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The foundational economy: Focusing on what matters

The foundational economy: Focusing on what matters

Foto von Brett Jordan auf Unsplash

Tobias Riepl
Exploring Economics, 2025
Level: beginner
Perspectives: Ecological Economics, Feminist Economics, Institutionalist Economics, Marxian Political Economy, Other
Topic: Institutions, Governments & Policy, Other, Reflection of Economics, Resources, Environment & Climate
Format: Foundational Text

1. Introduction

The foundational economy is a concept which describes the infrastructure of everyday life, encompassing all essential services like utilities or healthcare that people require for wellbeing (Calafati et al., 2023). The concept was originally developed by the Foundational Economy Collective, a group of mostly UK-based scholars in critical business studies who challenged the neoliberal privatization and degradation of public services since the 1970s (Bentham et al., 2013). In Europe, foundational economies employ roughly 40% of the workforce (Foundational Economy Collective, 2018) and can be considered as the backbones of society (Engelen et al., 2017). In light of the climate crisis, foundational economies have also been recently identified as potential key drivers for eco-social change: They not only hold significant leverage for reducing carbon emissions but also provide the social foundations that allow for ambitious climate action (Bärnthaler et al., 2021).

Over the years, the concept of the foundational economy has evolved into a global, heterogenous body of intellectual thought referred to as foundational thinking (e.g., Bärnthaler et al., 2021; Calafati et al., 2023; Riepl et al., 2025). It unites in rejecting a simplistic understanding of the economy as one single, manageable entity while acknowledging the diversity of economic zones and the particular importance of the foundational economy for society (Bentham et al., 2013).

In this contribution, I provide a brief overview of foundational thinking. Section 2 presents key elements of foundational thinking while Section 3 summarizes foundational policymaking. Section 4 relates foundational thinking to other economic thought and concepts. Finally, section 5 demonstrates the policy relevance of this approach in times of neoliberalism and of the necessity of achieving a good life for all within planetary boundaries.

2. Cornerstones of foundational thinking

Foundational thinking conceptualizes the economy as consisting of distinct economic zones, each of them characterized by “different business models, sources of revenue and organizational forms” (Earle et al., 2018, p. 40):

  1. the core economy outside the market economy and public provisioning covering unpaid work like child care or volunteering;
  2. the foundational economy providing (other) daily essential services;
  3. the overlooked economy providing services where the purchase can be postponed and occurs on an occasional basis like haircuts or holidays;
  4. the export-oriented market economy geared towards profit maximization and economic growth like the high-tech or car industry (Bärnthaler et al., 2021; Foundational Economy Collective, 2018).

The foundational economy then can be thought of as consisting of three segments. First, there is the material foundational economy. It connects households with material infrastructure such as utilities or transportation. Then, there is the providential foundational economy that covers welfare services such as healthcare or education (Foundational Economy Collective, 2018). In recent years, a new segment gets increasingly proposed that can be referred to as enlarged foundational economy (or Foundational Economy 2.0), which includes culture and nature (Calafati et al., 2021, 2023; O’Connor, 2024; Riepl et al., 2025). Culture can be seen as providing essential services as it is key for “our collective reimagining of the future” (O’Connor, 2024, p. 29), thus feeding via imaginaries into the so-called “long revolutions” (ibid, p. 15f) of human civilization. Access to nature can be considered essential for wellbeing, not only because of its well-documented positive effects on human health and social cohesion, but also because all provisioning including the one of foundational economy ultimately depends on the integrity of ecological systems (Calafati et al., 2021; Hartig et al., 2014).

Overall, the foundational economy can be understood as “the practical analogue of the large theoretical literature on human needs and human capabilities” (Foundational Economy Collective, 2018, p. 95). While the literature remains rather vague on the overlap with capability approaches (Calafati et al., 2021), the link to human need theory is well elaborated and arguably more straight-forward: Foundational thinking adds material realities to the theory of human need by linking foundational sectors and infrastructures to the human needs they contribute to fulfilling (Riepl & Grabow, 2025). Due to the non-commensurability of human needs (Gough, 2017), adequate access to all foundational infrastructures is required for sufficient wellbeing (Table 1).

Table 1: Overview of the foundational economy (based on Bärnthaler et al., 2021; Foundational Economy Collective, 2018; Gough, 2017; Riepl & Grabow, 2025).

