City Cottage Economics
City Cottage Economics
Ever since we started The City Cottage, years ago, there has been something nagging me, staring me in the face. Yes, of course, the original idea was to show the skills that have helped keep mankind alive and happy. How to cook, grow, preserve, store and hopefully enjoy food. But there has always been something just out of reach. A mystery, something out of sight but there, somewhere.
What would it be like if we ran our cities like we’d run a cottage?
Call it what you will, Damascus Road incident, Serendipity, but in the middle of the night what was out out sight came into sharp focus. What would it be if we ran our cities like we’d run a cottage? That the reasons, the fundamentals, the morality, the economics, relationships, production, food and services such as education and health were all run as though the city was a cottage?
You might think the analogy is a bit far fetched. You will find it pushed about and changed so much in what follows, but the fundamental idea remains. After all, an illustration is there only to make a point.
The reasons for the cottage
What I am suggesting is the economy of the cottage, that of the home, should be the underlying basis for the city. After all, the word economics comes from the same Greek word for home. Okios, from which ecology also finds its root, has three meanings. It refers to ‘The family’, ‘The family’s property’ and the house where the family lives.
Since economics, or the word at least, refers to the home and family, what’s all the fuss about? Well for many centuries economics of nations was based around the family, but things changed.
The reasons for the existence of the cottage and the consequences of the family can be summed up as being human centred.
The cottage provides protection
Protection from the elements, the weather, wildlife, a dry roof over your head, a warm place.
The cottage provides a base for relationships
The whole idea behind the family, the cottage, is the nurturing of people. I know that many people do not come from perfect homes, and I don’t want to romanticise the point, but the point of the home is to nurture people. The family, we would all agree, is to care, to grow healthy and happy people. To provide a backdrop for relationships providing for the reproduction of families.
The cottage provides a place of work
The world changed about 250 years ago in the UK, and thence around the world, leading to the growth of cities more than of any time in the history of civilisation. If you drive through Lancashire and Yorkshire you will find three story houses, with gardens, pig sty and outside toilet, though most of the toilets are gone.) They were cottage for floors one and two and workshop for weaving on the top. They made a good living, they fed their families. What they worked they earned, so the resources for the family were based solely on what they could make in terms of cloth.
But then, with mechanisation, the need for a workforce brought the people from the cottage into the city home, often a slum, packed into unhygienic squalor because they had become not a family but a resource to be exploited. The economy went from people centred to capital entered, something completely detested by those in the know. William Cobbet in his book Cottage Economy decried these changes in the early nineteenth century led to families not being able to bake bread or brew beer.
Looking back at the cottage, it’s income was dependent on the work the inhabitants did. It was a credit economy in that they had no option of borrowing money, they only had what they could earn or make or sell. William Cobbet, MP for Oldham, sometime farmer in the United States viciously attacked a change in the way banks worked. Instead of dealing with money, real money, coinage and the like, simple promissory notes which we now call banknotes, meant the British economy became a debt based economy.
The life of the cottage economy was effectively at an end. Indeed these two processes, the removal of the workplace from the home and the shifting of the economy from a credit to a debt economy, some hundreds of years ago are diametrically opposed to the idea of the City Cottage.
The seeds for huge debt, a growing debt for probably every nation on the planet came with paper money. The extrapolation of ‘I promise to pay the bearer…’ is the electronic creation of money by banks. High Street banks, when they make a loan, don’t simply pay from some mountain of money saved in the bank by millions of customers. No, they simply electronically create money and credit it to the account. They make money from fresh air, well, from warm transistors in computers.
In March 2014, the Bank of England release a report called “Money Creation in the Modern Economy”, where they stated that:
“Commercial [i.e. high-street] banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created.”
Sir Mervyn King, the Governor of the Bank of England from 2003-2013, recently explained this point to a conference of business people:
“When banks extend loans to their customers, they create money by crediting their customers’ accounts.”
And Martin Wolf, who was a member of the Independent Commission on Banking, put it bluntly, saying in the Financial Times that: “the essence of the contemporary monetary system is the creation of money, out of nothing, by private banks’ often foolish lending”
Why should banks not do anything they can to make money? After all this is the basic reason for their existence, they are simply using the nation state, the fact that the money is British or American or Russian means they can make money, literally, on the back of it.
And because we follow the people of the country bear the basic responsibility. When the bank creates money, in effect it really isn’t creating anything other than debt, which is saddled around the neck of the person or business that takes on the loan. Have you ever wondered how, in times of crash, banks still manage to make money. They haven’t actually lost anything, but the debt becomes their responsibility.
Simply put, I believe equating the ethos of the city with the ethos of the cottage, the institution of the family at the centre of city, work and commercial life, the transfer of the economy from debt to credit would be amongst the most important improvements for mankind.
Next time we will explore the idea of family a little further. In particular how family members contribute to the income of the cottage. If one cannot contribute financially, they do so in other ways – would it be a good idea if you cannot pay your local taxes (rates in the UK) if you could do some kind of work instead, rather than being hounded by courts and bailiffs? After all, you wouldn’t do it to a family member.