American democracy is widely held to be hanging in the balance this November, with the future of elections and the rule of law itself no longer assured. While both parties claim to represent the only democratic option, neither propose policies that would actually give more power to ordinary Americans. According to Ipsos polling, most Americans say that their choice of one candidate or the other in the upcoming presidential election ‘is a vote against the other candidate, rather than a vote of support’, that ‘confidence in public institutions continues to decline’, and that ‘only nine per cent of young Americans say the country is headed in the right direction’.
This comes as no surprise to anyone who has been paying attention to the fundamentals of the American economy, beyond the headlines on growth and employment. Americans are tired of being told it is doing great while they are struggling to pay the bills. They are sick of being told that they live in a great democracy when voting once every few years for unrepresentative candidates (if they vote at all) is the only way they may participate in the consequential decision-making affecting their lives.
The long-term trends speak for themselves. We are in a systemic crisis. No matter who has occupied the White House or had control over Congress, crucial indicators of economic, social, and democratic health have shown little improvement or, in many cases, substantial deterioration since at least the 1970s. On racial wealth inequality, maternal mortality rates, labour’s share of income, incarceration rates or life expectancy, the data paint a grim picture. Real wages for non-supervisory employees have remained stagnant for 50 years, though productivity has steadily risen. Meanwhile, the costs of homeownership and higher education have skyrocketed, squeezing household budgets and growing increasingly unserviceable consumer debt. More and more Americans are losing faith in their governing institutions.
A systemic crisis requires systemic solutions. In order to ‘save American democracy’, we need to move towards a new political economy that can produce better outcomes by designing for equity and sustainability from the start. One way to do this is by rewiring local economies from the bottom up through community wealth building (CWB) – a novel approach to economic development that creates a more equitable, democratic and sustainable economy based on shared asset ownership, giving people greater control of the economic activities that affect their daily lives.
CWB can reconfigure the everyday institutions and relationships of the economic system, changing how it operates directly – rather than pursuing ‘after the fact’ fixes to correct or ameliorate the worst effects of the current unequal and extractive model. By focusing on broad-based, democratic ownership of economic institutions and assets, CWB ensures that more people can share directly in generating wealth and exercise greater control over their economic conditions. Where this wealth is going, whom it is benefiting and how it can be repurposed to serve community needs is – or should be – the business of local democratic politics.
Five pillars
CWB helps shape these wealth flows by working across ‘five pillars’ as entry points for transforming local economies. Originally articulated in the UK as an organisational framework for understanding CWB, these five pillars organise concrete actions that can be adapted to the context of place and give people a tangible stake in their local economy. They are:
- Inclusive and democratic enterprise Develop a plurality of local enterprise forms that broaden ownership of productive capital, including multiple forms of worker and consumer cooperatives, social enterprises, municipal enterprise and more.
- Locally-rooted finance Encourage new lending practices and financial institutions that redirect money to the real economy of place through public and community banks, credit unions, targeted public pension investments, and new forms of community investment vehicles.
- Fair work Ensure that every worker receives a living wage and is able to organise through a trade union to build real power in their workplace, to guarantee decent work and employment conditions, and to influence production.
- Just use of land and property Bring local land and real estate development back under community control to combat speculation and displacement and return land to productive social uses through mechanisms such as community land trusts and community buy-outs.
- Progressive procurement Guarantee that ‘anchor institutions’ – economic actors that are locally rooted – lead procurement practices that re-localise economic activity, expand locally controlled investment and consumption and provide a bulwark against extraction of profits from local economies.
The many activities and elements practiced within these pillars – from employee-owned cooperatives to credit unions – provide ordinary people with a genuine stake in wealth produced. Communities around the world – most notably in the global south and black and brown communities in the global north that have been excluded from conventional economic activity and growth – have been experimenting with these mechanisms for local economic self-determination and solidarity for generations.