Foundational segments

Foundational sectors

Foundational infrastructures (examples)

Related human needs

Material foundational economy

Utilities

Energy grid, water sewerage, telecoms

Adequate nutritional food and water, non-hazardous physical environment, adequate protective housing

Transportation

Public transport, car transport

Economic security, appropriate healthcare, basic education

Food supply

Production, distribution, sale

Adequate nutritional food and water, appropriate healthcare

Postal services

Post office

Economic security, significant primary relationships

Retail banking

Local banks

Economic security

Providential foundational economy

Healthcare

Hospitals, doctors, pharmacies

Appropriate healthcare, safe birth control and childbearing, security in childhood

Social care

Nursing homes, preschools

Security in childhood, significant primary relationships

Education

Universities, schools, libraries

Basic education, security in childhood

Housing

Council housing, homeless shelters

Adequate protective housing, non-hazardous physical environment

Law and order

Police stations

Physical security, non-hazardous work environment, security in childhood

Public administration

Administrative offices

Economic security, physical security, basic education

Enlarged foundational economy

Culture

Museums, cinemas

Significant primary relationships

Nature

Parks, gardens

Non-hazardous physical environment

The interlinkages between foundational sectors and human needs, as depicted in Table 1, are illustrative and not intended to be exhaustive.

Apart from direct public provisioning (e.g., in education or public administration), foundational sectors may also operate on the basis of so-called social licensing (Bärnthaler et al., 2021). Social licensing obliges private providers in the foundational economy to adhere to particular (eco-) social obligations such as affordable prices, support for local communities or efficiency standards (Earle et al., 2018; Froud & Williams, 2019). For instance, in Germany, the Energy Industry Act (EnWG) requires energy companies holding concession rights for electricity and gas networks to ensure universal and adequate service to all households. With the rise of neoliberalism, however, social licensing became less common and was replaced by public-private partnerships, whereby the state outsources public infrastructure and responsibility to the private sector, largely unconditionally (Foundational Economy Collective, 2018). In many cases like UK’s water system, this has led to a deterioration of service quality and affordability. In the free market economy, the principle of profit maximization takes precedence over accessibility or quality concerns (Calafati et al., 2023, 2025).

3. Foundational policymaking

Foundational policymaking represents policymaking that specifically prioritizes and promotes the foundational economy because of its distinct value for society: It provides goods and services that (a) are necessary to satisfy basic needs; (b) are (therefore) consumed daily by all citizens regardless of income; and (c) are eco-efficiently distributed through collective provisioning systems (Foundational Economy Collective, 2018). It consequently opposes the neoliberal agenda of privatizing public utilities and outsourcing social welfare (Calafati et al., 2023).

Instead, it tries to protect or free foundational sectors from the competition pressures that intensified under neoliberalism. The primary policy proposals are fiscal policy instruments such as social licensing or tax reforms that aim to enable citizens to access and participate in the foundational economy (Bärnthaler et al., 2021; Calafati et al., 2021). Foundational policymaking follows a power-sensitive approach. It understands foundational infrastructures as no “innocent arrangements” (Shove et al., 2018, p. 5) but the outcome of the “unequal contests over places, resources and rights” (ibid.) and the provisioning process as a conflicted terrain where actors with different interests compete and power struggles determine what services are provided and who has access to them (Plank, 2020; Schaffartzik et al., 2021; Schafran et al., 2020). At the same time, foundational policymaking emphasizes the importance of multi-level governance, promoting “a vision […] where government at all levels works with and through intermediaries such as […] cooperatives and private organizations, to design and deliver policies that are more locally-attuned and socially accountable” (Heslop et al., 2019, p. 11). Building upon active citizenship and participative democracy, local anchors like housing associations or trade unions are specifically targeted to develop the foundational economy in collaboration with society (Earle et al., 2018).

The overarching goal of foundational policymaking is to ensure that everyone enjoys foundational livability – that is, universal access to the goods and services of the foundational economy (Calafati et al., 2023). Foundational livability represents a negative and minimalist policy goal in the sense that it aims to enable minimally impaired social participation for everyone through the satisfaction of needs (Brand-Correa & Steinberger, 2017; Riepl & Grabow, 2025). This approach contrasts with traditional policy goals primarily targeting aggregate economic indicators such as gross value added or gross domestic product that have shown to be poor proxies of wellbeing (Froud et al., 2018).

