S3 and Sustainable Development Goals (SDGs)

In 2021, the EU published a study (Miedzinski et al. Reference Miedzinski, Gampi Stoncara, Matusiak and Coenen2021) that aimed to reflect on the S3 framework within the context of a detailed examination of transition studies, notably socio-technical transitions, social-ecological resilience, and challenge-driven innovation policy. The study assessed the strengths and limitations of the current S3 framework and made suggestions as to how it might be revisited and strengthened.

The main message from the review was that the framework and methodology needed to be revisited and extended if S3 was to facilitate innovation and systemic change in line with the SDGs. Firstly, S3 needed to explicitly embrace and embed the SDGs at the heart of its conceptual and methodological framework. Second, a renewed framework needs to extend its innovation framework from a narrow technological focus towards a variety of innovations driving wider economic, environmental, and social transitions. Thirdly, the framework and methodology need to expand its theoretical and conceptual foundations to address complex, interconnected, and uncertain societal challenges. The new framework should encourage all regions to re-engage in the vision-building process, with a new focus on sustainability challenges and localising the SDGs (Miedzinski et al. Reference Miedzinski, Gampi Stoncara, Matusiak and Coenen2021: 2–3).

The original guide to S3 (Foray and Goenaga Reference Foray and Goenaga2013) put forward four principles to guide the design and process of S3:

• Choices and critical mass

• Competitive advantage

• Connectivity and clusters

• Collaborative leadership

Miedzinski et al. (Reference Miedzinski, Gampi Stoncara, Matusiak and Coenen2021: 51–52) suggested three more overarching guiding principles to give S3 ‘a stronger sense of direction and transformative ambition’:

Miedzinski et al. (Reference Miedzinski, Gampi Stoncara, Matusiak and Coenen2021: 52) claim that these extra principles could be usefully aligned with the original dimensions, but that they could have significant implications for the notion of competitive advantage. However, although seeking differentiation from other regions remains key, accepting an SDG framework ‘implies a deeper reflection on the motivation and rules guiding regional and interregional competition’.

Generally, it is suggested that in the new and challenging circumstances we confront, faced with ‘grand societal challenges’ such as ecological crises, policymakers have the opportunity to determine the direction of growth by making strategic investments across many sectors and nurturing new industrial landscapes, which the private sector can further develop (for a critique see Rainnie Reference Rainnie2021).

In these new circumstances, and crucially, the purpose of innovation is no longer to be limited to achieving competitive advantage in the marketplace but rather the rationale for innovation is explicitly in response to social needs and informed by ideological norms and values. Innovation is now mindful of the politics, conflict, and contestations that the process can imply (see Coenen and Morgan Reference Coenen and Morgan2020). Coenen and Morgan examine the FE as an expression of place-based social innovation. The standard approach to place-based regional development is seen to be promoting the attraction of inward investment in competition with similar regions. In spatial terms, this can result in a race to the bottom. In contrast to the zero-sum game, FE is a positive-sum game as all cities and regions have a significant stock of employment in mainstream foundational sectors:

The critique of S3 is slowly advancing. Miedzinski et al. (Reference Miedzinski, Gampi Stoncara, Matusiak and Coenen2021) push in the direction of incorporating the SDGs, which in themselves are limited in their scope and ambition. Coenen and Morgan (Reference Coenen and Morgan2020) point to FE as a possible next step on the journey. I now look at the strengths and limitations of the idea of the FE and the related DP approach.

Foundational economy

Foundation Economy is based on interlinked ideas concerning social consumption, public policy aims, and care-ful (sic) practise (Bentham et al. Reference Bentham, Bowman, de la Cuesta, Engelen, Ertürk, Folkman, Froud, Johal, Law, Leaver, Moran and Williams2013, Foundational Economy Collective 2018). Firstly, the well-being of citizens depends less on individual consumption and more on their social consumption of essential goods and services in the FE. Secondly, the role of public policy should be to secure the supply of basic goods and services in a socially responsible way. Socially responsible implies decent wages and conditions for the large number of workers employed in providing foundational goods and services, and, further, that foundational provision should not aggravate the climate emergency. Thirdly, FE breaks with the top-down, technocratic politics of ‘vote for us and we will make the economy work for you’.

