Biden says that “the American Rescue Plan meets the moment,” but this moment is one in which looming climate collapse, worsening economic inequality, and persistent systemic racial, gender and social disadvantages are converging in a perfect cataclysmic storm. This funding represents our best — and maybe our last — chance to avoid the worst of that storm and steer toward a new system built on justice, equity and protection of the planet.
Yet talk of “building back better” is still too often predicated on a return to the old economic normal of narrow ownership and wealth extraction, all bedeviled by low pay and insecure work. The economic development template of the past few decades — woo large and usually already wealthy corporations with generous tax and regulatory giveaways — remains a hardy perennial even in the wake of a deep track record of inefficiency, ineffectiveness and even fraud.
That’s why the way we practice mainstream local economic development needs a reset. We have to decisively reject the idea that once we secure growth at the top, benefits for communities will trickle down. Instead, we need to use economic development money in the service of racial, social, economic and ecological justice, with greater democratic and community ownership as the foundation for true economic transformation. Community wealth building is the emergent development paradigm for making that happen.
The Democracy Collaborative, for which we work, began developing the theory and practice of community wealth building in 2005. At its core, it is about broadening ownership and control of assets and wealth so that the economy works for all of us and not just an elite few. To share and grow household and community assets, local governments can implement or support a variety of mechanisms, such as cooperatives, employee-owned firms, community land trusts, community finance and public banks, and municipal enterprises. Community wealth building also harnesses the economic power of local, place-based anchor institutions, including universities and hospitals, to recycle wealth back into surrounding communities.
The transformative power of this approach has been demonstrated in Cleveland, where we partnered with the city government, local philanthropies, anchor institutions and community-based organizations in 2008 to launch the Evergreen Cooperatives. That has grown from a commercial laundry into a network of a half-dozen worker-owned cooperatives offering living-wage jobs and profit-sharing to 400 worker-owners, many of whom were chronically unemployed or formerly incarcerated.
One of the best places to see how that would look on a citywide scale is in Preston, a post-industrial town in the United Kingdom that took the Cleveland model and cranked it up several notches. The city government’s community wealth strategy led, in one four-year period, to an approximately $100 million annual increase in local institutional spending and the creation of 1,600 new local jobs. Several other administrations across the U.K., including in Scotland, have now also taken up community wealth building to change who the economy works for.
In the United States, cities are increasingly recognizing the importance of these strategies. In Chicago, for example, Mayor Lori Lightfoot in September proposed using $15 million of the city’s American Rescue Plan allotment for a community wealth building pilot fund that will invest in “shared equity models such as worker cooperatives, housing cooperatives and community land trusts.” This is a small but powerful example of how these funds can be used to stimulate a rethinking of local economies.
With a fraction of the cost of the tax breaks and incentives historically lavished on corporations — which can average from $16,000 to more than $46,000 a year for every job created — we can support local communities in establishing new vehicles of ownership and control that keep wealth locally rooted and broadly shared and that tackle the root causes of hardship and injustice.
Neil McInroy is a senior fellow, Sarah McKinley is a director and Isaiah J. Poole is vice president of communications at The Democracy Collaborative.
Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