4. Reflecting on intellectual foundations and related concepts

Positioning foundational thinking within economic thought

Foundational thinking uses insights from several schools of heterodox economic thought to theoretically enrich and empirically substantiate the initial critique of neoliberalism (e.g., Bärnthaler et al., 2021; Calafati et al., 2023; Coote, 2020; Riepl & Grabow, 2025).

Inspiration comes from strands of political economy and related schools of thought like institutional economics, especially their power-sensitive analysis of economic structures (Mattioli et al., 2020; Schaffartzik et al., 2021). It helped foreground the contested and political nature of the provisioning of the foundational economy: who controls infrastructures, who benefits, and who is excluded (Bärnthaler, 2024; Calafati et al., 2024; Engelen et al., 2017; Heslop et al., 2019). Advancing a power-sensitive understanding of the foundational economy – as a terrain of political struggle embedded in institutional contexts and shaped by historically contingent power relations – remains essential for addressing unequal access to foundational infrastructures and consequently need satisfaction (Bärnthaler et al., 2021; Riepl et al., 2025).

An equally important source for foundational thinking is feminist economics (Dengler & Plank, 2024; Power, 2004). It enriched the initial conceptualization of the foundational economy by framing economics as a system of social provisioning (Jo & Todorova, 2017). The inclusion (and thus recognition) of the core economy – encompassing unpaid care work, household labor, and community activities – in foundational thinking (next to other economic zones) reflects a feminist economics perspective. So far, however, barely any research in foundational thinking has studied the core economy more detailed, despite it being the basis for all other economic activity (Calafati et al., 2021). Future research will need to apply this focus, further engaging with feminist economic thought (Dengler & Plank, 2024; Kongar & Berik, 2021) in order to address the power imbalances and unequal access rooted in structural gender inequalities (Riepl et al., 2025).

Ecological economics provides another source of influence. Foundational thinking resonates with many values of ecological economics, in particular the eudaimonic wellbeing approach. They both focus on ensuring need satisfaction and long-term human flourishing, instead of preference optimization and short-term pleasure maximization known from hedonism and mainstream neoclassical economics (Brand-Correa & Steinberger, 2017; Riepl & Grabow, 2025). Rather recently, foundational thinking also started more actively to integrate the view of ecological economics that provisioning processes are embedded (Polanyi, 1944) within and constrained by planetary limits (e.g., Bärnthaler et al., 2021; Calafati et al., 2021). However, the integration of ecological dimensions in foundational thinking still remains partial, particularly with regard to understanding the ecological impact of the foundational economy and interlinkages between wellbeing and ecology (Bärnthaler et al., 2021; Riepl et al., 2025). Much greater efforts are needed to better embed insights from ecological economics like the planetary boundary concept (Brand et al., 2023; Steffen et al., 2015) into foundational thinking.

Linking the foundational economy to similar concepts

The notion of the foundational economy shows significant similarities with other concepts, notably Universal Basic Services (UBS) as developed by Anna Coote and others (Büchs, 2021; Coote, 2020; Coote & Percy, 2020), and the 15-minute city as envisioned by Carlos Moreno and colleagues (Allam et al., 2022; Moreno et al., 2021). In both of these concepts, the material dimensions of the provisioning process are emphasized, with a focus on the infrastructures that are prerequisites for accessing essential services. Furthermore, both concepts – at least in theory – adopt a critical stance toward neoliberal ideology, promoting empowerment and human flourishing (instead of profit maximization and economic growth) through infrastructures. However, the 15-minute city has largely been subsumed by smart city proposals promoting green growth (Bärnthaler et al., 2021; Coote, 2021; Moreno et al., 2021). That being said, the concept of the foundational economy can be seen as more encompassing than UBS and the 15-minute city, featuring a broader catalogue of essential services that is more closely linked to human need theory (Riepl et al., 2025; Riepl & Grabow, 2025). In UBS, the emphasis is placed on services within the welfare domain, such as healthcare and education (Coote, 2020), whereas the 15-minute city is only superficially grounded in human need theory, thus lacking a universal and exhaustive set of essential services (Allam et al., 2022; Bruno et al., 2024).