Mainstream economic policy, as argued (Calafati et al. Reference Calafati, Froud, Johal and Williams2019), is inherently liberal individualistic, the object is not well-being but economic welfare, primarily dependent on individual income. MacKinnon et al. (Reference MacKinnon, Kempton, O’Brien, Ormerod, Pike and Tomaney2022) point to five limitations with the dominant theoretical frameworks. First, a narrow understanding of the economy as growth measured by gross domestic product (GDP). Second, a fixation with tradeable and competitive sectors of the economy. Third, an over-focus on economically dynamic cities and regions. Fourth, a city centrism that views city centres as principal motors of economic growth. Fifth, the marginalisation of lagging and declining regions leads to an underestimation of their economic potential.

Heslop et al. (Reference Heslop, Morgan and Tomaney2019: 6) argue that ‘what is most problematic about the new industrial policy debate is that it leaves unanswered questions about the fate of the vast majority of people and places that do not figure in the world of mission-oriented innovation policy’. FE thinking challenges mainstream notions of GDP (or regional gross value added). Instead, FE promotes a zonal approach. This is based on material infrastructure – pipes cables and distribution systems for water, electricity, retail, banking etc. and providential services – education, health, dignified eldercare, and income maintenance. The economy is then thought of as a series of mutable zones comprising:

• The tradeable, competitive economy;

• The overlooked economy – including mundane, occasionally purchased cultural necessities like sofas, holidays, and haircuts;

• The FE – material infrastructure and providential services;

• The core economy of gift and goodwill in family and community.

Foundational thinking puts material context and the collectively determined at centre stage. The primary concern of economic policy in every region and national economy should always be with the adequacy, affordability, and continuous supply of foundational services such as housing, health care, and utility supply as these are the prerequisites for the well-being of every citizen in every household. Foundational liveability is a matter of ensuring the supply of universal basic services for most citizens most of the time (Froud et al. Reference Froud, Haslam, Johal, Tsitsianis and Williams2018). Heslop et al. (Reference Heslop, Morgan and Tomaney2019: 7) suggest that we can identify a range of movements aimed at finding alternatives to extractive economic models, similar to FE, including local wealth building, re-municipalisation, remutualisation, and sharing economies that provide local services, industries, and community and household resources. The list would also include Universal Basic Services, social guarantee, everyday economy, and so on.

In the Australian context, Spiller (Reference Spiller2020) draws a distinction, echoing the FE, between the household services economy, the care and learning economy, and the exports economy, and promotes ‘community wealth building’ reform. Spiller (Reference Spiller2020) points out that the household services economy deserves a discrete and substantial focus in the strategy process, and, further, that the caring and learning economy is the biggest employer in most local government areas and regions. For Guinan and O’Neill (Reference Guinan and O’Neill2019: 384), ‘community wealth building’ is:

Mehmood et al. (Reference Mehmood, Marsden, Taherzadeh, Axinte and Rebelo2020: 455) promote the idea of social innovation to drive sustainable place-shaping practices. Their framework brings together three different ‘lenses’:

It is now timely, it is argued, to move beyond generic and aggregated concepts around sustainability, resilience, or adaptation. Deeper and more practise-based studies are needed based on the three lenses outlined. This would allow for more spatially socio-cultural nuanced and deeper investigations of what really brings about social innovation. Furthermore, learning, experiencing, and regenerating emerge out of the physical and social understandings and reactions to places in which people live, work, and visit. We will return to the important question of agency shortly. However, it is important to look more closely at the relationship between FE and the state, as, either explicitly or implicitly, it could be taken to promote a form of Keynesianism that is problematic.

FE and the state

It is acknowledged that the supply side of the FE has been undermined by privatisation and outsourcing, and more generally, financialised firms are not grounded in and tied to a region by ownership, skills, or supply chain. Therefore, to operationalise this approach, in order to avoid inept, top-down approaches, it will be necessary to know more about how places work and what matters to people (Calafati et al. Reference Calafati, Froud, Johal and Williams2019: 18). However, FE relies on a benevolent, well-endowed government in terms of resources and capabilities to orchestrate and coordinate collective action.

