Few places have a more urgent need – or stronger case – for Community Wealth Building than does Ireland, where communities have been ravaged by neoliberalism and austerity, write Joe Guinan and Seán Byers.
Last week, in San Francisco, the sky turned bright red in the middle of the day. The cause was smoke from surrounding wildfires, but it looked like the end of the world.
Climate change, pandemics, inequality, social breakdown, political chaos, urban unrest – a world, quite literally, on fire. This is what the future looks like under the empire of capital, in which finance has colonised the economy, politics, society, and even the planet itself.
In this economy, labour is merely an input into production, a cost to be minimised or even eliminated. Ownership is extremely concentrated and financialised, inequality now worse than in medieval times. This economy offers profit-making opportunities for soon-to-be trillionaire oligarchs while imposing insecurity on everyone else. Economic activity becomes disembodied from society, with particular places seen merely as better or worse sites for extraction. There is no real community, with individuals and families left struggling to survive. The planet, too, is subordinate to capital; viewed as a limitless source of extraction and a limitless sink for waste, thereby guaranteeing an ecological disaster and the onset of a Sixth Mass Extinction.
After four decades, neoliberalism has so colonised our consciousness that it can be hard to imagine a different economy and society than the dystopian one we find ourselves inhabiting. But there is a new democratic economy in the making, one that in and of itself produces better outcomes: greater equality, more democracy, healthier people and communities, a cleaner environment.
Recent years have witnessed an explosion of interest in, and practical experimentation with, a variety of alternative economic institutions, models that are capable of fundamentally altering patterns of ownership – and of transforming our crisis-ridden political economy through greatly improved distributional, environmental, and social outcomes.
These alternative economic institutions include worker ownership, co-operatives, municipal enterprise, community land trusts, public banks, benefit corporations, social wealth funds, and many more. They represent ways in which capital can be democratised and held in common by workers, communities, and local governments. They illuminate how practical new approaches can generate innovative solutions to systemic problems. They embody alternative design principles, relying not on regulatory fixes or “after the fact” redistribution but on deep structural changes in the economy and the nature of ownership and control over productive wealth. New forms are constantly emerging, as well as ideas as to how innovative combinations might produce still more powerful results.
Taken as a whole, these institutions and approaches form the mosaic of a new democratic economy. They suggest the contours of a system beyond today’s extractive economy, and some pathways for getting there. These approaches, and the institutions and strategies for knitting them all together, have been termed “Community Wealth Building”.
Community Wealth Building is now emerging as a new approach to economic development. Offering real, on-the-ground solutions for localities and regions battered by successive waves of disinvestment, deindustrialisation, displacement, and disempowerment, it is based on a new configuration of economic institutions and approaches capable of producing more sustainable, lasting, and equal economic outcomes. It is rooted in place-based economics, democratic participation and control, and in mobilising the largely untapped power of the local public sector.
The original model for Community Wealth Building is Cleveland Ohio’s Evergreen Cooperatives. Evergreen was created in response to years of deindustrialisation in America’s rustbelt. For decades, massive economic destruction has been visited upon America’s manufacturing heartlands, destabilising community after community. The capital, carbon and human costs have been immense, and the political consequences are plain to see.
Starting in 2008, Evergreen was started in an attempt to turn the tide. The city had previously lost half its population and most of its Fortune 500 companies due to deindustrialisation. In terms of poverty, it was second only among American cities to Detroit. But the city still boasted very large quasi-public institutions such as the Cleveland Clinic, Case Western Reserve University and University Hospitals – known as anchor institutions because they are rooted in place and aren’t likely to up and leave. Together these three institutions had a combined spending power of around $3 billion dollars per year – very little of which was going to the local community.
The Democracy Collaborative worked with the anchors, the city, and the Cleveland Foundation to pursue a strategy to localise their procurement spending in support of a network of purposely-created green worker-owned businesses – the Evergreen Cooperatives – tied together by a community corporation.
These include an industrial scale ecologically advanced laundry, a large urban greenhouse, and a renewable energy company. A fund has recently been added to pursue employee ownership conversions of existing businesses. The Evergreen companies are structured so they cannot easily be sold outside the network without the permission of the community, and they return a percentage of their profits to develop additional worker-owned firms. Unlike conventional corporations, these democratic businesses will not pick up and move their jobs elsewhere. They provide living wage jobs for their worker-owners, who also receive a share of their profits.
They also keep money recirculating locally rather than extracting it. The estimate of the multiplier from buying local is eight, meaning that if you buy from a large multinational then that money leaves your community right away, but if you buy from a local business it stays local and is spent a further eight times.
Through such strategies – the opposite of neoliberal extraction – money can be kept recirculating, anchoring jobs and building community wealth, reversing long-term economic decline.
Today the Evergreen companies are competing with the multinational corporations that had previously provided contract services to the big anchor institutions. Not long ago, the Evergreen Cooperative Laundry beat out the multinational firm Sodexo for the Cleveland Clinic’s full laundry contract. They acquired the former Sodexo plant, hired the former Sodexo workers, gave them a pay raise equal to the local living wage, and put them on a fast track to employee ownership. No jobs were lost; all that changed was that profits now circulated in Cleveland to the benefit of the local economy rather than going to distant absentee shareholders.
