Andrew Simms's Blog, page 14

Happiness: the price of economic growth | Andrew Simms

The relentless pursuit of productivity is socially divisive, environmentally destructive and doesn't make us any happier

Last week, on the same day that we learned economic growth in the UK was running at a miserly 0.2%, the Office for National Statistics launched a new programme of work on measuring human well-being.

The latter was the result of a month-long survey in which the public were asked what mattered to them. To barely disguised yawns, the answers that came back were, "family, friends, health, financial security, equality and fairness in determining well-being", according to national statistician Jill Matheson.

So we were caught on one hand between a low-grade, generalised fear that people weren't buying enough stuff to keep the economy going, and being told on the other hand something we already knew deep down: that a better quality of life stems not from consuming more, but from a range of mostly immaterial things. Crucially, in a society like the UK, enjoyment of these does not correlate in any positive, straightforward manner with economic growth. On the contrary, some policies used to promote growth can directly undermine a range of the factors that do contribute to well-being, such as the time we need to spend with family, health, equality and fairness.

Depending on how it is pursued, economic growth can be jobless, socially divisive and environmentally destructive. It can, in other words, be "uneconomic growth". In a quite extraordinary intervention, as part of the government's desire to cut spending on public services, Oliver Letwin, the coalition's policy minister, recently suggested that "fear" of losing your job should be used to increase the productivity of workers.

This approach appears to be wrong on so many levels that I first thought it had to be a spoof. It will do nothing for growth; it chronically misunderstands how to get the best out of people; it contradicts the prime minister's own public conversion to the importance of well-being at work and, perhaps most importantly, it misunderstands real productivity.

In professions like health and education, if you drive out costs (ie people) you get a worse service. Quality of care and nurturing depends to a huge degree on attentive human contact in a convivial context. Subject people to old-fashioned Taylorist production-line management, coupled with the intimidation of a threatened job loss, and nobody wins.

It is wrong, also, because buried in this conundrum, may also be the secret of how, in the long term, we align our livelihoods and lifestyles with the limited planet on which we depend. This is about designing an economy of better, not more. And that suggests fundamentally rethinking what we mean by efficiency and productivity.

An economy that is more based on services, and in which we are sharing, repairing, recycling, reusing, learning, collaborating and coproducing services (that's the jargon, at any rate – it just means give and take) is one in which, ultimately, we may have more people doing fewer things in formal paid employment. In that context, we might have more time for "family, friends, health", and all the things that do add to our well-being.

The big objection is that growth is needed for jobs, and that these are what we need for financial security. On one level, yes, of course. However, financial security is also a function of equality and fairness, and given other economic problems (such as that many of the jobs created in a push for growth alone do not deliver financial security) as well as environmental constraints, there may be more reliable paths to find security. Inequality both creates insecurity and raises a society's costs in relation to health problems, crime and almost everything else.

Redistribution of income and access to employment, therefore, compared with generalised, unequal and resource-hungry growth, can be quicker, less destructive and a more effective way of delivering security.

A sensible approach to enhance economic activity in a way that met many needs would be to take Vince Cable's suggestion of another round of quantitative easing, but instead of just spraying a general injection of cash via the banks (who take a cut) into the economy, to channel it into the productive low-carbon economy – a sort of green easing.

Sadly, that doesn't look likely to happen any time soon. For now the captain of this ship insists we're all heading south, when there are all kind of indicators telling us that our real needs can only be met by going north.

Economic growth (GDP)EconomicsEconomic policyGreen economyAndrew Simms
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A People's Jury of a thousand angry citizens | Neal Lawson and Andrew Simms

From banking to hacking public horror has failed to tame Britain's feral elites. We need a People's Jury

A new routine is emerging. First, a crisis occurs in a vital part of our lives: banks crash, MPs fiddle expenses, a media empire hacks phones. Public anger and outrage rises. Everyone says that something must be done. But frustration and apathy set in as it becomes obvious that nothing is done. A moment for change slips through our fingers. Meanwhile the next – possibly bigger – crisis lurks round the corner, perhaps banking again, or the energy companies. Why is this happening and what can we do about it?

We are witnessing a crisis of elites. Society has always had people in positions of power and huge influence. But now they have broken free of moral and regulatory constraints and operate, unashamedly, in their own interests. Remember Bob Diamond, the Barclays boss, lecturing MPs that the "time for remorse" was over.

