Brexit. The last chance to do the right thing.

Calvin Jones argues that Brexit provides the springboard to genuinely transform the economy.

It has already begun. The Chancellor aiming to make business even cheaper to do in the UK, and doubling down on our Big Brother-esque relationship with China (‘It’s not us George. It’s you.’). Our Economy Minister promising much more of the same and making it plain Wales remains ruthlessly open for business (but not like BHS was open for business, hopefully), whilst the First Minister emphasises not a penny of subsidy must be lost, and the Opposition tout a Marshall Plan for Wales that would have many merits, except that it wilfully ignores the last forty years of UK economic history. In short, the task is on, and tools are to hand: plenty of mood-soothing political paper and buckets of sticky platitudes to paste over Britain’s largest ever cracks. If only we had an infinite number of long armed chimps.

This might have been sufficient for us to limp on in the face of a narrow Remain vote. After a referendum for Leave that was characterised by deep social and geographic division, driven largely by the have-nots (and never-wills), it is not good enough: Nowhere near. There are a number of important lessons for Wales from Brexit. One is that economic position and prospects matter more to those at the wrong end than any sense of ‘Welshness’. Another is that those who have been left behind by the modern, globalised and networked economy fully realise the precarious nature of their future and the paucity of their social stake, and are therefore very willing to abandon business as usual to take a leap into the dark, holding hands with a number of people who would normally be extremely unwelcome north of Nantgarw.

Business as usual is in any case dead. We will only know the full cost of Brexit for Wales after our Captains of Industry have picked through the wreckage from their offices in Mumbai, Toulouse, Essen and Dearborn, and after our plucky Westminster negotiators have wrung every last concession from the unelected Brussels commissariat, but it is fair to say that the twin dreadnoughts of inward investment and redistributive UK regional policy have not so much sailed as been floated into the Bay, loaded with Semtex and torched. But doing different stuff is hard. Prior attempts to create a new ‘endogenous’ dynamism in the Welsh economy, based on flawed and imported notions of enterprise, entrepreneurship and competitiveness have been buried quietly in unmarked graves next to the innovation and R&D strategies. And the reason all these have failed is that they were uniquely unsuited to the Welsh social, ecological and economic-geography context, as well as the character of the nation, insofar as it is different to the English.

So whatever replaces our outward looking, region-competitive, foreign capital-led policies (which would not save the Valleys or rural Wales even if they worked) must build on what the Welsh are good at. Which is not much, but does include a reasonable level of cheerfulness (or at least contented grumpiness) in the absence of actually having much stuff; the (related) valuing of geographically based social and community networks; and an (often misplaced) belief that their local patch is somehow better (or at least different) to other places. Some of these slightly different approaches to life have seen political flowering in the Future Generations Act. The rejection of a globalised, fragmented and insecure economic future by those most important in our society – the left behind – gives us the mandate to follow such policies to their obvious destination. This is where I begin to sound like a broken record, but here goes.

Brexit provides the springboard to genuinely transform the way we think about, talk about and engage with the economy, and from this, to eventually change the economy itself.

All this would take (yes, yes I know) is the placing of the Future Generation aspirations – the primacy of people’s current and future welfare, here and in other places – at the centre of Welsh Government economic strategy and institutional structures. The evidentially obvious conclusion here is that further economic growth, as currently understood, is an inappropriate target – ecologically and climate destructive, very uncertainly related to happiness, and in any case physically impossible in the medium term. Economic growth is in any case becoming more and more difficult in Western Europe, down a long way from its post-WW2 high. Recognising and responding to secular stagnation with a deliberate move to a dynamic steady state economy is at least a distinct and positive choice that responds to real social problems, and to the actual financial reality – that we already live in pretty much a zero growth world, certainly in terms of public sector budgets and average disposable incomes. This is a new normal not a blip.

