Foundational Economy - Essential Services
Also known as:
1. Overview
The Foundational Economy is a concept that re-frames our understanding of the economy to focus on the essential goods and services that underpin everyday life for all citizens, regardless of their income or social status. It represents a shift in perspective from a conventional focus on a few high-growth, technologically advanced sectors to the often-overlooked infrastructure of daily life. This includes a wide range of services such as healthcare, education, housing, utilities (water, energy, sanitation), and food supply. These are the non-negotiable elements of a civilized and dignified existence, forming the bedrock upon which all other economic activity is built.
The concept was developed by the Foundational Economy Collective, a group of academics and researchers who challenged the prevailing neoliberal economic paradigm that has dominated policy-making for several decades. They argue that the relentless pursuit of privatization, marketization, and cost-efficiency in the provision of essential services has often led to a degradation of quality, reduced access, and increased social inequality. The Foundational Economy offers a counter-narrative, emphasizing the importance of collective provision, social value, and long-term security over short-term financial gains.
At its core, the Foundational Economy is about recognizing and valuing the parts of the economy that are “infrastructural, mundane, and essential.” It is not a specific policy prescription but rather a framework for thinking differently about economic development and social well-being. It encourages a move away from a “race to the bottom” in terms of wages and working conditions in these essential sectors and towards a model that prioritizes decent work, fair pay, and high-quality services for all.
2. Core Principles
The Foundational Economy is guided by a set of core principles that distinguish it from mainstream economic thinking. These principles provide a normative framework for re-imagining how essential services are organized, delivered, and governed.
1. Universalism and Social Citizenship: At the heart of the Foundational Economy is the principle of universalism. It posits that essential goods and services are not luxuries but fundamental rights of citizenship. Access to healthcare, education, housing, and other basic necessities should be guaranteed to all members of society, irrespective of their ability to pay. This principle directly challenges the market-based logic of exclusion and rationing, advocating for a system where everyone has a stake in and can benefit from the collective provision of essential services.
2. De-commodification and Public Good: The Foundational Economy seeks to de-commodify essential services, moving them out of the realm of market competition and private profit-making. Instead of being treated as commodities to be bought and sold, they are framed as public goods that are essential for social well-being and economic stability. This principle calls for a greater role for the public sector, co-operatives, and other non-profit organizations in the provision of foundational services.
3. Social Value over Shareholder Value: A key departure from conventional economic models is the emphasis on social value over shareholder value. The success of the Foundational Economy is not measured solely by financial returns or economic growth, but by its contribution to a wider set of social and environmental goals. This includes improving public health, enhancing educational outcomes, strengthening community resilience, and reducing carbon emissions. This principle requires a new set of metrics and evaluation frameworks that can capture the full social and ecological impact of economic activity.
4. Stewardship of Essential Assets: The Foundational Economy promotes a sense of collective stewardship over essential assets and infrastructure. This means managing these resources for the long-term benefit of society as a whole, rather than for the short-term gain of private investors. It involves a commitment to maintaining and upgrading the physical and social infrastructure that underpins the Foundational Economy, ensuring that it can continue to serve future generations.
5. Subsidiarity and Local Empowerment: The principle of subsidiarity suggests that decisions about the provision of foundational services should be taken at the most local level possible. This empowers local communities to shape the services they receive and ensures that they are responsive to local needs and priorities. It also fosters a sense of local ownership and accountability, strengthening the democratic governance of the Foundational Economy.
6. Decent Work and Fair Incomes: The Foundational Economy recognizes the importance of the people who work in essential services. It advocates for decent work, fair wages, and secure employment in these sectors. This is not only a matter of social justice but also a prerequisite for delivering high-quality services. By investing in the workforce, the Foundational Economy aims to create a virtuous circle of good jobs, high morale, and excellent service delivery.
3. Key Practices
The principles of the Foundational Economy are put into practice through a range of concrete actions and policy interventions. These practices are designed to re-orient the economy towards the provision of essential goods and services and to create a more just and sustainable society.
1. Re-municipalization and Public Ownership: One of the key practices of the Foundational Economy is the return of essential services to public ownership and control. This can involve the re-municipalization of privatized utilities, the creation of new public enterprises, or the expansion of existing public services. The aim is to ensure that essential services are run for the public good, rather than for private profit, and that they are accountable to the communities they serve.