Waves of extraordinary public horror, such as over the hacking of Milly Dowler and now Sara Payne's phones, refashion only ever so slightly relations at the top. For common to all these crises is excessive behaviour; greed, risk-taking and hubris, all the products of small, sheltered cliques wielding too much power.

It is the rise of corporate and media elites as first among equals, and their disproportionate influence over a demoted political class, which makes this era very different. And Britain feels particularly vulnerable. The US still has strong anti-corruption and monopoly laws. In Germany there is effective corporate governance of every major firm.And France has strong provisions for the public interest in areas like planning.

This is exactly what Britain has lost: any real notion of public interest and pride in the public domain. Hence the assault on public spaces like libraries and the replacement of multipurpose town squares at the heart of communities by private, single-function, gated shopping malls. The very concept of the public has been systematically eroded over the past four decades and replaced by private and corporate interests.

What was good for them was deemed good for all. But from banking to the media, transport and our utilities, that has been shown to be false. As the public tide went out, it left self-interested elites behind, operating with no predators, nothing to fear and no one to be accountable to.

Indeed they were given political sanction. Margaret Thatcher said "There is no such thing as society", while New Labour insisted that economic efficiency and social justice went hand in hand. All parties conflated the market with the state and squeezed the public out. With no pressure for higher ethical standards, the new all-powerful elites were like kids left free in the sweetshop, going feral as they lost all self-control and all touch with society.

The only means by which these crises can be avoided, or mitigated, is though the moral and institutional reassertion of a "public interest" in British political and corporate life. So today we, and a host of others, are calling for the government to set up a People's Jury to put the British public interest first. The jury would be made up of 1,000 citizens drawn at random from the electorate and funded out of the public purse. A paid secretariat will commission research and call witnesses to make our nation's elites answerable to the public. Reporting within a year of its launch the jury will report on how the public interest relates to media ownership; the role of the financial sector in the crash; MP selections and accountability; policing; and more generally on British political and corporate life.

The outcome would be a new public interest test with ethical procedures for the corporate world – useful for example in the takeover by the junk food giant Kraft of Cadbury's – and the proper treatment of national assets, services and utilities; and the outlawing of excessive concentrations of elite power in places like banking or the media.

There is an irony in that this call is coming from another group of the self-appointed and self-righteous. But in today's celebrity world this is the only way left to draw attention to an issue; and the issue is, letting the public decide.

Elites have always been with us and always will. What matters is whether they are in any way accountable to us. To constrain them requires constant vigilance and struggle. The truth is that for too long there has been no such struggle, and so we pay the price in banks that wreck our economy, politicians that line their pockets and media empires that intrude on our rights, our democracy and our grief, just to sell it back to us.

ProtestBankingPhone hackingAndrew SimmsNeal Lawson
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Goodbye Habitat, hello knowledge hub | Andrew Simms

As more of our famous stores close down, the high street can be reinvented as a place where we not only shop, but learn and do

From Woolworths to Thorntons and Habitat, the moribund economic picture is changing the shape of the high street.

At the height of the banking crisis we were told that it was almost our patriotic duty to shop for the recovery. Now, even if we wanted to, the opportunities are becoming fewer, with 14% of high street premises standing empty.

The advice, too, is changing. Startlingly, it comes from the Bank for International Settlements (BIS), a sort of trade body for central banks. Its job is to set a range of standards for how cautious or reckless banking should be. And BIS seems to have concluded that spending money we don't have on things we don't really need isn't such a good idea after all.

"The sooner advanced economies abandon the leverage-led growth that precipitated the Great Recession," notes its new annual report, "the sooner they will shed the destabilising debt accumulated during the last decade."

Meanwhile, even if George Osborne thinks otherwise, his extraordinary faith in peculiar and convoluted economic theories is unlikely, in any case, to restore pre-recession habits.

Like a one-man Gilbert and Sullivan of economics, the tax expert Richard Murphy lampoons Osborne's commitment to "expansionary fiscal contraction" (try saying it with a straight face). This is the belief that the private sector will save us following big public spending cuts, in effect, because people will start spending again, because their confidence will be restored, because they understand that tax cuts in the future (not now) will give them more to spend, er, in the future … Quite. Let nobody hold their breath.

But, to reprise many previous observations about not just the economic, but environmental consequences of debt-fuelled over-consumption, is this not an opportunity for a much bigger rethink?

Following last month's news that, globally, in spite of the recession, carbon emissions are still rising, this month the climate change committee reports that the UK has failed to cut emissions in several areas and is missing its targets for reduction. Emissions even rose last year by 3%, instead of falling.