The CWB framework helps supercharge these efforts by taking a comprehensive, strategic approach to local economic development that connects and scales grassroots action through institutional (re) design and building out robust ecosystems. To do this, CWB requires the co-construction of locality, especially at a city wide level, whereby stakeholders from diverse backgrounds as well as institutions (including government) must engage with one another, debate, disagree, resolve conflict, find common ground and, ultimately, build trust and community cohesion.
Testing the theory
These theories were first put to the test with the original CWB experiment in Cleveland, Ohio, in the late 2000s, which produced the Evergreen Cooperatives. This network of green industrial scale employee-owned enterprises provides goods and services directly to local anchor institutions. They now employ more than 400 people, the vast majority of whom are black, many of them returning citizens from the criminal justice system. The enterprises are linked together by a community-controlled holding company that has a ‘golden share’ in the network. The Evergreen Cooperatives’ successes and challenges have inspired other communities in the US and worldwide to experiment with locally led and designed CWB projects.
In the UK, local governments have taken up the framework of CWB, leading to more comprehensive implementation across the whole of a local economy. For example, following the collapse of a traditional economic revitalisation strategy in the wake of the 2008 financial crisis, Preston City Council leaders launched a CWB initiative that has since redirected £70 million of local institutional spending to the local economy and created over 4,500 jobs. The city set a living wage standard for local government as well as local institutions, launched a cooperative network, and reinvested local pension funds directly into community-based projects such as affordable local student housing.
In order to ‘save American democracy’, we need to move towards a new political economy that can produce better outcomes by designing for equity and sustainability from the start
Once listed as one of the most deprived urban areas in England, Preston rated as PricewaterhouseCooper’s most improved city in 2018 and 2019, and the ‘Best Place to Live’ in the north of England. Early-stage research shows notable improvement in both physical and mental health outcomes correlated to CWB efforts. The positive local impacts associated with Preston’s CWB approach also seem to have delivered favourable returns at the ballot box for the councillors championing this work, demonstrating its political viability.
Elsewhere, the Scottish government has integrated CWB into its national economic strategy as a means to deliver on its commitment to wellbeing economy goals and is supporting local authorities to advance CWB plans. In the US, the City of Chicago has invested $15 million into a pilot community wealth building initiative focused on strengthening the CWB ecosystem, pipeline of activity and pilot projects. While different places are taking different approaches – Scotland using economic strategy to drive local action; Chicago focused on empowering grassroots activity to inspire governmental policy – all are reshaping government resources and policy in service to local community need with the express goal of building a more just and equitable economy.
Going further
While Evergreen is a powerful demonstration project showcasing the possibilities of CWB on a neighbourhood-level, Preston took CWB further, integrating it directly into the economic strategy of the city and demonstrating how local government can be a powerful partner in advancing and scaling this kind of change in a way that begins to shift power. Recent efforts in Scotland and Chicago point to a more structured and mature approach to CWB application, with ongoing iterations refining CWB practice. Emerging now is a self-conscious movement to intentionally shift institutional behaviour and rewire the local economies towards more equitable outcomes.
At its core, CWB is grounded in the belief that healthy democracy requires that people have control of their economic conditions. Economic inclusion and participation advance political inclusion and participation – it is not just a potential side-effect. By taking a systemic and collaborative approach to fostering recirculatory, community-rooted economic activities, CWB requires the creation of new economic institutions. But it also requires the reclamation and democratisation of existing institutions, and especially government, so that they are more responsive to, and fully reflective of the people and communities they serve. CWB offers both active strategies to re-root community wealth for local benefit and a process to grow a new local political arrangement rooted in democracy and economic agency.
With democracy itself now at risk from the backlash against a system that is no longer delivering for most people, approaches such as CWB offer a way to recreate political community and democratic legitimacy by striking at the heart of the problem – that a plutocratic economy and a democratic politics cannot coexist without one overthrowing the other. That is the fundamental struggle that will be playing out in the coming political cycle – and for years to come.