2. Social Licensing and Regulation: Where services remain in the private sector, the Foundational Economy advocates for a system of social licensing and regulation. This means that private companies are granted a “social license to operate” on the condition that they meet certain social and environmental standards. This can include requirements for affordable pricing, universal access, high-quality service, and decent working conditions. The aim is to ensure that private providers are held accountable for their social and environmental impact.
3. Community Wealth Building: Community Wealth Building is a key practice for localizing and democratizing the Foundational Economy. It involves a range of strategies to build and retain wealth within local communities, such as supporting local businesses, creating community-owned enterprises, and using public procurement to support the local economy. The aim is to create a more inclusive and resilient local economy that is less dependent on outside investment.
4. Participatory Budgeting and Democratic Governance: The Foundational Economy promotes a more democratic and participatory approach to the governance of essential services. This can involve the use of participatory budgeting, where citizens have a direct say in how public money is spent, and the creation of new forms of democratic governance, such as citizen assemblies and community councils. The aim is to give people a greater voice in the decisions that affect their lives and to ensure that essential services are responsive to their needs.
5. Investment in Public Infrastructure: The Foundational Economy calls for a major program of public investment in the physical and social infrastructure that underpins essential services. This includes investment in new housing, renewable energy, public transport, and digital connectivity, as well as in the education, health, and social care systems. The aim is to create a modern and efficient infrastructure that can support a high-quality of life for all.
6. Progressive Taxation and Fair Funding: The Foundational Economy requires a system of progressive taxation and fair funding to ensure that essential services are adequately resourced. This can involve a range of measures, such as increasing taxes on wealth and high incomes, closing tax loopholes, and tackling tax avoidance and evasion. The aim is to create a more equitable and sustainable funding model for the Foundational Economy.
4. Application Context
The Foundational Economy framework is not a one-size-fits-all solution but a flexible approach that can be adapted to a wide range of contexts. Its applicability extends across different types of economies, political systems, and geographical scales, from local communities to national governments. The relevance of the Foundational Economy is particularly pronounced in contexts marked by de-industrialization, social inequality, and the challenges of climate change.
1. Post-Industrial Regions: In regions that have experienced the decline of traditional industries, the Foundational Economy offers a new path for economic development. Instead of chasing elusive high-tech industries, these regions can focus on strengthening their foundational sectors, which are often the largest employers and the most stable parts of the local economy. This can involve investing in social infrastructure, supporting local supply chains, and creating new forms of community-based enterprise.
2. Urban and Rural Areas: The Foundational Economy is relevant in both urban and rural settings. In cities, it can help to address the challenges of affordability, congestion, and social exclusion by strengthening public services and promoting community-led development. In rural areas, it can help to revitalize local economies, protect essential services, and create new opportunities for employment and enterprise.
3. Developed and Developing Countries: While the concept of the Foundational Economy originated in the developed world, it has a growing relevance in developing countries. In these contexts, it can help to build the basic infrastructure of a modern society, such as clean water, sanitation, and electricity, and to ensure that everyone has access to essential services like healthcare and education. It can also help to create a more inclusive and sustainable model of development that is less dependent on foreign aid and investment.
4. Different Political Systems: The Foundational Economy is not tied to a particular political ideology. It can be implemented in a variety of political systems, from social democracies to more liberal market economies. The key is a willingness to challenge the dominant neoliberal consensus and to prioritize the collective provision of essential goods and services. This can involve a range of policy instruments, from direct public provision to social licensing and regulation.
| Context | Applicability | Challenges | Opportunities |
|---|---|---|---|
| Post-Industrial Regions | High | Overcoming path dependency, lack of investment | Creating new sources of employment, improving quality of life |
| Urban Areas | High | High cost of living, social fragmentation | Strengthening public services, fostering community resilience |
| Rural Areas | High | Depopulation, lack of services | Revitalizing local economies, protecting natural assets |
| Developing Countries | High | Lack of infrastructure, weak institutions | Building basic infrastructure, promoting inclusive development |
| Social Democracies | High | Bureaucracy, resistance to change | Strengthening the welfare state, promoting social innovation |
| Liberal Market Economies | Medium | Dominance of market logic, political opposition | Creating a more inclusive and sustainable economy, addressing market failures |
5. Implementation
Implementing the Foundational Economy framework requires a multi-faceted approach that involves a combination of policy changes, institutional reforms, and grassroots initiatives. It is a long-term process of social and economic transformation that requires a sustained commitment from a wide range of actors, including governments, businesses, civil society organizations, and local communities.