Coenen and Morgan (Reference Coenen and Morgan2020: 7) go further and argue that FE is challenged on three counts:

1. 1. Treasuries are averse to raising income tax to provide revenue support for public services such as education, health, and social care;

2. 2. Presupposes that governments are prepared to engage in radical reregulation to raise the social ‘ask’ of the private firms and public agencies that deliver foundational services;

3. 3. Predicated on active citizenship in as much as citizens are deemed to be willing and able to become co-producers of the essential services that they collectively consume.

It should also be noted that New Public management-influenced approaches to local and regional development have devolved increasing responsibility down to localities whilst retaining control, particularly over purse strings at a national level (Rainnie Reference Rainnie2021). In reviewing the Welsh government’s initial experiment with the FE, Lang and Marsden (Reference Lang and Marsden2021) suggest that the government was trying to ride two horses; espousing FE as an experimental element of the Welsh economic landscape, whilst continuing to adopt standard measures of growth in its broader economic policy approach. Instead, Lang and Marsden (Reference Lang and Marsden2021: 11) argue that any new Welsh spatial plan should start with spatial equality and should challenge existing restricted notions of the agglomerative economy in post-carbonism and post-industrialised transitions. Although community wealth anchoring might be important, it can only be part of a wider sustainable place-making agenda.

MacKinnon et al. (Reference MacKinnon, Kempton, O’Brien, Ormerod, Pike and Tomaney2022) point out that, to date, scarcely any work has been done to define and assess the social infrastructure requirements of economically lagging and declining places that meet the needs of their communities. Heslop et al. (Reference Heslop, Morgan and Tomaney2019) identify three similar lacuna – gender, ecology, and active citizenship. FE is a highly gendered construction, with women disproportionately employed in its low-paid sectors. The implications of gendered work need to be considered as a cause for concern and as an opportunity to address gender-based inequalities. Governance of the FE represents a major challenge, with an important geographical twist. How can weaker economies that lack fiscal, governmental, and civic capacity reorient their activity towards FE? The danger is that the FE simply becomes a gloss over an old argument for vulnerable regions to base economic development on sectors (service and beyond) that have been the target of outsourcing and privatisation and rely on gendered, low-paid insecure labour often provided by labour-hire firms and financialised not-for-profits. Coenen and Morgan (Reference Coenen and Morgan2020) argue that part of the answer lies in the challenge of experimentalism in the public sector, a sector that looms large in lagging regions and other places that were deemed not to matter. Drawing on Barca (Reference Barca2009) and Sabel and Zeitlin (Reference Sabel and Zeitlin2012), the approach is based on three principles:

• A clear identification of objectives and standards measured by validated indicators;

• A permanent mobilisation of all interested parties;

• An experimental approach through which collective local actors are given an opportunity to experiment with solutions.

Rather than emphasising the entrepreneurial discovery process, it suggests that prioritisation for development and innovation is based on principles of empowered deliberative democracy.

Morgan (Reference Morgan2021) points to the idea of experimental governance (EG), wherein jurisdictional authority abandons the pretence of command and control in favour of a form of multi-level organisation in which framework goals are routinely corrected in the light of the ground-level experience of implementing them. EG is then neither top-down, nor bottom-up. It is a democracy in which legislation is in continuing and close touch with lived experience. It is lived experience of locality upon which DP analysis claims to focus.

Deep place

MacKinnon et al. (Reference MacKinnon, Kempton, O’Brien, Ormerod, Pike and Tomaney2022) conclude that much further research is necessary to inform, evidence, and elaborate the FE agenda:

1. 1. Fuller understanding of the economics of belonging, drawing out the implications of collective, and place-based attachments for the ‘development’ of left-behind places;

2. 2. An understanding of the livelihood strategies and practices of households in the ‘FE’;

3. 3. Specify the currently missing geographies of the FE and the relationships between universality and particularity;

4. 4. Explore connections and alignments between the foundational, tradeable, and overlooked economies.