Additionally, the foundational economy shares some common ground with the concept of sustainable welfare. Both the notion of foundational economy and sustainable welfare draw from human need theory to conceptualize human wellbeing (Büchs et al., 2024; Foundational Economy Collective, 2018). Furthermore, in both concepts, the state plays a central role (and responsibility) to initiate change towards securing the basic needs for all in a sustainable manner through collective provisioning (Bärnthaler et al., 2021; Koch, 2022). However, there are significant differences between sustainable welfare and foundational economy. First, the scholarship on sustainable welfare has traditionally placed greater emphasis on eco-social policymaking (Bohnenberger, 2023; Büchs et al., 2024; Mandelli et al., 2022) whereas interlinkages between wellbeing and ecological sustainability remain largely unaddressed in foundational thinking. Second, research on the foundational economy represents a more practical and applied field predominantly conducting small-scale case studies (Bärnthaler, 2022; Bassens et al., 2023; De Boeck et al., 2019; Riepl et al., 2025). In contrast, the sustainable welfare literature still remains largely conceptual, focusing on society-wide challenges such as redistribution, ecological limits, and post-growth transitions, while offering fewer empirically grounded or sector-specific analyses (Bohnenberger, 2023; Koch, 2022; Mandelli, 2022).

5. The foundational economy gaining relevance as a transformative driver

Since mostly developed by European scholars, foundational thinking is particularly relevant for Europe. Yet, core principles – promoting universal access to essential services, prioritizing collective provisioning, targeting need satisfaction – are of global relevance, especially for advancing sustainability in terms of a good life for all within planetary boundaries (Fanning et al., 2021; O’Neill et al., 2018; Vogel et al., 2021).

The foundational economy is increasingly considered a potential, transformative driver of sustainability because it can help tackle both social and ecological challenges at the same time (Bärnthaler et al., 2021; Riepl et al., 2025; Sayer, 2019). On the social side, the foundational economy is vital since it not only provides the essential goods and services that enable people to meet their basic needs, but also constitutes a major source of employment and economic security (Riepl et al., 2025). From an ecological perspective, the foundational economy plays a critical role both as a challenge and as a solution. Many sectors – such as housing, energy, transport, and food provisioning – are among the most resource- and carbon-intensive areas of economic activity (Calafati et al., 2021). As such, decarbonizing and transforming these sectors is essential for achieving sustainability (Bärnthaler et al., 2021; Novy et al., 2024). At the same time, the foundational economy encompasses sectors like education or healthcare that predominantly operate on the basis of collective (network-based) provisioning – which tends to be more ecologically efficient than individual provisioning (Baltruszewicz et al., 2021; Vogel et al., 2021). For instance, public schooling (or healthcare) delivers services collectively in ways that would be highly inefficient if each household had to provide them individually. Lastly, secure social foundations are a necessary precondition for achieving ambitious climate action: without guaranteed access to essential services, public support for far-reaching ecological transitions is unlikely to materialize (Bärnthaler, 2024; Bärnthaler et al., 2021).

Despite its potential, Europe’s foundational economies are currently in poor shape (Foundational Economy Collective, 2018). The development of many current foundational infrastructures dates back more than 100 years. Initially, in the early industrialization (beginning of 19th century), private initiatives dominated: factory owners built railway lines to serve their operations, and wealthy neighborhoods often financed their own sewage and water systems (Malm, 2016). Over time, however, private and piecemeal provision proved inadequate as uneven access resulted in public health crises and periods of economic hardships (Foundational Economy Collective, 2018). In response, governments increasingly took control of infrastructures, standardizing access and expanding services particularly of the material foundational economy through municipalization and nationalization – for example, municipal waterworks, national electricity grids, and state-managed railways (Calafati et al., 2023). After the World Wars, this approach was extended to welfare provisions: education, healthcare, housing, and social security were developed and scaled up under state authority, forming the backbone of what became the modern providential foundational economy (Foundational Economy Collective, 2018). From the 1970s onwards, the neoliberal shift brought widespread privatization, outsourcing, and austerity. Public assets were sold off, services were commodified, and state responsibilities were scaled back (Riepl et al., 2025). What followed were decades of neglect, underinvestment, and market-driven reforms, resulting in a vicious circle of austerity measures and service quality decline (Bärnthaler & Gough, 2023; Calafati et al., 2023). The UK’s water system is a prime example for that neoliberal outsourcing process where service quality and capacity gradually declined after privatization (Calafati et al., 2025).