In looking at how to rebuild the economy, fundamentals need rethinking, and that includes the high street. Speaking last week at the annual Co-operative Congress I found surprising, welcome heretical thoughts percolating up through the membership. "How should we change our model, so that we are not just selling more stuff and promoting consumption for its own sake," asked one. "How can the co-operative movement engage with transition towns," asked another?

Behind the questioning was a big thought. Can high streets become more than places where we go to shop, and can shops become places where we do more than simply buy things? For example, what if the shop of the future had only some of its space given over to shifting goods, and the rest of the space reserved for trading the skills and knowledge to make, maintain, repair, share, re-use and recycle things? Tiny gesture as it might be, Fiona Reynolds, head of the National Trust, pointed out that B&Q was already looking into leasing, rather than just selling, tools.

The degradation of the high street in the face of the economic slowdown and unfair competition from the big supermarkets has big economic and social costs. A vibrant, local economy is the place where community (dare I say the "big society"?) gets built. When denuded the opposite happens. But why can't we rebuild the high street so that it is better than before, and make it a place where we not only shop, but learn, do, share and interact.

These types of skills and activities are fundamental to a low carbon, green economy.

There is an opportunity for the government to innovate and step in with a big society good use order to bring some of those 14% of empty premises back into use.

All necessary safeguards and caveats could be applied to reassure owners. In economically shattered Detroit, unused land was used by community groups to grow food – they called it "from Mo-Town to Grow-Town". People drove less and had healthier diets. Empty high street properties could become community-, co-operative- and social enterprise-led food hubs, energy hubs, local money scheme hubs and arts hubs. Why not create places at the heart of our local communities where micro and small producers can sell and exchange, where people can swap knowledge, learn more about energy-saving, mending, making your own entertainment, growing food, how to cook and conserve it, and tool- and transport-sharing schemes?

It would bring back vibrant local life and, at a stroke, it would revitalise local economies and help reskill Britain for the challenges of the modern world. If the government did that, George Osborne could spend more time at Wimbledon's centre court, where he was seen last Wednesday, and walk the talk of government getting out of the way to let people do things for themselves.

Green economyHome RetailRetail industryRecessionEconomicsAndrew Simms
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George Osborne's banks plan is 'separation lite' | Andrew Simms

The chancellor's proposal to ringfence retail from investment banking sounds good but doesn't go far enough

With George Osborne's pledge to ringfence retail banking from its casino investment twin, the first dust begins to fall from stones shifting in the structure of our financial system.

Nearly three years after the financial crisis that almost brought down the global economy, this is the first sign of awareness from government that structural reform of the banking system is necessary. However, today's announcement is not it. In making the proposal Osborne is effectively conceding that another bank crisis is likely and acting, not to prevent that, but to protect the taxpayer and depositors when it happens.

He accepts the admission made tacitly by Sir John Vickers' International Commission on Banking report that future trouble is highly probable. There is, it said, "inherent uncertainty about the nature of the next financial crisis", and in doing so took for granted that there would be one.

Although full details are yet to be made public, Osborne's proposal appears to stop short of the full and effective separation of investment and high street, retail banking. But full separation is what worked so effectively for decades in the US after the Glass-Steagall Act was introduced in response to the devastating Wall Street crash of 1929. It worked partly because it was simple, unlike the weaker and far more complicated recent US attempt to restore financial order, the Dodd-Frank Act.

Osborne appears to be proposing a half-measure, "separation lite", a move that lacks the simplicity of full separation and could, as a result, fail adequately to protect the taxpayer as well as being complicated to implement.

For a start, global retail banks will still be large, complex beasts, and ringfencing will not address the "too big to fail" problem and its costly public underwriting. Retail banks will also still be able to make a range of high-risk investments, and unless there is scrutiny over the balance of assets they are allowed to hold, they could still represent a major public liability. For example, the financial writer John Kay suggests that retail banks should be forced to hold 90% of their assets in the form of relatively safe business loans, residential mortgages or government bonds, which would also help the economy.

Even under ringfencing, capital can still be moved between the subsidiaries of investment and retail banks, as long as the capital held in each subsidiary stays above a certain level. That means, again, that taxpayers' guarantees will still, to some extent, be subsidising casino banking.

The measure also leaves untouched the range of ways in which the banking system is failing large areas of Britain, countless businesses and much of the population, either by not providing sufficient services, or providing them at excessive cost and with terms and conditions that make flatpack furniture instructions look user-friendly by comparison.