1. Mapping and Analysis: The first step in implementing the Foundational Economy is to map and analyze the existing foundational sectors in a particular region or locality. This involves identifying the key actors, institutions, and supply chains that are involved in the provision of essential goods and services. This analysis should also assess the strengths and weaknesses of the existing system, including its social, economic, and environmental performance.
2. Building Coalitions and Alliances: Implementing the Foundational Economy requires building broad-based coalitions and alliances for change. This involves bringing together a wide range of stakeholders, including trade unions, community groups, faith-based organizations, and progressive businesses, to build a shared vision for a more just and sustainable economy. These coalitions can play a crucial role in advocating for policy changes, mobilizing public support, and holding decision-makers to account.
3. Policy and Legislative Reform: Implementing the Foundational Economy requires a range of policy and legislative reforms at the local, regional, and national levels. This can include changes to procurement rules, planning regulations, and tax laws to support the development of the Foundational Economy. It can also involve the creation of new public institutions, such as a national investment bank or a public-sector consulting firm, to support the transition to a more foundational model of development.
4. Piloting and Experimentation: Implementing the Foundational Economy is a process of learning by doing. It involves piloting and experimenting with new approaches to the provision of essential goods and services at the local level. This can include the creation of new community-owned enterprises, the development of new forms of social licensing, and the use of new technologies to improve the efficiency and effectiveness of public services. These pilots can provide valuable lessons and insights that can be scaled up and replicated in other contexts.
5. Monitoring and Evaluation: Implementing the Foundational Economy requires a robust system of monitoring and evaluation to track progress and to ensure that the desired outcomes are being achieved. This should involve a combination of quantitative and qualitative indicators that can capture the full social, economic, and environmental impact of the Foundational Economy. The results of this monitoring and evaluation should be used to inform ongoing policy-making and to ensure that the Foundational Economy is continuously improving and evolving.
6. Evidence & Impact
The Foundational Economy is not just a theoretical concept; it is a practical approach to economic development that has been implemented in a variety of contexts with demonstrable results. The evidence of its impact can be seen in a range of social, economic, and environmental outcomes.
1. Improved Quality of Life: By prioritizing the provision of essential goods and services, the Foundational Economy can lead to a significant improvement in the quality of life for all citizens. This can be seen in better health outcomes, higher educational attainment, and improved access to affordable housing and public transport. For example, the re-municipalization of water services in Paris has led to a significant reduction in water prices and an improvement in water quality.
2. Increased Economic Resilience: By strengthening local economies and reducing dependence on external markets, the Foundational Economy can help to build greater economic resilience. This can be seen in the creation of more stable and secure employment, the growth of local businesses, and a reduction in the volatility of local economies. For example, the community wealth building initiatives in Preston, UK, have led to a significant increase in the amount of public spending that is retained in the local economy.
3. Reduced Social Inequality: By ensuring that everyone has access to essential goods and services, the Foundational Economy can help to reduce social inequality. This can be seen in a narrowing of the gap between rich and poor, a reduction in poverty and social exclusion, and an increase in social mobility. For example, the provision of universal basic services in Finland has been shown to have a positive impact on the health and well-being of low-income households.
4. Enhanced Environmental Sustainability: By promoting a more localized and resource-efficient model of development, the Foundational Economy can help to enhance environmental sustainability. This can be seen in a reduction in carbon emissions, a decrease in waste and pollution, and an increase in the use of renewable energy. For example, the development of local food systems can help to reduce food miles and to promote more sustainable farming practices.
| Impact Area | Evidence | Examples |
|---|---|---|
| Quality of Life | Improved health and education outcomes, better access to essential services | Re-municipalization of water in Paris, public transport in Vienna |
| Economic Resilience | More stable employment, growth of local businesses | Community wealth building in Preston, UK, local procurement in Cleveland, USA |
| Social Inequality | Reduced poverty and social exclusion, increased social mobility | Universal basic services in Finland, social housing in Vienna |
| Environmental Sustainability | Reduced carbon emissions, increased use of renewable energy | Local food systems, community energy projects |
7. Cognitive Era Considerations
The transition to the Cognitive Era, characterized by the proliferation of artificial intelligence, automation, and data-driven technologies, presents both significant opportunities and profound challenges for the Foundational Economy. The principles and practices of the Foundational Economy can provide a crucial framework for navigating this transition in a way that is equitable, sustainable, and enhances human well-being.
