What the Academics Would Do
Can we learn from the current financial crisis? How can we make things better for the future? Two experts from different disciplines at the OU offer their views
Doreen Massey is Professor of Geography at The Open University and a winner of the Vautrin Lud Prize, the geographers' equivalent of the Nobel Prize. In her most recent book, World City, she argued that the unbridled growth of the finance sector was deepening social and regional inequalities in the UK. Now, she says, we should use the current crisis in the sector to re-build our economy on a new footing, which is focused less on the Square Mile.
Massey's book was published last year before the credit crunch began. "It was clear that the finance sector, and the sort of stories it told about itself, were being challenged from different directions," she says. "And one of these was its lack of regulation and absence of a sound financial basis, which has come home to roost now.
"But what I was emphasising was a whole range of other problems that have arisen from the role of the City. There is the deep inequality within London, the difficulties that this causes poorer people, and the difficulties of running a city where low-paid workers can't get housing, and so on. And in the country as a whole the City, which is actually based in a very small part of London, dominates the national economy to the detriment of other regions."
Given her arguments, how does she view recent events in the finance sector? "It certainly is a crisis, but there is the potential for making it into an opportunity. It has thrown up serious questions about our current financial architecture which must be addressed.
"First, we have to put out the fire - but when we are through the worst, we need to think of a completely new way of relating finance to the rest of the economy, both national and global. One of the aspects rarely mentioned in discussions of the negative effects of the dominance of finance, is the regional one. If we were to diminish the role of finance within the British economy, then one of the by-products might be a more regionally equal country.
"One of the approaches to the present situation that I have found most interesting is the Green New Deal."
The Green New Deal, created by a group of experts in finance, energy and the environment and published by the New Economics Foundation, proposes a modernised version of President Roosevelt's famous New Deal which rescued 1930s America from the Great Depression.
"The Green New Deal is a response to what it calls 'the triple crunch' of peak oil, climate change and the financial crisis," says Massey. "Its approach to the finance sector says what is becoming more generally recognised - we need to have more regulation - but it also says we need to diminish the role of the sector within the British economy. And we need to break it up, so that institutions don't become so big that we cannot allow them to fail. That would mean we were less held to ransom by the failures of financiers."
The other side of the Green New Deal, she says, is the development of an industry built around green technologies. It talks about creating a "carbon army" of new skilled workers in these sectors. "That carbon army would, I imagine, be spread fairly equally across the country - it wouldn't all be within the Square Mile."
"We don't just want to get back to where we were before all this happened," says Massey. "It wouldn't solve the social and economic inequalities, let alone the financial instability. And it wouldn't solve the north-south divide. We need a different kind of growth."
How optimistic is Massey that there is an appetite for such a radical change in our thinking? "I think there is a question of political will and political bravery. We have had a consensus between the main parties supportive of the City for so long, it will be interesting to see who dares confront the possibilities of this new opportunity. …