Sarah McKinley describes a structural reset to democratise our economies.
The results of the recent midterm elections in the US were less polarised than anticipated and the threatened Republican Red Wave never materialised. But the toxic divides and fractious politics that led up to the poll are now a feature of daily life in America.
As communities and people across the country suffer under rising inflation and a severe cost of living crisis, not to mention the ever-worsening impacts of climate change, hardship is deepening. Fear mongering and lowest-common-denominator politics feed off the desperation that is a byproduct of hardship. Meanwhile, the rich get richer and wall themselves off from the rest of the world and the impacts of these compounding crises. Without radical moves to address this rampant and destabilising wealth inequality, these divides will harden and American democracy (such as it is) will indeed be at risk.
For many – especially black and brown people in America – hard work is not a route out of poverty.
During the pandemic, US billionaires saw their wealth grow by $2.1tn, while millions of Americans lost their jobs, health insurance, homes, and life savings. Broken down by race, these disparities are more alarming. The median white household has a net worth ten times that of a black household. Right now, if black households held a share of national wealth in proportion to their percentage of our population, it would amount to $12.68tn in household wealth, rather than the actual sum of $2.54tn – suggesting our racial wealth gap is an astounding $10tn.
For many – especially black and brown people in America – hard work is not a route out of poverty. It barely supports a precarious state of being, with increasing cost of living and growing debt outpacing any income they earn. And the UK is not too far behind the US in these statistics – a recent report showing that the gap between the wealthiest tenth of households and the poorest 40% of households in the UK was second only to the US, at 107 times median disposable income.
Without a structural reset, this extraction and concentration of wealth will continue to undermine democracy at its core, disenfranchising swathes of the population, capturing institutions, and imbedding division. To address wealth inequality seriously requires far more than tinkering around the edges. A continued focus from progressives on redistribution, revitalisation, and individual wealth building opportunities is important but not enough. We need to rewire our economy entirely, so that it works not just for individuals and in response to crises, but for all of us, and for the planet, for generations to come. We need to democratise our economy. And there is a way to do that, starting at the local level.
Community Wealth Building (CWB) is the way to begin the move to a more equitable, democratic, and sustainable economy based on shared asset ownership. It gives people greater control of the economic activities that affect their daily lives. So what does CWB look like?
For generations, communities have been experimenting with elements within this model – from employee-owned cooperatives to credit unions – to recirculate and provide a genuine stake in wealth produced. But taking a comprehensive CWB approach to local economic development supercharges the power of these efforts, making them greater than the sum of their parts, by connecting and scaling them through policy development, institutional design, and ecosystems of support.
And in this time of perma-crises, local governments from Chicago to Sydney and from Scotland to Northern Ireland are taking up CWB as a means of rebuilding their economies in ways that result in greater resiliency and equitable outcomes. In September 2022, Chicago Mayor, Lori Lightfoot, announced that the city would invest $15 million in a pilot CWB fund. The work is being led by the new Office of Equity & Racial Justice who has launched a new CWB initiative, which “promotes the local, democratic, and shared ownership and control of community assets.” Specifically, Chicago is investing in four, key institutional models – worker cooperatives, limited equity housing cooperatives, community land trusts, and community investment vehicles – to achieve its goals of community empowerment, neighborhood stabilization, dignified work, and narrowing the racial wealth gap.
An example of a more fully developed and advanced CWB strategy is in North Ayrshire, Scotland, where the local authority was the first one to embrace this transformative economic development strategy. When it first launched its CWB strategy in May 2020, the world had just entered a global pandemic and the forthcoming recession and growing compounding environmental and social crises we are now in were clearly looming on the horizon. The goal of the strategy was, and still is, to create a fair and resilient local economy, reducing poverty and inequality, for all residents – a goal that has only become increasingly more relevant and urgently needed.
From the outset, North Ayrshire set up a £3 million CWB Fund, capitalised from a £250 million Growth Deal for the combined Ayrshire authorities, to help institutionalise a CWB approach across the region and to direct the whole of the Growth Deal monies towards CWB related advancements. In the years since then, North Ayrshire has made Herculean strides to institutionalise CWB across its economic development policy and practice as a local authority as well as a region. One great example is the forthcoming creation of two solar photovoltaic farms on former landfills that will be operated as a municipal enterprise. They promise to create green jobs for local residents, providing green energy to all local authority buildings, and returning energy to the grid at a profit that will then be reinvested into CWB efforts locally.
Across Scotland, five other local authorities are piloting CWB, and there is now a new Minister of Public Finance, Planning and CWB.
North Ayrshire may have been an early adopter of CWB, but it is fast becoming mainstream economic thinking across the whole of Scotland – a way to truly deliver on the Scottish Government’s commitment to building a Wellbeing Economy for all. Across Scotland, five other local authorities are piloting CWB, and there is now a new Minister of Public Finance, Planning and CWB. Soon all 32 local councils across the country will develop CWB plans.
These examples show even amid current crises, we cannot default to business as usual reactivity. Instead, they reveal that real, lasting change is possible. But we must be bold and work together to link up, scale, imbed, support, resource, and innovate CWB solutions so that they can truly disrupt and displace the extractive economy now.