While the ringfencing proposal has drawn most attention, Osborne is also announcing a worrying return to business as usual with the news that Northern Rock would be re-privatised. Yet, if the crisis of 2007-08 taught us one thing, it's that we need a more diverse banking system for stability, resilience and to work for people. That means more mutuals, co-ops and innovative, smaller local banks, not more risk-takers wanting to gamble unaccountably with other people's money. Remutualisation of Northern Rock would have helped to build this kind of system.

The Bank of England's own figures show that the banks are still dependent on significant public support. With the government's economic strategy failing to effectively reduce the deficit and further weakening the economy; ringfencing alone, although symbolically important, looks like the minimum desperate intervention of an administration that knows another crisis is coming, and is dimly aware that much greater structural change is needed.

Compared to Treasury briefings earlier in the year that appeared to dismiss any separation of the banks, Osborne has surprised some by seeming to follow the ICB's advice. He shows good intentions but hasn't reach a logical conclusion, like building a bridge halfway across a valley. Public anger is also unlikely to be assuaged, with the spectacle of bank executives walking off with massive pay and bonus packages underwritten by taxpayer guarantees still present. Dust may be falling from the financial system, but a dangerous, shaky edifice still towers above us.

George OsborneBankingAndrew Simms
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10 steps to tackle climate change | Andrew Simms

Our global approach to impending environmental crisis needs an urgent shakeup. Here are my suggestions for climate negotiators

A week is a long time in energy politics. A once seemingly unstoppable nuclear resurgence falters with Germany's decision to abandon its entire programme by 2022, and we learn that not even the most severe economic collapse for decades has stopped the rise of greenhouse gas emissions, in poor or rich countries. What could the UN meetings in Bonn next week do differently to shed the torpor of current negotiations and re-energise the process? Here are 10 carefully considered and completely serious suggestions.

1. Move the negotiations to a small, low-lying nation, like Tuvalu (assuming that it would have them). Time the meetings to occur when seasonal tides are highest and when water covers much of the island. Distribute the working groups, canteens and plenary sessions around the various islets of the atoll to give the delegates a flavour of what life will be like for the environmentally displaced in a world in which they have failed to halt dangerous climate change.

2. Deal with denial. Denial seems to be a common problem. We are currently waving goodbye to the climatic conditions that were kind enough to usher in human civilisation, and still heading in the wrong direction. Yet there are many well known strategies for dealing with denial. Each UN session could begin, for example, with state of the art group therapy, each delegation could replace their usually embedded corporate lobbyists with the best counselling skills available. Delegates from frugal under-emitting nations could "buddy" carbon-addicted delegates from heavy polluters.

3. Stop using fantasy carbon accounting that allows rich countries to "offshore" their emissions. The current system dumps responsibility for the pollution created by manufacturing goods on the exporting country, not on the country that demanded and ultimately consumes the product. It allows countries like the UK to look much better than we really are, creating an illusion of progress and resulting in complacency.

4. Experiment more. Progress is deadlocked because the default position of national delegations is to negotiate not for the greater good, but for short-term national advantage. It doesn't work. Why not experiment with something that breaks the link. A representative but independent council could be created within the system, mandated to set targets, timetables and distribute responsibility for cutting emissions. Its brief would be to pursue the best course for humanity as a whole.

5. To get in touch with how to create real change on the street, in local economies and communities, all climate negotiators should either set up, or join, a Transition Town initiative. These are built around practical energy descent paths. They are about doing as much as talking, and force you to develop those currently ailing practical problem-solving skills.

6. Get rid of the circus shows. The UN climate talks too often resemble commercial technology trade shows. At an early one I attended the nuclear industry was handing out squishy foam light bulbs to calm people's concerns about it. It's a distraction, such circuses create the impression that a few new energy gizmos will solve the problem, allowing business as usual to continue, when what is needed is to rethink our economic model and have far more social innovation. They should clear out the trade fairs (they'll find somewhere else to sell) and showcase instead new economic thinking and experiments with new ways of living and working (like how a recession-driven four-day week left some people happier and cut carbon).

7. Mobilise the same amount of money that was used to bail out states and banks in the wake of the financial market failures, and use it to invest in smart grids and mixed renewable energy systems. That scale of investment could, potentially, displace fossil fuels at a stroke. At the same time, stop obsessing about the red herring of nuclear power. It won't save us. A comprehensive, favourable assessment by MIT concluded that even under an almost unimaginably positive scenario, containing several major unsolved problems, nuclear would only increase its global share of electricity generation by 2%.

