Developing an Economy of Belonging

by Henrietta Moore

The Covid-19 pandemic has exacerbated the systemic fissures and failures of the social fabric through economic policies and political decisions that trace back to the 1970s and 1980s, and that have shifted risk and uncertainty onto the most vulnerable members of society. While Black and Minority Ethnic communities and those living in deprived areas have been most impacted, responses to the crisis are not addressing many of the existential challenges derived from a decade of austerity measures, including rising inequality, economic insecurity, in-work poverty, and declining mental health and life expectancy.

The result is a worrying disconnect between macroeconomic models, centralised policy frameworks and the lived realities of individuals and communities. There is continuous lack of understanding on the priorities and factors affecting socio-economic experiences and wellbeing at the local level. This is further compounded by UK over centralised policy frameworks that constraint local authorities’ of any real fiscal autonomy to confront the crisis through the development of more localised policies to secure people’s livelihoods, capabilities and capacities to respond.

In this project, we examine these challenges by asking how an economy of belonging might be characterised and what consequences this might bring to macroeconomics policy and research. More precisely, we set to identify and understand what are the priorities, infrastructures and mechanisms necessary for macroeconomics to take account of those left behind by structural disadvantage and how these interrelate at the local level.

To this effect, we examine these challenges through three interrelated research papers: WP1, Identifying and understanding local priorities for developing an ‘Economy of Belonging’: A case study of eight areas in the UK; WP2, Political budget cycles and trust in the UK; and WP3, Europe in crisis: political trust, corruption and austerity.

In WP1, we conduct a mixed qualitative and quantitative comparative analysis of eight local areas across four regions in the UK to understand the interconnecting factors affecting individuals’ and communities’ quality of life and prosperity. First, we examine Understanding Society Survey data from 2009-2018 waves to explore individuals’ lived experiences using a multi-level hierarchical analysis. Second, we examine the eight case study areas across a series of datasets and indices at the local authority (LA) and lower-local super output area (LSOA) levels using an integrated analytical framework based on life outcomes, life opportunities and life together (LOOT). This allows us to see more clearly patterns of interaction between factors that are not immediately evident at the micro level – the individuals living in a specific region - nor well captured at the macro level – aggregate inter-regional variations.

WP2 examines political budget cycles and trust at the sub-regional level across the UK. The aim of the paper is to examine whether political cycles are effective in the microlevel

In the UK. Looking at public spending at different levels of aggregation (i.e. central governmental policies, regional policies, sub-regional policies) findings suggest that in the UK, political cycles are effective in the microlevel to a certain degree but not enough to swing electoral outcomes or probability to vote.

Finally in WP3, the research attempts to identify what makes individuals report a particular level of trust towards their national government and why in Europe such trust is declining. At first, the paper attempts to lay the theoretical grounds of what affects trust decisions. Subsequently, we attempt to explore the question empirically by analysing data from the Eurobarometer (2005-2018). Using a multilevel logistic regression, we combine micro and macro characteristics to also explore the role of perceived corruption in this process. Results suggest that corruption is a significant determinant of trust in national governments, particularly where austerity was present.

In this sense, while in WP1 we examines how to capture and understand data on the infrastructures and mechanisms necessary to develop an economy of belonging, WP2 and WP3 examine what drives political distrust in government as a factor that undermines belonging in the UK and Europe.

We conclude that building an economy of belonging requires us to attend to what is happening at the meso level. That is shifting the scale of analysis and the scope of economic policy from inter- to intra-regional variation, as it is place where individual's lived socio-economic realities become meshed with the structural determinants of the economy.

The research further suggests that:

Place is important and the costs of neglecting it are large.

We must proactively address area and community deficits and the capacities and capabilities of individuals to respond to transformation and change. Assisting individuals – through benefits, job creation schemes, and other ad-hoc rescue measures – will not necessarily shift the context of embedded constraints within which they are situated, unless something is done more proactively to address area and community deficits – like environmental deprivation – as well as the capacities and capabilities of individuals to respond to transformation and change.

Change at the meso level has the greatest potential for improving or diminishing place-based prosperity, yet this remains understudied

The analysis shows it is change at the meso level that has the greatest potential both for improving and/or diminishing peoples’ life chances and national economic and political strategies. Analysis shows that that community level is crucial for understanding intra-regional variations that are not captured at macro levels nor perceived at micro levels, and that this meso level remains relatively understudied, most especially in terms of the interrelations of key elements in context specific locales. The report suggests that the micro, meso and macro levels are connected through the workings of meso trajectories, and that such trajectories are currently understudied.

Macroeconomics should take account of meso level trajectories beginning with care infrastructures and activities.

We suggest that possible next step for macroeconomics is to take account of meso level trajectories through care infrastructures and activities – including, the care economy, housing, clean energy, environmental regeneration and green spaces – where training, reskilling and implementation could be created at local level to improve the quality of life and secure livelihoods.

Invest and repair of social capital and social solidarity

A strong component of care infrastructures would include public investments on social capital and social solidarity. This would involve leveraging pubic services for greater impact on peoples’ livelihoods and capacities and capabilities to shape, manage and thrive through change. We suggest that an extended system of universal public services (UBS), could offer transformative, locally-situated and coordinated, and economically feasible way to achieve this.