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Introduction
Enterprise and Deprivation
Alan Southern
INTRODUCTION AND AIMS OF THE BOOK
The main proposition of this book is that enterprise and deprivation have a clear propinquity. At first glance this may seem counterintuitive, particularly as the former is considered to be positive, aspirational and life changing; the latter meanwhile is spoken of in a negative sense and associated with decline, individual despair and collective failure though of course is also life changing. There has been an increasing tendency to situate both enterprise and deprivation in the same sentence, as references have been made to anti-poverty strategies, particularly in the developing world through âbottom of the pyramidâ type initiatives for example (see Prahalad 2005). Latterly however, enterprise has been explicitly advocated as a means to address inner-urban decline in the developed world. One of the main challenges for this book is to recognise how and why this is happening now and to reveal greater understanding of the conceptual basis to this juxtaposition of enterprise and deprivation.
The ideas presented in this collection come from a variety of experiences and academic disciplines. One particular theme drawn from the book is the limitation of enterprise, this concept of hope and ambition, and particularly how enterprise and entrepreneurship might address social and economic exclusion. Here is a critique of how we understand the role of enterprise in turning around the conditions in some of our societiesâ worst affected communities. We see in a number of chapters that problems of deprivation have structural roots, and the questioning by authors of whether enterprise policy can address these problems, or whether it might even exacerbate them, is shown to be perfectly valid.
In this respect the book offers the reader an opportunity, through the combination of chapters, to examine an empirical base and to discuss the recent push for enterprise as a panacea for deprivation in the developed world. This push stems directly from the positive notions attached to enterprise rather than any clear theoretical or empirical framework. It simply is not easy in academia to write about enterprise without buying into a generic discourse concerning its progressive qualities. Here, authors have tried to move away from the dominant, and often neo-liberal, language associated with enterprise and have sought to bring into the debate a number of interrelated factors often concerning structures of class, race and gender. Thus some of the more opaque questions surrounding enterprise in communities of deprivation are faced here.
We ask, for example, is it feasible that some configurations of enterprise lock communities into certain types of deprivation? Alternatively, are some forms of enterprise locked into certain types of deprivation? Equally as pertinent is to ask whether there is a plausible argument in the suggestion that enterprise reinforces forms of structural inequity. We need to pose questions that help explain why particular forms of enterprise can be found in deprived neighbourhoods and why we tend to associate low value enterprise and often social enterprise with a particular place. The contributions made here should help us to comprehend why, on the one hand, enterprise is considered to be a feature of a particular group (see for example the work of the Global Entrepreneurship Monitor at www.gemconsortium.org), while on the other, deprivation can be regarded as characteristic of some alternative group, thereby creating difference based on deserving entrepreneurial attributes, in contrast to undeserving dependency traits.
To return to the main premise of the book, concerning the association between enterprise and deprivation, we find geography and metaphor shaping the analysis in the book. The reader will see authors investigating whether enterprise and deprivation are epidemic or endemic as cause and effect is examined. And to test the proposition of propinquity, not only is the limit of enterprise tested through a wider evidence base than previously available but also considered is the link between enterprise and inequity, for example through associations of enterprise with race and gender. We look critically at social enterprise and examine enterprise through a different political lens, through a consideration of worklessness and hidden systems of enterprise. To achieve these aims, some authors start from the point of enterprise while others start from the point of deprivation.
In the next part of the chapter a general framework is set out from which to consider the work of the authors. This begins by looking critically at the notion of renewal (the regeneration of deprived communities) being led through a market-based approach. Some suggestions are then made for a more systemic concept from which to analyse the juxtaposition of enterprise and deprivation before the structure of the book is outlined.
SUPPORTING ENTERPRISE, ADDRESSING DEPRIVATION
In the UK we can trace contemporary efforts to address deprivation through support for enterprise back to the late 1990s and the election of a new Labour administration. Firmly placing enterprise as a main response to poverty and deprivation, the Policy Action Team 3, part of the Social Exclusion Unit, pushed forward the view that more successful business start-ups in poor neighbourhoods should be encouraged as the way to regenerate communities. The ideas outlined, relatively simple in essence concerning improved business advice and better access to finance, could be traced in some form to the developments that had taken place in the US.
Central to this was Michael Porterâs view (1995a, 1995b) that deprived communities should aspire to affluence by becoming more competitive. This struck an intuitive cord among UK policy makers on the wave of an âeverything newâ political agenda forged from a âthird wayâ ideology (see Giddens 1999 but also Williams and Windebank 2003). The shape of the Boston-inspired Inner City 100 initiative influenced policy in the UK and specifically in England through the City Growth Strategy. A few years later this was made explicit in the 2003 Local Government Act, with the Local Enterprise Growth Initiative (LEGI) and through the formal introduction of Business Improvement Districts. Even as Porter was making reference to neighbourhoods as a homogenous entity, his concepts were received with interest in the UK despite what appeared to be difficulties in making these ideas operational.