8. Agree to phase out fossil fuel subsidies and redirect the money into national "green new deals" that will create jobs, reskill people who are out of work, bring enormous economic benefits, more comfortable homes, and insulate countries from energy price shocks, as well as cutting emissions.

9. Make key goals more visible. Achieving 30% emissions cuts by 2020, which is needed to keep the world on track, requires keeping the issue on everyone's minds, at least until some momentum is created and there is a sense that we really are all in this together. It needs to be visible, like the collection of metal railings for the war effect from outside people's homes in Britain during the second world war. How about a global "Lights out at 11" measure? In every city where empty office blocks and other buildings are lit throughout the night, save energy, cut light pollution and remind everyone of what we're trying to achieve by turning the lights out.

10. Finally, solving this problem is going to need everyone's input. It's our problem as much as theirs. So No 10, I'm leaving blank, a space for you to fill ...

Climate changeUnited NationsAndrew Simms
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The Business podcast: Are supermarkets too powerful?

Supermarkets now sell us 97% of our groceries. As the big four continue to grow, small and independent competitors are in steady decline.

This week Ed Miliband backed a stronger voice for local people who oppose the spread of supermarkets in their towns. But the issue is not simple: supermarkets also offer jobs, convenient shopping and low-priced food. But have they become too powerful ... and if so, what can be done about it?

In the studio this week we have a panel of experts:

Phillip Blond is the director of the thinktank ResPublica which recently published The Right to Retail – Can Localism Save Britain's Small Retailers?.

Andrew Simms is director of the New Economics Foundation and author of Tescopoly.

Shiv Malik is an investigative journalist and author of Jilted Generation: How Britain Has Bankrupted its Youth. He reported from Bristol on the recent riots at the new Tesco store in Stokes Croft.

Nils Pratley is the Guardian's financial editor.

Also on the podcast this week: we discuss the controversial windfall tax on North sea energy companies, plus the details of Portugal's bailout.

Leave your thoughts below.

Aditya ChakraborttyNils PratleyShiv MalikPhillip BlondAndrew SimmsPhil Maynard

Carbon accounting system is mad as a hatter | Andrew Simms

By not having to account for emissions caused by imported goods, rich nations are living in Alice's wonderland

If there was a pub where you could drink your fill and leave the hangover with the landlord, would you go there? Idle dreaming, but this is the deal in the world of carbon accounting, where responsibility is shared out among countries, and targets set for reducing greenhouse gas emissions.

If I want to own and enjoy a cheap, garage-sized TV, all the fossil fuel emissions that result from making it don't get added to my home account, but to the country of manufacture, most probably China.

As a result, the origins of demand and the place of consumption become insulated from environmental consequences.

Worse still, as the latest, most comprehensive set of figures on the hidden trade in "embodied carbon" reveal, it allows countries such as the UK and the US to delude themselves, by suggesting that the real problems in tackling climate change lay elsewhere, and to dangerously misunderstand the scale of domestic challenges.

It allows us to think that, even if too slowly, we are heading in the right downward direction in terms of our emissions. When in fact the more comprehensive, latest figures reveal that the UK's CO2 emissions didn't fall by 28m tonnes between 1990 and 2008 at all, as the official record indicates, but rose by a substantial 100m tonnes. Rich country emissions went up 12% over the period when hidden, traded emissions are included, and anomalies such as Russia, whose economy collapsed in the early 1990s, are left out.

Trade's share of the global economy increased steadily in the last two decades and, in tandem, emissions from the production of traded goods and services rose from one fifth to more than one quarter of global CO2 emissions.

The UK has targets under the Kyoto protocol, and legal obligations under the Climate Change Act to reduce emissions. But the benchmark against which those targets and obligations are set excludes this "off-shored" carbon. Using a faulty accounting system creates a kind of Alice in Climate Wonderland world in which up is down, the wrong people take the blame and the kingdom is never put in order.

Enter the government's "green deal", a centrepiece of the coalition's pledge to be the greenest government ever, which is about to arrive for scrutiny in the House of Commons.

Like a spoon of sugar at the Hatter's tea party, it will allow motivated households to install home insulation and pay off the cost over time through their fuel bills.

Parliament's environmental audit committee is currently investigating whether there are contradictions between how the UK addresses climate change in its aid programme, and how we behave at home.