In a related publication, Tomaney et al. (Reference Tomaney, Natarajan and Sutcliffe-Braithwaite2021) investigate the former Durham (UK) mining community of Sacriston, seeking a deeper understanding of place. Change, it is argued, has been the order of the day in Sacriston for generations. However, broader changes in the labour market, privatised consumption, shifting cultural attitudes, and the impacts of austerity had shaped social and economic conditions in the village. Older members of the community lamented the loss of a thriving and cohesive village, whilst younger members of the community valued strong community ties and saw the potential to rekindle the more appealing aspects of the past. Arguing against the notion of ‘left behind places’ on the basis that this has the tendency to stigmatise their residents as passive, immobile, and impoverished, it is suggested that:

Therefore, it is not impossible to develop strong rooted local economies where income circulates locally and wealth, skills, and experience are all retained and built up in the area, in other words, a strong FE based on DP analysis (Tomaney et al. Reference Tomaney, Natarajan and Sutcliffe-Braithwaite2021: 9). How far it is possible or indeed desirable to insulate a local economy from wider economic forces, social and political organisations, and structures is a question of central concern. As Heslop et al. (Reference Heslop, Morgan and Tomaney2019: 8) point out, ‘the challenge here is to consider how concerted local action fits into broader flows and networks of global capital’. The suggested is the role of DP analysis (Adamson and Lang Reference Adamson and Lang2014).

The approach was developed in Wales to examine two pressing social and economic policy problems. The first was high levels of unemployment in post-industrial communities and the second was moving towards a more sustainable model of the economy, recognising the low carbon imperative and the potential crisis of energy supply and cost. The argument is that these are two elements of the same problem, stemming from the dominant paradigm, neo-liberalism, that is exploitative of both people and the environment. The approach is not anti-capitalist, but rather brings together some of the central Keynesian principles of state economic management, with a heightened concern for poverty eradication and environmental protection. The aim is to identify patterns of economic activity that underpin the welfare and well-being of all members of society, whilst reducing our environmental impact. The approach attempts to locate the issues at a lower (local) spatial level than is generally the case.

Deep Place is based on a model that views social exclusion as the cultural, emotional, and physical results of economic marginalisation and social exclusion from society as a whole. These systemic mechanisms of exclusion prevent the excluded population from engaging with society as fully productive and active citizens. The approach is based on a number of theoretical foundations including transition theory, which sees a strong connection between global environmental conditions and local actions. This is based on the necessity of an increasing reliance on economic relocalisation as the era of cheap transport fuels ends. The move towards more localised, energy efficient, and productive living arrangements is not a choice, it is an inevitable direction for humanity. Rather than waiting for ecological crisis, DP advocates planning for change and using the implementation of change as a source of employment in innovative responses to climate change. The concept of resilience is mobilised to signify the capability of a community to hold together and maintain functionality despite external shocks and pressures.

This is allied to a notion of Total Place, which is based on public services reform. Rather than basing public services on mainstream and limited notions of Best Value, Total Place is about creating higher public service value in services that better meet the needs of service recipients whilst also improving performance and accountability of service providers. The approach underlines the question – what is the purpose of public service? The approach moves from command and control to an examination of what customers need and whether that is being delivered. This requires close working relationships with all service deliverers and recipients.

However, not everything can be delivered at the local level. Modelling the approach to the UK’s post-Second World War Settlement, there is a call for a New Settlement. This will require a reconfiguration of public services and a major transformation in the roles of the central and local state. The transition will also require citizens and the state to act in unison. The state will also be required to develop green infrastructure and incentivize green consumption patterns, and the citizens will need to embrace a less acquisitive and consumerist lifestyle (Adamson and Lang Reference Adamson and Lang2014).

Overall, the approach is based on the reworking of the ‘radical, liberal collectivist spirit of Beveridge and Keynes’, embodied in the FE.

