Philip Blond: What would the Tories doin the Economic Crisis if They Were in Charge?

However, the Conservatives without quite realising it have already embraced part of the answer to the current economic crisis ”“ localism. The economic disaster now engulfing us is a direct result of financial globalisation and the resultant monopoly and speculation that this has encouraged. For instance the “free market” allowed a monopoly accrual of debt (which is what Fannie Mae and Freddie Mac achieved in the US) and the speculative reclassification of this debt as an asset. Securitising this debt across the globe as a stable income stream allowed the huge augmentation of credit and the initiation and expansion of the asset price bubble. However this process undermined the very assets on which the original debts were written ”“ since other debts subsequently made to the both the prime and subprime market were written not on ability to pay but on the now speculatively enhanced asset price itself. This system fed on itself until someone somewhere became unable to pay, as happened in the subprime crisis where, because of the hidden penal interest rates levied on the poor, the whole system unraveled.

The current Conservative emphasis on decentralisation and the development of local societies offers a real though unexplored alternative to much of the foregoing. If localism is to flourish it needs a corresponding political economy, so far the Tories have defined this in terms of disaggregating to communities state funds and public grants. Yet there is another source of disempowering monopoly: the market. Corporate capital has outcompeted local small businesses so that our towns and cities have become clones of each other with the same chain stores, restaurants and retail outlets. All of this sucks money out of the regional economy, with only 50 pence of every pound spent in corporate outlets returning to the locality ”“ as against £2 returning to the area for every pound spent in a local business.

If we were able to generate a local economy, then why not decentralise finance as well, and create, as David Cameron has already intimated, local cooperatives and indeed guilds around which people could invest? Then, we could reinvent capital as also local and not just global.

Read it all.