The contradiction is so large that perhaps it is difficult to see. It is the economic model itself. It demands ever more damaging over-consumption by the already rich to deliver shrinking, unreliable benefits to the poor. It's a model in which most benefits accrue to the former, yet without significantly improving life satisfaction, and costs, to the latter. Economic insult is merely added to environmental injury that a large proportion of our current carbon debts (let alone larger historical ones) are borne by others because of an accounting quirk.

Other downright peculiarities emerge, such as the boomerang trade ,which sees the UK importing and exporting often near identical amounts of goods, like sending 5,000 tonnes of toilet paper to Germany, then importing 4,000 tonnes.

Apart from failing on its own terms and being distorted by faulty measurement, the model – rising overall consumption fuelled by debt and export-led development – assumes endless supplies of cheap oil and infinite natural resources. Neither are available.

Last week saw commentators obsessed with minor fluctuations in the UK's GDP, a measure of the quantity, not quality, of economic activity. "Recovery" has become synonymous with the return of rising consumption. In trying to revive a flawed and failing economic order, however, we appear as sad romantics, rather like those diehard Russians who still dream with misplaced memories of a golden age, for the return of the tsars or "strong" communist party leaders, rather than looking forward and imagining how the world could be different, better.

Carbon emissionsClimate changeCarbon footprintsEthical and green livingCarbon offsettingAndrew Simms
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Does David Cameron really follow this green guru? | Andrew Simms

He may be in fashion in Downing Street, but EF Schumacher would have been horrified by its policy on the environment

It was a surprise to read in the Observer that the late economist EF Schumacher, author of the seminal 1973 book Small is Beautiful, was not only back in fashion, but apparently also a guru for those within Downing Street.

For many, myself included, Schumacher never went out of fashion. His ideas inform several prominent organisations and movements active in creating better, more climate-friendly food and energy systems. His understanding that the economy must know its junior place next to the biosphere, dependent not dominant, has gained influence over decades. It's a paradigm-shifting insight with profound implications for economics and other disciplines.

Which is why, leaving aside a little political mood music, it is hard to believe that he is a guru to the current government. The coalition is rushing to restore a very old-style deregulated market economy, where finance comes first and making it easier for the already rich to get richer is meant to benefit all. Schumacher's impressive eyebrows would have shot skyward at this thought, so very far from his "economics as if people mattered".

Similarly, he would have been horrified to see the proceeds of taxing big oil companies, being used to subsidise consumption of their product, oil, a nonrenewable resource. He would also have dismissed Downing Street's enthusiasm for nuclear power and other big, centralised, capital intensive technologies that lack human scale, or fight against nature rather than co-operate with it.

Schumacher was full of ideas on rethinking both work itself and the places where we do it. He advocated "trusteeship" as a radical form of economic governance, something also directly applicable to our management of natural resources.

In particular he praised the model adopted by a manufacturing company called Scott Bader Commonwealth that still operates successfully today. Once it was a conventionally run, profit-maximising business. Now it has no shareholders and the maximum differential between highest and lowest paid is 1:7. A democratic members assembly made up of staff committed to the firms ethos holds the board to account, in line with their founding principles.

The company is immune to takeover and has long-term planning horizons. Sixty per cent of profits are reinvested and each generation at the company is obliged to work to ensure the long-term sustainability of the firm, in order that future generations may benefit.

Godric Bader, descended from the firm's founder, says this has "a direct parallel as to how we now urgently have to look at our earthly home".

Schumacher thought the key to success was developing "responsibility for a bundle of assets – not ownership". The approach, he wrote, overcame "the reductionism of the private ownership system and uses industrial organisations as a servant of man, instead of allowing it to use men simply as means to the enrichment of the owners of capital".

The current rush to re-privatise Britain's bailed-out banks and privatise afresh everything from the blood donation service to, well, almost everything, would have left Schumacher exercising the most vividly colourful corners of his vocabulary. The transformation of ownership into a sense of long-term trusteeship over common assets, rather than its mere changing of hands from company founder to workers was, he thought a "necessary, but not sufficient, condition for the achievement of higher aims". Explicit tasks that are useful in economic, but also social and environmental ways, need to be written into the principles of "commonwealth".

News that the UK's greenhouse gas emissions rose by nearly 3% last year would have presented Schumacher with just such an explicit task. For the UK to play its part in preventing dangerous climate-change emissions, cuts of around 10% per year are needed. Just as the 10:10 campaign is trying to do, Schumacher would have written this goal into the principles of commonwealth in such a way that it became an economic purpose of the company to achieve it.