Opportunities:
- Enhanced Efficiency and Effectiveness: AI and automation can be harnessed to improve the efficiency and effectiveness of foundational services. For example, AI-powered diagnostics can improve healthcare outcomes, smart grids can optimize energy consumption, and automated logistics can streamline food distribution. These technologies can help to deliver better services at a lower cost, freeing up resources for other social priorities.
- Personalization and Customization: Cognitive technologies can enable the personalization and customization of foundational services to meet the specific needs of individuals and communities. For example, personalized learning platforms can tailor education to the learning style of each student, and on-demand public transport can provide more flexible and convenient mobility options.
- Empowerment and Participation: Digital platforms and tools can empower citizens to play a more active role in the co-production and governance of foundational services. For example, online platforms can facilitate participatory budgeting, and mobile apps can enable citizens to report problems and provide feedback on public services. This can help to create a more democratic and accountable Foundational Economy.
Challenges:
- Job Displacement and Deskilling: The automation of routine tasks in foundational sectors could lead to job displacement and the deskilling of the workforce. This could exacerbate social inequality and create new forms of social exclusion. It is therefore crucial to invest in education and training to equip workers with the skills they need to thrive in the Cognitive Era.
- Algorithmic Bias and Discrimination: The use of algorithms in the delivery of foundational services raises the risk of bias and discrimination. For example, biased algorithms could lead to the unfair allocation of social housing or the discriminatory targeting of welfare benefits. It is therefore essential to ensure that algorithms are transparent, accountable, and fair.
- Data Privacy and Surveillance: The increasing use of data in the Foundational Economy raises concerns about privacy and surveillance. The collection and use of personal data must be subject to strict ethical and legal safeguards to protect the rights of citizens. It is also important to ensure that the benefits of data are shared equitably and that citizens have control over their own data.
| Consideration | Opportunities | Challenges | |
|---|---|---|---|
| Automation | Increased efficiency, lower costs | Job displacement, deskilling | |
| AI & Data | Personalization, improved outcomes | Algorithmic bias, data privacy | |
| Digital Platforms | Empowerment, participation | Digital divide, platform monopolies | ### 8. Commons Alignment Assessment (v2.0) |
This assessment evaluates the pattern based on the Commons OS v2.0 framework, which focuses on the pattern’s ability to enable resilient collective value creation.
1. Stakeholder Architecture: The pattern establishes a robust stakeholder architecture centered on social citizenship, defining universal rights for all humans to essential services. It assigns responsibilities to public and community organizations for stewardship and provision, explicitly considering the needs of future generations. While it promotes environmental sustainability, it frames the environment as a resource to be managed rather than a stakeholder with inherent rights.
2. Value Creation Capability: The pattern’s primary focus is on expanding the definition of value beyond the purely economic. It directly enables the creation of social value (public health, equality), ecological value (sustainability), and resilience value (stable local economies). By de-commodifying essential services, it creates the conditions for collective well-being to be recognized and cultivated as the primary output of the economy.
3. Resilience & Adaptability: Resilience is a core outcome of the pattern, achieved by strengthening local economies and reducing dependence on volatile global markets. It promotes adaptability through the principle of subsidiarity, allowing local communities to tailor essential services to their specific needs and changing circumstances. This focus on local provision and control helps maintain coherence during systemic stress.
4. Ownership Architecture: The pattern fundamentally redefines ownership away from private, monetary equity towards collective stewardship. Through practices like re-municipalization and community wealth building, it defines ownership as a set of rights (access) and responsibilities (stewardship for long-term social benefit). This aligns strongly with a commons-based view of ownership as a function of social and ecological contribution.
5. Design for Autonomy: The framework is highly compatible with distributed systems, as seen in its emphasis on local empowerment and subsidiarity. While not explicitly designed for AI and DAOs, its principles of de-commodification and social value provide a crucial ethical foundation for deploying autonomous systems in essential sectors. The Cognitive Era considerations show an awareness of the need to align these technologies with public good, reducing coordination overhead by setting clear, non-market goals.
