of Polanyi's thought: fictitious commodities, the double movement, the United States' exceptional development, the reality of society and socialism as freedom in a complex society. The volume culminates in explorations of how Polanyi has influenced, and can be used to develop, ideas in a number of fields, whether income inequality, world-systems theory or comparative political economy. Contributors: Fred Block, Michael Brie, Radhika Desai, Michael Hudson, Hannes Lacher, Kari Polanyi Levitt, Chikako Nakayama, Jamie Peck, Abraham Rotstein, Margaret Somers, Claus Thomasberger, Oscar Ugarteche Galarza.