The perception of problem, cause and solution was perfectly clear for Porter. His critique of previous intervention strategies, those that sought to help depleted communities through social investment, put forward an alternative based on a totemic market-led axiom. The logic behind this has been to establish a means by which the paternalistic focus on a redistribution of wealth can be displaced âthrough private, for-profit initiatives and investments based on economic self-interest and genuine competitive advantage instead of artificial inducements, government mandates, or charityâ (Porter 1995b: 304).
Here, without ambiguity, was the way to move from subsidies, inflated levels of income benefit and interventions aimed at stimulating economic development, social housing and physical regeneration. Porter made the case for
an economic model [that] must begin with the premise that inner city businesses should be profitable and positioned to compete on a regional, national and even international scale. These businesses should be capable not only of serving the local community but also of exporting goods and services to the surrounding economy. The cornerstone of such a model is to identify and exploit the competitive advantages of inner cities that will translate into truly profitable businesses. (Porter 1995a: 56)
So instead of the dependency culture and subsequent self-pity that is often implicated in deprived communities, the way forward through this market-led approach is to populate the neighbourhood with enterprises that are competitive.
Those with a primary source of research focused on small business and entrepreneurial behaviour had previously attempted to identify causes behind start-up and sustainability in the context of location. For example, Storey (1994) cited population characteristics, unemployment, wealth, education and occupation, level of existing enterprise, housing and local government as impacting on geographical differences in new business start-up. More recently Fritsch and Muller (2004) suggested that spatial variance in start-up activity was related to the quality of start-up, indicating how the role of human capital is important. This is an important point; far from improving places the suggestion here is that more enterprise of the wrong kind can actually undermine local economic performance. Work of this nature, however, restricts our observation of the dynamics of localities and is what Gibson-Graham would refer to as the dominance of a âcentred vision of economic totalitiesâ (1996: 185). In a similar vein, Leyshon and Lee (2003) point to the emphasis on âan a-social economy controlled entirely by unfettered market exchangesâ (2003: 8). We should not assume, then, that Porterâs work was left without challenge.
It is relevant to question why the focus on poverty became marginal as Porterâs ideas took hold. Townsend (1970), particularly with his idea of nation-based relational poverty, helps us to understand the persistence of poverty in the context of the push to support enterprise. His concepts around stratification, for example in relation to status and access to resources, initiated in the UK a debate on the relative position of poverty. Communities began to be compared within high income nations and the rank position of any particular neighbourhood reflected the relative deprivation and therefore plight of individuals and families. While this is also a contested debate, Townsend reminds us that social structures are important in understanding poverty, even though tendencies can exist that place the source of deprivation on to communities themselves. The focus has shifted away from poverty, and we have become more conditioned to use a refined language and to talk of social exclusion and inclusion.
While Levitas (2006) shows how the multi-dimensional character of social exclusion makes it difficult to assess its overall scale, Blackburn and Ram (2006) noted that UK policy makers seized the enterprise agenda in a drive to overcome social exclusion. They suggested that the competitiveness agenda, a subtle reference to Porter, and the social inclusion agenda were potentially contradictory, noting that small businesses are themselves part of a dominant system that has produced deprivation. Thus, social exclusion, inclusion and the drive for enterprise as a means of addressing such ills coincided with the pushing to one side of poverty, at least in the sense of the latter being a useable contemporary term.
Others, including some of the authors in this book, sought to demonstrate how enterprise and deprivation brought together a complex set of dynamics and wide range of relationships beyond those Porter seemed to be concerned with. Those such as Fainstein and Gray (1995) suggested Porterâs initial position was incorrect, arguing how his views were limited in respect of the advances made through some forms of regeneration. To add to this Sawicki and Moody (1995) noted how Porter had transported his theories on international trade into the arena of the inner city without confirmative evidence, while Blakely and Small (1995) were equally as critical arguing that Porter had failed to grasp the complexity of inner-urban decline. A little later Bates (1997) was to add that the entrenched attitudes held by those such as Porter simply reinforced views on deprivation.
Looking specifically at the operation of finance institutions in US neighbourhoods, White Haag (2002) noted how lenders would literally âdraw a red line around certain geographic areas and then decline to make loans in those areas on the basis of the racial composition, age of housing stock, or other factors, regardless of the creditworthiness of individual loan applicantsâ (ibid.: 252).1 While this is reminiscent of the work of Rex and Moore (1969) who explained the use of redlining in the UK context in the mid 1960s, the Bank of England (2000) were quick to dismiss this and argued that businesses in the most deprived locations access finance in the same way as those in affluent places. This is reflective of how the debate was taking shape well before the Labour Government came to power in the UK in the late 1990s, when they aligned their policy position with those of Porter.