6. Composability & Interoperability: The Foundational Economy is a high-level framework that is explicitly designed to be combined with other patterns. It can interoperate with practices like Community Wealth Building, Participatory Budgeting, and various forms of co-operative and public ownership. Its principles provide a stable foundation upon which more specific, modular solutions can be built and integrated.
7. Fractal Value Creation: The pattern’s logic is inherently fractal, designed to be applicable from the local neighborhood to the national and even transnational level. The core idea of identifying and provisioning essential services based on social value can be scaled and adapted to different contexts, whether urban, rural, developed, or developing. This allows the value-creation logic to replicate and adapt across multiple scales of social organization.
Overall Score: 4 (Value Creation Enabler)
Rationale: The Foundational Economy framework is a powerful enabler for creating resilient, collective value. It provides a comprehensive architecture for re-orienting economic activity towards social and ecological well-being. Its strong emphasis on de-commodification, stewardship, and universal access aligns it closely with the core tenets of a commons-based society.
Opportunities for Improvement:
- Develop a more explicit framework for the Rights of Nature, treating the environment as a key stakeholder rather than just a resource to be managed.
- Create clearer guidelines and models for integrating autonomous technologies like AI and DAOs into the governance and provision of foundational services.
- Strengthen the concept of citizen responsibility and co-production to complement the strong emphasis on the right to access services.
The Foundational Economy framework has a strong alignment with the principles of the commons. It seeks to create a system of collective provision for essential goods and services that is governed by and for the common good. This assessment evaluates the alignment of the Foundational Economy with the seven dimensions of the commons.
| Dimension | Alignment | Rationale |
|---|---|---|
| Shared Purpose & Values | High | The Foundational Economy is explicitly oriented towards a shared purpose: ensuring that everyone has access to the essential goods and services they need to live a decent life. This shared purpose is underpinned by a set of common values, including universalism, social justice, and environmental sustainability. |
| Collective Governance | High | The framework promotes collective governance through practices such as re-municipalization, community wealth building, and participatory budgeting. It seeks to empower citizens and communities to have a greater say in the decisions that affect their lives and to hold service providers to account. |
| Fair Distribution | High | The principle of universalism ensures that the benefits of the Foundational Economy are distributed fairly across society. By de-commodifying essential services and prioritizing social value over shareholder value, the framework aims to reduce inequality and to ensure that everyone has a fair share of the collective wealth. |
| Sustainable Stewardship | High | The Foundational Economy promotes the sustainable stewardship of shared resources by taking a long-term perspective and by prioritizing social and environmental goals. It encourages investment in renewable energy, sustainable transport, and other green infrastructure, and it seeks to reduce the ecological footprint of the economy. |
| Open & Accessible | High | The principle of universalism and the practice of de-commodification are designed to ensure that essential services are open and accessible to all, regardless of their ability to pay. The framework also promotes transparency and accountability in the governance of the Foundational Economy. |
| Polycentric & Multi-layered | Medium | The Foundational Economy framework is adaptable to different scales, from the local to the national. However, its implementation often depends on the actions of central government, which can limit the scope for polycentric and multi-layered governance. There is a need to develop more decentralized and networked models of governance for the Foundational Economy. |
| Contribution & Reciprocity | Medium | While the Foundational Economy emphasizes the rights of citizens to access essential services, it is less explicit about their responsibilities to contribute to the common good. There is a need to develop a stronger culture of contribution and reciprocity within the Foundational Economy, where citizens are not just passive consumers of services but active co-producers of the common good. |
9. Resources & References
- The Foundational Economy Collective. (2023). The Foundational Economy. https://foundationaleconomy.com/
- Riepl, T. (2025). The foundational economy: Focusing on what matters. Exploring Economics. https://www.exploring-economics.org/en/discover/the-foundational-economy/
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Bentham, J., Bowman, A., de la Cuesta, M., Engelen, E., Ertürk, I., Folkman, P., Froud, J., Johal, S., Law, J., Leaver, A., Moran, M., & Williams, K. (2013). Manifesto for the Foundational Economy. CRESC Working Paper No. 131. https://hummedia.manchester.ac.uk/institutes/cresc/workingpapers/wp131.pdf
- Foundational Economy Collective. (2018). Foundational Economy: The infrastructure of everyday life. Manchester University Press.
- Barbera, F., & Jones, I. R. (2020). The foundational economy and citizenship: Comparative perspectives on civil repair. Policy Press.