The method is based on reconnecting economically and socially marginalised communities and the individuals who live there with employment opportunities (see Adamson Reference Adamson2018). This is achieved by examining sectors in the local economy where growth is possible and where lower-level skill sets are required to allow recruitment of unskilled people with low levels of confidence and experience. The approach fosters social enterprises, as well as start-ups, supports existing small businesses, and helps small and medium sized businesses (SMEs) to grow and diversify. Strategies for change also involve cultural change that challenges community peer cultures and develops new aspirational horizons for young people in the community. Deep Place (DP) identifies four critical social domains and promotes change in all four:

• Atmosphere – the feel of a place.

• Sense of identity, fractured or tight-knit.

• Landscape – physical characteristics and how they influence quality of life. Built environment and housing quality etc.

• Horizon – sense of social horizon experienced by residents. Cultural and psychological horizons. Is there social provision that builds bridges to the outside worlds of employment, education, and healthy living.

Implementation of the DP approach requires an adaptive and flexible form of ‘situational leadership’, which requires moves between different models of leadership as circumstances dictate, rather than adherence to a strictly defined leadership approach. It has to be able to promote debate, diversity of responses, and not be afraid of experimentation and failure (Adamson and Lang Reference Adamson and Lang2014). This goes well beyond the hugely underdeveloped notions of leadership exhibited in most evolutionary economic geography-influenced place-based analysis (Rainnie Reference Rainnie2021). It also seeks to draw on literature on community development that place-based analysis has largely ignored (see for example Bjørn Peterson et al. Reference Bjørn Peterson, Talmage, Knopf, Phillips, Trevan and Kraeger2020).

Adamson and Lang (Reference Adamson and Lang2015) have sought to extend the DP approach into what they describe as the distributed economy. This builds on an understanding that the FE approach attempts to seal local circulation within a geographically defined local economy to maximise the multiplier effect of local expenditure. In this model, the local economy is seen as relatively autonomous but also ultimately dependent on and exploited by the mainstream or external economy. In the distributed model, activity takes place throughout the region. There will be mainstream-orientated concentrations in key localities such as the Central Business District (CBD) but there will also be lower-scale levels of activity distributed spatially throughout the region. These activities are intricately linked and meshed together in a grid-like structure. By harnessing state support for the FE, especially those activities that are conventionally seen as ‘withdrawals’ from the economy, there is potential for increasing growth and employment in the distributed economy. In their DP study, in Tredegar, Wales, (Adamson and Lang Reference Adamson and Lang2014) identified what they described as the core sectors of food supply, energy generation and conservation, social care, and e-commerce/e-working as areas with potential for growth in the FE.

However, the problem appears to remain that, as Martynovich et al. (Reference Martynovich, Hansen and Lundquist2020) pointed out in their critique of FE, its overall contribution to regional resilience, even when combined with DP analysis, appears to be limited. The results of their Swedish analysis do not suggest that FE is driving general economic growth. Indeed, the danger is that in ‘regions left behind’, the role of FE is to allow the area to shrink with dignity (Martynovich et al. Reference Martynovich, Hansen and Lundquist2020: 29). Hansen (Reference Hansen2021) concludes that the FE approach is promising when addressing challenges associated with social polarisation. However, to date, few suggestions have been made as to how the foundational approach would address challenges associated with environmental sustainability. Fundamentally, by not challenging the basic tenets of a capitalist economy, FE is prone to the contradictions identified in the approach of the Welsh Government. This becomes clear when we examine confronting the challenges of climate change.

FE and environmental policy

Heslop et al. (Reference Heslop, Morgan and Tomaney2019: 10) suggest that there are three lacunae in FE thinking – gender, active citizenship, and ecology. Active citizenship has been addressed to a degree by the EG approach. Sayer (Reference Sayer2019) argues that beyond acknowledging the need to address issues of environmental sustainability, FE supporters do not say much about how FE policies might be combined with green policies to rapidly decarbonise the production and consumption of goods and services. In 2022, Russell et al. (Reference Russell, Beel, Rees Jones and Jones2022) were still acknowledging that FE thinking was yet to work out quite how it addressed our multifaceted ecological crises.

