What solutions can help bring back the creation of wealth to local communities?


Fonds mondial pour le développement des villes (FMDV)

While many local European governments are currently rethinking their funding and the management of their resources to meet the challenges posed by various crises, some have gone even further by calling into question certain “fundamental” principles of urban development. In this third and final chapter, we will highlight the initiatives attempting to create another approach for funding local areas, which make support for the local, socially inclusive, and solidarity-based economy a top priority. How can we make the local level a top priority in our economic development? How can we create an economic model that generates financial profits and extrafinancial benefits for the society that are socially inclusive and sustainable? What levers do local European governments have for achieving this objective? According to what cooperative model? What role stakeholders can play from the solidarity-based social economy and the socially responsible finance sector? How can we identify the positive outcomes of a project, quantify them, and determine the amount of government aid required? How can we move beyond the experimental phase of these particular initiatives and ensure an overall, standardized, and collective approach to local economic development?

Para descargar: local_innovations_to_finance_cities_and_regions6.pdf (1,5 MiB)

The case studies analysed below will attempt to respond to all of these questions. Each project attempts to encourage the development of the local economic and social fabric with local resources, but in very different ways. These vary from an associative approach to common resources in the Brussels Community Land Trust to the statistical analysis of public procurement in Manchester, and the creation of special trade areas brought about by the creation of a local currency in Brixton. Their common point is based essentially on their ultimate objective, which is to root the local economy in its own geographic area. We chose them to illustrate real political actions undertaken to bring back the creation of wealth to the local community. In addition, they can be applied by any other local government, and are experiments in which the local government plays a major role in defining and conducting them.

Toward a new approach to local and global development

Increasingly present and building on each other, there are many approaches striving to transform local areas, such as edible cities, Transition Towns, and alternative indicators of wealth and well being. The common point among all these initiatives is that they contribute to reflections on concepts such as commons and the right to the city, often advocating a break with the past so as to achieve a social, ecological, and democratic transition. Fundamentally motivated by principles of active solidarity, these initiatives invite us to renew local economic thinking. The French sociologist Jean-Louis Laville argues that these alternatives have a transformative function1. Encouraging an endogenous approach, oriented toward the local area, these initiatives are complementary to traditional financing schemes (grants, transfers, local tax schemes, Public-Private Partnerships, and borrowing) and schemes to optimise the management of expenditures (in-depth cooperation, decreasing the energy dependency of local areas, redefining the levels of local government…), which were analysed in the previous chapters. They open up another way to produce, redistribute, and evaluate the wealth of the local area in which the local economy is a catalyst for local development. It is a question of (re)becoming conscious and using the significant local economic potentials available, which have sometimes been neglected due to globalisation and the consequent financialisation of the economy. In synergy with local area management systems, these approaches attract the attention of local governments, which support them and deploy complementary financial, economic, and monitoring strategies. They make it possible to transform the organising principles of local government and related institutions, to promote fair access to public services, and to initiate a new dynamic cycle of relationships with local residents (in other words, a culture based on participation2). As good places for experimentation and cooperation, urban areas are conducting experiments that develop and support local practices promoting social integration and inclusion. Far from excluding or marginalising the poorest, these initiatives are helping to renew urban development in a way in which everyone can find their place.

Rethinking local area governance: re-establishing the role of local governments to support the local economy

The three case studies presented in this chapter are examples of possible transformations of the role played by local governments in the management of local areas and in the governance of urban public services. The latter are currently torn between performance requirements and broader reflections on their sustainability, which have been conceptualized by advocates of coproduction3 and the social and solidarity-based economy (SSE). Coproduction consists in involving professional stakeholders and service recipients in every phase of the service chain (from design to distribution, and including control and assessment) in order to make it more effective and cut costs. It is often compared with the SSE, which according to the French Ministry of Finance, designates “a group of companies […] whose internal operations and business activities are based on the principles of solidarity and social utility. These companies operate on the basis of democratic and participative management principles4”. Another definition, more common in other parts of Europe including the United Kingdom, and which could be called social entrepreneurship, makes a distinction between SSE organisations and others in terms of the fact that the former are motivated by public interest rather than profit. Taking account of this overall objective, these organisations have the same kinds of interests as local governments.

