Relational Economics: Recognising That Economic Life Involves Networks, Connections and Relationships Is an Important Part of Rethinking the Economy
Westall, Andrea, Soundings
There has been much discussion - in these pages and elsewhere - about the rise of excessive individualism and its impacts on our society and economy. Our economic system seems to 'refer' and incentivise the more selfish and competitive aspects of our humanity. On the other hand we talk about the economy in terms of broad categories such as 'consumers' or the 'business community' or see it as subject to uncontrollable forces. But to discuss economics in terms either of isolated competing individuals or of abstract categories and forces is to ignore the role of people or the interactions and relationships between them. In the last issue of Soundings, Hilary Cottam talked about the need for 'relational welfare', arguing that in the current welfare system the power of money and transactions has overridden the importance of interactions and relationships between people. Similar issues and analysis are relevant to our economy: we also need a relational approach to economics.
Relational economics is useful in debates about how capitalism has become detached from political control, and in dealing with the more negative impacts of our economic system and ways of working on our personal, family and community lives. It can also aid thinking about how to deal with complex challenges that affect whole sectors and systems of economic activity, for example energy production and use.
There was a time, though, roughly from the mid-1990s, when people on the left spent time thinking about these issues. The focus then was on the increased effectiveness and productivity of more connected and relational ways of running local and regional economies, as well as the potential of 'new mutualism' to recognise and reinforce the economic and personal benefits of joint activity. But those ideas were lost as New Labour was influenced by a pervasive neoliberalism, underpinned by a simplified form of neoclassical economics. That government generally pursued top-down economic policies, which mostly responded to individual businesses or entrepreneurs (except in relation to hi-tech, the 'knowledge' economy, or in struggling areas where the rules of 'normality' did not have to apply). Indeed, in the run up to the 2010 general election it was the Conservatives who seemed more receptive to this way of thinking, despite its roots in the left, and particularly in Labour's past.
However, such issues and concerns have been given more prominence by the financial crisis, as well as by a left emboldened by Labour's defeat to rethink fundamentals. Drawing particularly on the insights of Karl Polanyi, thinkers such as Maurice Glasman are engaging in a consideration of how more collaborative and relational ways of working could help people respond to and constrain large-scale economic power, restore morality or create forms of employee identity and security. (1)
Why do we have such difficulties in taking such ideas on board? What personal, cultural or systemic blockages disable us from thinking in this way? Why do practical examples showing that collaboration and co-operation are effective (even when there is strong evidence of positive benefits) receive so little attention - or remain 'unheard', on the margins, seen as 'exceptional'? We need to spend time reflecting on, and removing, such blockages - otherwise we will not be able to change the dominant common sense. And alternative ideas, policies or plans could fail again. Stuart Hall and Doreen Massey explain this inability to entertain alternatives partly in terms of the way that dominant ideas have become embedded within our common sense. (2) As Tony Judt has said, part of 'our disability is discursive'. (3)
The aim of this article is to draw attention to the implications and possibilities of focusing on relationships between people and businesses in the economy, and to spark discussion on the many and varied blockages to thinking and acting in this way.
Examples of a more relational approach
We first need to remind ourselves (yet again) that economic and market activity have always worked through norms and human relationships. …