Ironically, the title that helped make the book successful, Small is Beautiful, was forced on to a reluctant Schumacher by his publisher Anthony Blond. Schumacher didn't think everything should be small, but of an appropriate scale. But he thought:

"There is wisdom in smallness if only on account of the smallness and patchiness of human knowledge, which relies on experiment far more than on understanding. The greatest danger invariably arises from the ruthless application, on a vast scale, of partial knowledge such as we are currently witnessing in the application of nuclear energy, of the new chemistry in agriculture, of transportation technology, and countless other things."

"Ruthless application on a vast scale" accurately describes the current government's programme of cuts, and the use of a narrow, failed and discredited version of market economics. If that message creeps from the pages of the copies of Small is Beautiful allegedly to be found in Downing Street, the guru can take a bow.

Nuclear powerPublic sector cutsPublic services policyGreen economyEconomic policyEconomicsAndrew Simms
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In the dark over oil reserves | Andrew Simms

Shell says we're entering a 'zone of uncertainty' over oil supply – a frank admission it hasn't a clue what's going to happen

There is a perverse circular logic to George Osborne using tax revenues from the oil companies to subsidise our national car habit. It may worsen long-term energy security, obstruct the shift to a low-carbon economy and leave us vulnerable to uncontrollable global events, but it makes short-term political sense to the government.

Just how big a gamble Osborne is making becomes clear when you look at how the oil companies themselves see the future.

Looking into its crystal ball of energy scenarios, Shell breaks down where it thinks we've got to, and where we might be going in a new report called Signals & Signposts. It warns that we face an upcoming "zone of uncertainty" – a frank admission that, really, it hasn't a clue what is going to happen. Then it labels a large block of time between now and 2050 as a "zone of extraordinary opportunity or misery" (Shell's involvement in the Niger delta demonstrates that the two are not necessarily mutually exclusive).

Using optimistic assumptions, the company nevertheless sees a gap emerging by 2050 between "business-as-usual-supply" and "business-as-usual-demand", a gap so large that it is equal to the size of the whole industry in the year 2000.

The US mission in Saudi Arabia, a country long relied on to increase production when times are hard, recently questioned in a cable made available by WikiLeaks, "whether they any longer have the power to drive [oil] prices down for a prolonged period". Such revelations make the markets jittery. Events like those in Libya make them jump. And the industry is already embroiled in problems elsewhere.

For example, it can no longer safely rely for slack production on the potential of more marginal fields, such as the Macondo prospect in the Gulf of Mexico, now famous as the scene of BP's Deepwater Horizon debacle.

US giant Chevron is paying for big display adverts that declare: "Oil companies should support the communities they're part of." But it's unlikely that they'll do so by complying with the courts in Ecuador who recently fined the company £5bn, half its annual profit, for polluting the communities that "they're part of". Unhappy BP sees output falling in key countries like the US, Russia and the UK, and is now caught up with dark machinations in Russia that smack of the old days of the "great game".

The whole industry is faced with the odd prospect that the more successfully they conduct their core business, of finding and pumping oil, the more quickly they will do themselves out of a job. A comparison of numerous forecasts by Steve Sorrell and colleagues, published in the journal Energy Policy, revealed a list of 56 oil-producing countries already apparently past their point of peak production. They concluded that any forecast putting the global peak and decline of oil production more than a couple of decades away was based on assumptions that were "at best optimistic and at worst implausible". Some thought it had already happened, more still that it would occur in the next five years. When markets decide that the moment has come, the foundations of the economy could change as fast as a Middle Eastern regime.

But within the industry there remains the same kind of blithe confidence in its ability to continue as before, propping up our economy and lifestyles, that governments just a few years ago placed in the banking system.

The cost of oil imports as a share of GDP for the US, Europe and Japan is back around the level it was in 2008, at between 2-3%, roughly double the average for the past four decades. That doesn't sound much, but it's misleading. Because, in effect, 100% of the productive activities that comprise GDP depend on energy.

The Shell report spoke of "volatile transition", and of economic outlooks that range from "severe-yet-sharp" to "deeper-and-longer" and the marvellously catchy, if dated, "Depression 2.0".

With so much insight, it is remarkable then, that Shell, like BP, has reversed at speed out of renewable energy. Shell dropped investment in wind, solar and hydrogen energy in 2009, the same year BP closed the London HQ of BP Alternative Energy, along with its solar plants in the US and Spain.