There is no unanimously accepted definition of the SSE in Europe, rather varying definitions according to economic and social traditions in different countries. In spite of these differences, the SSE is a concrete reality in Europe, where this sector accounts for 10% of the jobs5. The SSE provides a new perspective and new solutions to the challenges traditional approaches have not been able to resolve. It brings global issues down to the local level, facilitating stakeholder “ownership”. These stakeholders include citizens, associations, entrepreneurs, and elected officials, who would not have been able to engage in such action beyond the local level. In this framework, in which the governance of public services is being reconfigured (coproduction) and private stakeholders are playing a role in working for the general interest (SSE), local governments find themselves at the centre of interests that converge on sustainable local development. Internationally, the European Commission and the OECD are behind this new “placebased approach6”, and hope to strengthen key local leaders7. The major issue facing the innovative policies and strategies emerging in European cities and regions is to encourage the development of the values and ideas of the social and solidarity-based economy in an international context that is not very open to its guiding principles.

Concrete initiatives in favour of local economic development – the driving force behind the development of a geographic area It is highly likely that in the fast-changing economic and social context, all local European governments are going to have to find new endogenous sources of financing for local economic development. This chapter suggests another approach to local areas and the sustainable city, and indicates a new socio-economic model rooted in daily life. In a society that has been indelibly marked by the current multifaceted crisis, local governments and local areas can initiate political actions that significantly redefine traditional development strategies, based on the already existing relations linking the stakeholders in the same area, and at no extra medium- or long-term cost to the local government. Local economic development is largely dependent on joint action based on dialogue among all of the stakeholders in an area (elected officials, local companies, associations, and others). For these urban actors, implementing a policy of endogenous local development enables the wealth created in the local area to be amplified and rooted in this area, and in this process consolidates local economic and social cohesion. As is the case with the strengthening of public procurement policies to favour local stakeholders, local currencies, and the development of Community Land Trusts studied in this chapter, the objective is to provide local governments with the means to create win-win partnerships with local stakeholders in order to create development opportunities. Each of these initiatives has demonstrated its usefulness and pertinence in its own way and context. However, because these are innovative policies going against the flow of major world economic trends, they are often misunderstood or victims of biases that can slow down their implementation. Thus as a battle for people’s hearts is being waged between international competition and local economic development, a new idea called system “viability8” is emerging. By taking into account the intrinsic positive and negative outcomes of an action or development project, this notion opens up new perspectives. We are not only trying to green the economy today, but also looking for a fairly organised system with improved local participation.

1 For more information, you can visit Jean-Louis Laville’s blog (in French)

2 Access to public services and the urbanisation of the world, Chapter on metropolises- GOLD 3- UCLG report

3 For more information, visit www.fmdv.net

4 Finance and economy portal (updated 08/11/2013, in French) Qu’est-ce que l’économie sociale et solidaire ? (What is the social and solidarity-based economy) Centre de documentation économies & finances (Economics and finance documentation centre)

5 Désert, Manon. (in French) L’économie sociale et les élections européennes : enjeux et perspectives (Issues and perspectives for the social economy and the European elections). Pour la solidarité (For Solidarity), working papers collection. April 2014.

6 F. Barça (2009) An Agenda for a Reformed Cohesion Policy- A place-based approach to meeting European Union challenges and expectations. Independent Report prepared for Danuta Hübner, Commissioner for Regional Policy

7 Barcelona Principles, defined within the OECD’s LEED programme: G. Clark (2009) Recession, Recovery and Reinvestment: The Role of Local Economic Leadership in a Global Crisis

8 Rivalité des puissances ou humanisation, il faut choisir (in French-We must choose between rivalry between powers and humanization): Xavier Ricard’s notion of viability p158 – Revue Projet « quel travail sans croissance ? » (What work without growth?) Oct-Dec 2013.