A steady state economy would bring a far greater focus on redistribution and reallocation of resources, although doing this via centralised tax-and-spend is far from optimal (although still marginally better than bloody, violent revolution); far better to redistribute work and opportunity rather than cash. There is much merit in the idea of a four-day week. Certainly in my case, giving up my fifth day (and 20% of my income) to a postdoc researcher would probably increase aggregate welfare and the productivity of my university (as well as, I suspect in my case, the general level of cheeriness around the office). A new, radically decentralised approach to service delivery would spread opportunity geographically, and an allied restructuring of institutions (and politics) together with an above-all focus on holistic, civic and inclusive education (building engaged, curious citizens not just instrumentalist worker-drones) would help the next generation understand the nature of the opportunities offered, and the shape of the new social contract. Such an economy can only function if contributions from people are maximised – across space, society and lifetimes. There can be no slack resources: no able-bodied or -minded people sitting idle when there is socially useful work to be done, and the devolution of welfare policy will be a key enabling mechanism.

Such an economy prioritises the local (and won’t Kevin Morgan’s entreaties on procurement take on a new light now all those pesky EU Directives have gone away?). Local, diverse policies delivered through city-regions and Counties and hyperlocal democracy. Locally owned (and otherwise embedded) organisations favoured in planning and tax structures. The disadvantages of the small against the large recognised, and good businesses prioritised for support rather than obsessing on growth. And on the consumption side, Brexit is the ideal opportunity to recognise how far current levels of growth and consumer expenditure are actually built on economic structures, sectors and bubbles that are effectively in meltdown – and how far re-localisation of consumption – and thence, eventually production – is a viable and coherent response.

Living on what we actually have, not what we might expect to have in future, is no happy-clappy, hippy utopia, no matter how it looks from the snoozy comfort of a rural Transition Town. There is merit in the idea of a Welsh scrip to reward and enable social contributions, complementary to Sterling and acceptable for regional tax (which as Dave Graeber points out is the primary rationale for money), but this won’t buy many iPhone 7s. At-will, far-flung holidays are a very recent development, in-play-vulnerable now irrespective of your economic outlook. In my opinion, the room’s largest elephant is that retirement for the masses is wholly an invention of the fossil-fuelled, rapid-growth industrial age. Retirement is reliant (either directly or indirectly) on inflating the balloon of stocks, shares and other investments – but in real not nominal terms. Keynes’ investible opportunities, required to puff helium into this great balloon are drying up as innovations become ever more trivial, the marginal efficiency of capital nosedives and markets tie themselves in ever greater knots in an effort to hide their basic irrationality, inefficiency, corruption and inherent unfairness. So building a new narrative for the older population – as workers perhaps, but also as carers of the young, as teachers and as integral parts of larger households – will be a key plank of any bridge to the future.  

So where do we start? We start, as always with language and developing a shared understanding, then with the policies and structures, and key projects (such as a properly multi-nodal Metro and decentralised, zero carbon energy system) that will take us to a preferred future. We of course emphasise to our partners (such as existing inward investors) that we would love to have them walk this road with us, and think about how we build an offer to new global partners who have a predisposition for working with the new, the socially innovative and the sustainable. A Cardiff City-Region Commission aimed at making those living in the region Safe, Happy and Well may sound a bit soft, but it’s at least distinctive, clear and radical – unlike the current, perhaps slightly dystopian-sounding version.

No doubt the comments below the line will decry my isolationist, socialist, greenie idealism, but a rejection of the current hyper-connected, hyper-global and faceless nature of economic life need not be read as such. I am writing this piece because a very nasty strain of isolation is, I believe the most likely ‘policy off’ scenario for the medium term future, and those of us with a more communitarian bent must find a positive narrative with which to combat the rosy, backward-looking and ethnically-cleansed visions of Britain (and hence Wales) currently on offer. There is a wealth of evidence that when people say they want a job, what they actually want is to feel valued for their contribution to the communities (geographic and of interest) of which they are a part. If we use this as the premise for building a Welsh economy and national narrative, rather than focusing on the notional value of crap created, crap delivered and crap thrown away, then we have a chance of pulling some pretty cool stuff from the wreckage of the last two weeks.

Calvin Jones is a Professor of Economics at Cardiff Business School

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