The Preston Model
The concept of Community Wealth Building approaches has subsequently crossed the Atlantic. Back in 2012, the Cleveland initiative caught the attention of a young Labour councillor, Matthew Brown, now the Leader of Preston City Council.
With the collapse of a plan for major private investment, Preston had been left high and dry by conventional economic thinking. Meanwhile, the UK’s new Tory-Lib Dem coalition government had begun an austerity drive which, among other things, slashed the budgets of many Labour-led local authorities. With the help of the Manchester-based Centre for Local Economic Strategies (CLES), Preston took up the Cleveland Model and radically expanded it. The “Preston Model”, as it has become known, encompasses a string of public sector anchors across Preston and Lancashire, to which Brown and his colleagues have added public pension investment and affordable housing, while laying the groundwork for the development of a community bank.
Once a poster child for economic deprivation and “left behind” places, Preston has already seen significant payoffs from its Community Wealth Building approach, having been named the UK’s most improved urban area. The share of the public procurement budget spent in the city quadrupled between 2013 and 2018, representing a gain of £75m, while across Lancashire it more than doubled for a gain of £200m. Unemployment has also fallen, and Preston has seen better-than-average improvements in health, transport, work-life balance, and youth and adult skills acquisition.
Other parts of the UK are now following this lead, from Wirral to North of Tyne, Newham to Islington and North Ayrshire, which became Scotland’s first local government to adopt a community wealth building strategy earlier this year. Notably, the North Ayrshire strategy has been designed to support the Council’s net-zero carbon ambitions and a just transition.
What once seemed like a fringe idea is moving fast towards the mainstream, a new way for local governments to shape their local economies. The COVID-19 pandemic and accompanying economic crisis makes these strategies all the more important.
Poverty of ambition
Few places have a more urgent need – or stronger case – for Community Wealth Building than does Ireland, where communities have been ravaged by neoliberalism and austerity. For decades the Republic of Ireland has been the extractive economy par excellence, an economy based on low wages, precarious employment, financialised property speculation, and heavy reliance on foreign direct investment, coupled with a generous system of state subsidies and tax breaks for transnational capital. The north has adopted large parts of this model wholesale.
The result of this is an agglomeration economy that has concentrated power and capital accumulation in the urban centres of Dublin and Belfast, cities increasingly oriented to the needs of finance capital and those with the ability to pay. This has come at the expense of state-led investment, indigenous enterprises, balanced regional development, and the needs of those who work and live here.
The pandemic has exposed the fragility and unsustainable nature of this economic model. There is no route back to anything resembling the pre-Covid economy that does not involve increased inequality and additional human suffering. But the power of finance capital has determined that the show must go on, with workers now being strong-armed back to their work for the benefit of commercial landlords.
The recent decision of a Belfast City Council Planning Committee to approve a £500m gentrification project – aptly named “Tribeca” after the Manhattan neighbourhood – is further evidence of the power of absentee investors against widespread community opposition. This betrays a poverty of ambition among policymakers at a time when awareness and support for Community Wealth Building strategies is growing.
Community Wealth Building approaches are adaptable and implementable everywhere, from deindustrialised East Belfast to the decaying communities of Ireland’s Western and border regions. Indeed, Seán McCabe of TASC suggests that as well as providing the basis for a new model of urban development, a Community Wealth Building model could be applied to promote regeneration, tackle inequality, and support transition in rural Ireland. This would go some way towards addressing the country’s regional imbalances and inequities.
But where to start, in the absence of a new fiscal settlement for local authorities? The power of Community Wealth Building lies in part in its ability to tap the resources of large place-based institutions such as hospitals and universities. Some areas are blessed with more of these than others, but every part of Ireland has them to some degree. In adopting the “anchor mission”, these institutions can deploy their substantial resources to benefit local communities through targeted investment, purchasing, and hiring. This means a total reevaluation of purchasing and procurement strategies by public and tax-favoured private institutions, with a large-scale attempt at the re-localisation of the global supply chains that have broken down during the pandemic. It means green-proofing every investment and spending decision in a given area. It means support for local and democratically owned businesses that will provide decent, well-paid jobs while recirculating wealth locally.
Meanwhile, local investment capacity could be enhanced through council issuances of municipal bonds or working in partnership with credit unions to support community-led projects for community benefit – be they local energy initiatives or localised food production and distribution networks. This could eventually form part of a new, integrated public banking model that democratises finance in the interests of people, place, and planet.
Community Wealth Building presupposes new levels of community control and the expansion of community power. Ireland has a well-developed community infrastructure, a parallel state that has long supported working-class and marginalised communities when governments have not. These networks and traditions have come into their own during the pandemic, but they are working against the grain of a system that concentrates power and resources in the hands of central government and unelected bureaucrats. Community Wealth Building offers a framework for reimagining local democracy by putting citizens at the heart of key decision-making processes – as workers, farmers, consumers, and community members.
These principles and new institutional arrangements are uniquely positioned to be at the heart of Ireland’s response to COVID-19, economic turmoil, and the real and present danger of climate breakdown. They represent foundational steps for building a new economy where the needs of the community and planet come before the prerogatives of private capital.
Getting there will require strong political leadership and the mobilisation of communities, combining the best of the Preston and Cleveland Models and going beyond them to implement Community Wealth Building from the top-down and bottom-up. The task of creating this new economy must begin now, across the island.