Climate change is one of the major challenges to be confronted. On one reading, this could be taken as moving beyond the entrepreneurial state towards what has been recently described as the ‘environmental state’. Hausknost and Hammond (Reference Hausknost and Hammond2020: 2) suggest that this can be explained as extending the functional logic of the welfare state from the mitigation of social externalities to the mitigation of environmental externalities. However, the environmental state was never intended to overcome the basic structures of industrial capitalism; instead, it is tied to the paradigm of ecological modernisation, wherein the strategy is to increase the efficiency and effectiveness of environmental management through technological and administrative innovation.

For Koch (Reference Koch2020: 129), the overarching ‘growth imperative’ constitutes a problem, in that the priority of providing economic growth in policymaking can be read as a ‘glass ceiling’ of the environmental state and a structural limit to its capacity to engage in societal and ecological transformation. Koch draws a distinction between an economy orientated towards monetary growth and a post-growth steady-state economy. In the former, state action is largely reduced to the provision of green growth. In the latter, state economic, social, and environmental policies are oriented at minimising matter and energy throughput and maximising sustainable welfare, specifically the provision of sufficient need satisfiers for all people now and in the future. Bailey (Reference Bailey2020) points to what is described as the ‘trilemma of the green state’: how to orchestrate degrowth, and maintain the fiscal viability of the state, while also expanding the environmental functions of the state. For Bailey, achieving all three is impossible so long as the state remains dependent on private capital accumulation.

Goods et al. (Reference Goods, Rainnie and Fitzgerald2015), in developing a conceptual framework to analyse green jobs in the Australian auto industry, examined the theory of ecological modernisation (EM). The authors argued that EM represents a pragmatic environmental policy response whose basic perspective is that environmental and economic aims are compatible. Ecological sustainability, it is suggested, can be achieved within the current political-economic system via technological innovation and environmental management. However, within this admittedly limited framework, there is a divergence between ‘weak’ approaches, which focus primarily on technological solutions, and ‘strong’ approaches, which look to a transformation of existing social, political, and economic institutions, alongside technological innovation. Goods et al. (Reference Goods, Rainnie and Fitzgerald2015) do acknowledge that proponents of the ‘strong’ approach accept that it faces severe opposition from industries such as the resources sector and associated political and lobby groups. This, as argued, requires a strong state to intervene to manage a ‘just transition’ towards ecologically sustainable strategies.

Sayer (Reference Sayer2019) draws on Gough (Reference Gough2017) to suggest that in trying to make FE environmentally sustainable, and in rejecting GDP growth as a goal, it follows that the idea of ‘green growth’ is an absurdity. However, Ian Gough (Reference Gough2017) suggests that there may be a staged approach that could overcome these problems. Gough proposes a three-stage transitional strategy for sustainable well-being: green growth, recomposed consumption, and post growth (C1, C2, and C3).

This is about as far as the environmental state approach can take us. However, neither C1 nor C2 alone or combined will reduce emissions far enough or fast enough to avert catastrophic climate change, so:

John Bellamy Foster (Reference Bellamy Foster2022, 78–79) also proposes a ‘transitional’ strategy offering an eco-democratic phase to build a broad alliance to demand a world of sustainable human development. The eco-democratic phase would carry out radical reforms, but nonetheless conceivable meaningful forms of struggle in the present context:

1. 1. Emergency plan for reduction of carbon emissions in rich economies by 8–10% per year

2. 2. Moratorium on economic growth coupled with radical redistribution of income and wealth, conservation of resources, and reduction in economic waste

3. 3. Diverting military spending to defence of the planet

4. 4. Creation of alternative energy infrastructure

5. 5. Closing down coal-fired plants and blocking unconventional fossil fuels, e.g., tar sands oil

6. 6. Carbon fee and dividend system

7. 7. Initiatives to aid emerging economies to move towards sustainable development

8. 8. Implementation of principles of environmental justice

9. 9. Adoption of principles proposed in the Peoplesʼ Agreement on Climate Change – Cocahmaba, Bolivia 2010.

This would provide conditions for the next eco-socialist phase. It does, however, take us some distance from the application of the FE in any particular place, Total or otherwise. The approaches are not necessarily incompatible but would argue for a Total Place/FE approach being a part of a much more expansive strategy, as Gough’s (Reference Gough2017) approach suggests.