Fatih Birrol, chief economist at the International Energy Agency, says we have moved beyond Shell's "uncertainty" into the "danger zone" for the global economy.

It's been tempting to speculate that Britain is returning to the 1970s. We're teetering around recession, there's upheaval in the Middle East and concern about the rising price of oil is spilling over from the cost of filling a petrol tank to filling a fridge with food.

But if problems with production, politics and price combine, the danger is that this may be less a repeat of Britain in the 1970s, and more like Cuba in the 1990s when it suddenly lost access to cheap cold war oil.

On the bright side, almost overnight, Cuba took to urban organic farming, walking, cycling, mending, repairing and reusing what it already had. Cubans might not have chosen to be so, but they became the modern age's first previously addicted explorers of a world beyond oil, and they found themselves much healthier and with some of the best mechanics in the world. The harder we cling to the comfort of oil, the sooner we might not have that choice either.

OilRoyal Dutch ShellCommoditiesOil and gas companiesEnergy industryBPBP oil spillOilChevronEnergyWikiLeaksRenewable energyOil spillsPollutionUnited StatesAndrew Simms
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How Subway tops the fast-food chain | Andrew Simms

Subway has toppled McDonald's as the fast-food king – so what's the secret ingredient behind its relentless growth?

"Subway", it's not a name born for a food chain in Britain. The US maybe, suggestive of something warm, convenient and protected. But what does it make you think of here: a cold, windswept concrete underpass, smelling of piss?

Somehow, though, Subway has climbed to the top of the fast-food pile, deposing McDonald's, in spite of the burger chain's desperate attempts to revive its brand. Outlets decorated in less brash colours, and plastic pots of salad to go with the usual burgers, failed to stem the ascent of the chubby sandwich chain.

How did it happen? Subway likes to promote itself as a healthy alternative to the usual staple of burgers, chicken and fries, all served in super-sized portions. But, the last time I actually looked in the window of my local south London branch it had a special offer. If you bought one large sandwich, overflowing with cheese and layers of cooked meat, you would get another free. The rest of the window display promoted Subway's own special cookies. Hard to believe, but it's possible that the sandwich chain is just more commercially aggressive than McDonald's.

In 2002, Subway announced plans to open 2,000 outlets in the UK and Ireland by 2010. So far it has made it to 1,507, but claims to be opening new outlets at the rate of five every week. As terrifying as that prospect of food homogenisation is, there's certainly no shortage of premises. The recession continues to hollow out the high street, at the last count leaving 14% of retail spaces empty.

It could be that Subway benefited from flying beneath the radar. McDonald's, its main competitor, became a lightening conductor for concerns ranging from the epidemic of obesity linked to the rise of junk food, to animal rights and environmental degradation. High-profile court cases against protesters backfired, further hurting the company's reputation, and there was an apparent, general loss of confidence in the brand. In the middle of the last decade the tide seemed to be going out on its fortunes, with McDonald's actually closing branches.

Rightly or wrongly, sandwiches, (we still generally resist calling them "subs") cling to a better reputation than burgers. Obviously the reality depends rather a lot on the actual ingredients and how they're made.

Subway appeared as the new kid on the British high street, although it actually started life in 1965, the same year as me (hell, it's opened over 34,000 stores since then, that's more than I've had, err, hot dinners?). Its franchise model allows rapid expansion with low risk to the parent company. If the franchisee succeeds, so does the parent company. If they fail, the company just moves on. The stores offer their customers tailored sandwiches (much, in fact, like any sandwich shop), from a range of reliably uniform ingredients – choice within hermetically sealed boundaries.

Partly, Subway is benefiting from a market for fast food, already worth over £10bn, that continues to grow in spite of concerns about health and cloned high streets. It now exists in a friendly political climate, too. Soon after being made secretary for health, Andrew Lansley cast aside decades of increased understanding about food, diet and health saying that there was no need to regulate the self-interest of the food industry, and that we should all just be happy to choose from what the food multinationals offer us.

My biggest complaint about Subway, however, is that although its outlets don't smell like a motorway underpass, whatever it does to make its food produces a distinctive smell that is almost as bad. Some might like it, but for me it hangs in a nausea-inducing plume on the pavement outside the stores. But choice remains king. If the march of the sandwich chain continues, we'll soon be able to eat anything we want on the high street, as long as it's sold by Subway.

Food & drinkFood & drink industryMcDonald'sAndrew Simms
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