Clearly Porterâs work has become influential to policy. His approach is unambiguous in the support of enterprise. However, his views are contested, and critics point to the simplistic manner of his concepts and lack of empirical work to verify the turn of ideas into policy. Put plainly, supporting enterprise in the manner indicated by Porter has not necessarily proven to be the means to address deprivation. This debate has increased in quantity and quality thereon in. The following is an introduction to the framework in which enterprise is promoted and deprivation exists. Alongside is the idea of cumulative causation to provide a different perspective for looking at enterprise and deprivation. The aim is to take the debate beyond what can often appear to be a polemic view of market-led renewal or politically led regeneration.
THE VICIOUS CIRCLE AND INSTITUTIONAL FIX
The value from the work of those such as Gunnar Myrdal, Nicholas Kal-dor and Karl Polanyi is not that they provide an answer to contemporary matters but that their ideas are transferable across time and allow current issues to be considered in alternative ways. For example, we could use the work of Myrdal (1944) to argue that deprivation is an outcome of the principle of cumulation. Equally, Polanyi (2001) would profess that the anxiety created by a market-inspired free-for-all would be counterproductive to an inclusive society. In this sense market dysfunction in deprived communities might be part of the cumulative effect that at some point would require a type of institutional intervention.
Kaldorâs notion of cumulative causation can be linked to the period of Fordism and, to an extent, latterly took a form of resistance to the argument for monetarism that emerged in the 1970s. Myrdalâs concept of cumulative causation, or the vicious circle, was broader than economic. His emphasis was placed on the dynamic social causation of a wide range of influences, a âconception of a great number of interdependent factors, mutually cumulative in their effectsâ, thereby rejecting the idea that an outcome is related to a single cause (Myrdal 1944: 1069). If we are to accept the notion of a vicious circle of deprivation coupled to a low level of enterprise activity, we need to ask what it is that happens to initiate the cumulative process and to what extent the process becomes systemic.
Kaldorâs work inspired Argyrous (1996) to speculate on how we might identify the structures and processes that facilitate cumulative causation. From this emerges the question of history and path dependency. Those places, those communities associated with deprivation, not only experience this decline in real terms but there is also an image created that itself becomes a factor in the cumulative process. Thus rankings of deprivation and estimates about levels of enterprise that feed into the imagination about places become locked into a cycle. By contrast the cumulative processes in the more affluent places work in a similar but opposite manner, with growth occurring that leads to a virtuous cycle.
Skott and Auerbach (1995) noted three important characteristics of uneven development that we might adapt in the context of the local economy. First, there are aspects of path dependency and instability and some form of feedback mechanism that influences the future trajectory of the local economy. Second, local economic instability is an outcome of the interaction of economic and non-economic factors that, in turn, are likely to provoke institutional intervention, which we might see as social, economic and physical regeneration. Third, as local economies come under global pressures, it becomes impossible to fully assess what external factors are likely to impact and how. More pertinently it is implausible to know what the limits of those externals factors might be. The indirect effect from the sub-prime housing market in the US on the local economy on a town in northern England, for example, is an illustration of this.
The danger of such an analysis becoming deterministic is obvious. This is particularly so when considering enterprise and deprivation through the economic lens initiated by Kaldor (1934, 1972). Rosenthal and Ross (2010) would argue that entrepreneurs take violent crime into account when bidding for locations within an urban area. Likewise, the Bank of England (2000) claimed that safety and security issues and spatial variance were more important influences in determining access to finance than any notion of contemporary redlining. Introducing the idea that something systemic is at play when we consider the propinquity of enterprise and deprivation is helpful. We might try and explain how the variables that we use to measure enterprise, specifically business start-up, and those variables we use to rank deprivation are systemically woven. The interaction, for example, of levels of education, access to finance, levels of crime and access to basic services such as health care may act to produce cumulative causation.
Thus we can attempt to use Myrdalâs broader concept of cumulative causation in trying to understand the dynamics of enterprise and deprivation. This forces us to contemplate two things. First is to consider the individual components of a system that would lead to the levels of deprivation and enterprise experienced. The effects of the interaction of such components would be systemic in their impact and not equilibrium generating (OâHara 2008). This is an important point because it takes us away from what can appear to be a polemic, idealised and unobtainable argument for or against the market, or for or against intervention. Second, we would need to incorporate ideas and arguments about the importance of political intervention simply because we recognise this is a significant part of the local s...