Research operationalizing foundational thinking aims to counter this decline, trying to contribute to the rebuilt, expansion and ecologization of foundational economies. It represents local and policy-oriented research that can be grouped into three major research areas. The first major body of literature advances the concept of the foundational economy, applying the economic development framework to the urban context (Engelen et al., 2017; Essletzbichler, 2022), to regional studies (Bärnthaler, 2024; Hansen, 2022; Martynovich et al., 2023), to the sustainability discourse (Bärnthaler et al., 2021; Wahlund & Hansen, 2022), and to EU’s industrial policymaking (Bärnthaler & Gough, 2023) as well as distinguishing it from related concepts like UBS or Doughnut Economics (Coote, 2020; Russell et al., 2022; Wahlund & Hansen, 2022). The second major area of research constitutes empirical case studies that mostly qualitatively assess the (de)commodification process of essential services. For instance, Green (2019) looked into housing in South Wales, Froud et al. (2020) into the National Healthcare System in the UK, De Boeck et al. (2019) into the construction sector in Brussel, Salanti & Susani (2023) into the private construction of motorways in Italy, Calafati et al. (2024) into the degradation of public transport in Wales’ rural areas, and most recently, Calafati et al. (2025) into the UK water system. Lastly, a third research area represents studies measuring foundational livability by estimating the accessibility of foundational infrastructures in a region. While some focus on the availability as a key dimension of accessibility using geospatial analytics (Riepl et al., 2025), others focus on affordability indices incorporating monetary measures like residual household income – the amount remaining after covering the costs of essential services (Bassens et al., 2023; Calafati et al., 2023; Froud et al., 2018). Increasingly, accessibility dimensions like availability and affordability are integrated into one composite metric of foundational livability (Neuhuber & Schneider, 2025; Riepl & Grabow, 2025). However, more research is needed to account for the multidimensional nature of accessibility.

The growing body of research on the foundational economy has helped generate momentum, with elements of foundational thinking increasingly informing policymaking. Wales, for example, declared itself the world’s first ‘foundational economy nation’ and in 2019 launched a £4.5 million Challenge Fund to support 50 pilot projects, while creating a community of practice for policy learning (Froud, 2021). Barcelona’s strategic plan seeks to restore local sovereignty over foundational infrastructures through remunicipalization of water supply, affordable housing initiatives, and food charters (Estela, 2019). Paris’ push for transforming into a 15-minute city largely falls in line with foundational policymaking, particularly when considering additional policies like the remunicipalization of the water system (Moreno et al., 2021). Similarly, UK’s “Warm Homes: Social Housing Fund” aiming at the ecological retrofit of social housing can be considered as underlying principles of foundational thinking (Guardian, 2025). Germany also has recently taken significant steps to retrofit its foundational economy, investing up to €100 billion in public infrastructures like the railway system (DW, 2025).

These initiatives reflect a growing recognition of the need to restore and renew foundational economies. Yet, given the degraded state of foundational infrastructures and the scale of the climate challenge, meaningful renewal will require sustained and strengthened political commitment, ambitious policy interventions, substantial investment, and continuous democratic engagement (Calafati et al., 2023; Foundational Economy Collective, 2018).

6. Conclusion

To conclude, the foundational economy is a concept encompassing the infrastructure of everyday life – that is, all essential services like utilities or healthcare that people require for need satisfaction. The concept originated from the UK and emerged as a critique of neoliberal policies that have dismantled public services since the 1970s through privatization (Calafati et al., 2023). Today, the concept has evolved into a heterogenous body of intellectual thought referred to as foundational thinking, largely resting upon insights from heterodox economic thought such as political economy, feminist and ecological economics (Bärnthaler et al., 2021; Calafati et al., 2023; Riepl & Grabow, 2025). Despite small differences within the scholarship, foundational thinking – at the core – calls for a more nuanced understanding of the economy that acknowledges the heterogeneity of economic activities and stresses the importance of the foundational economy for society (Riepl et al., 2025).

Recently, foundational economies have been identified as potential key drivers of eco-social transformation as they provide the social foundation (through need satisfaction) that enables ambitious climate action (Bärnthaler et al., 2021; Riepl et al., 2025). To uphold this promise, however, much more effort is needed to better understand the ecological dimension of the foundational economy: how provisioning relates to planetary limits, what measures might be most eco-socially effective, and how power and political momentum can be built for foundational policymaking to induce change. Looking ahead, foundational thinking will need to address these questions to evolve into a coherent intellectual body of thought that bridges eco-social issues more comprehensively. Only then can foundational policymaking gain the policy relevance required to help bringing about the social-ecological transformation that is urgently needed.


Acknowledgement

The author wants to thank Anke Schaffartzik, Andreas Novy, Richard Bärnthaler und Hannah Kiefer for their valuable feedback on earlier versions of this contribution.


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