The places building a new economy

The foundations of the new economy movement are being laid, with new models emerging, and public ownership back on the agenda. But for the vision to become reality, renewed levels of democracy and participation are needed, as Clare Goff finds out.

‘We’re in the process of building a cathedral but all we are doing right now is carrying some big heavy rocks. At some point we will have built this enormous amazing edifice that everybody will be able to equally and fairly make use of. But at the moment it’s a hard struggle.’

So said Ed Whitfield, co-managing director of the Fund for Democratic Communities, at the opening plenary of last month’s Commonbound conference in Boston, Massachusetts. The ‘cathedral’ of the new economy is taking shape and its workers were out in force for three days of talks and debate, organised by the New Economy Coalition.

The fact that the current economic system is showing no signs of being able to fix the entrenched problems of poverty, climate change and inequality has given new impetus to the new economy movement, which advocates the need for a complete overhaul of the current neoliberal thinking, replacing it with an economic system which benefits the common good.

Much of what the ‘cathedral’ Ed Whitfield talks about will look like when it’s complete is up for debate.

But there are numerous models and projects laying the groundwork, challenging mainstream economic development, and putting the foundations of a new system in place .

People-based economics
Whether its solidarity economics or a steady state model, the new economics movement is flourishing in cities and towns that have been at the sharp end of the neoliberal system. Reviving the old economy is no longer an option for those places and people that have long since been left behind by the failures of market economics.

In Detroit – a city ravaged by the demise of the car industry on which its whole economy depended – the people are fighting back, with a ‘grassroots improvement movement‘ to rebuild a new economy and society. In Cleveland Ohio a network of worker-owned cooperatives set up to supply local hospitals and other anchor institutions and linked to a revolving fund designed to create more businesses, is providing a model now being replicated across the US and in Preston in the UK.

‘Economic recovery is not enough.

We need economic reinvention.’

At the heart of the movement is the democratisation of the ownership of wealth, replacing corporate power with local control of resources and businesses. Co-operatives and community-owned businesses embody that shift, breaking up the concentration of wealth, ensuring that companies stay rooted to place, and renewing local democracy.

The Fund for Democratic Communities helps local areas regain ownership, of for example, local food supplies in North Carolina. A development of co-operative businesses in Dalston in east London has enabled the area to maintain community control as gentrification sweeps through, and in the US city of Boston, a community land trust has protected housing from the forces of the market.

Things are starting to happen at the city level too, with municipalisation back on the agenda in many places, and progressive local governments taking concrete steps to overhaul the local economic system.

In Oregon a Genuine Progress Indicator is replacing the measurement of GDP. Cylvia Hayes, the first lady of Oregon, said that cities and states need to take on the challenge of moving beyond neo-liberalism and growth for growth’s sake.

Ed Whitfield at this year’s Commonbound conference

‘We have to take on system change and state and multi-state regional government are the best chance for this to happen’, she told the Commonbound conference. ‘Economic recovery is not enough. We need economic reinvention.’

Describing growth for growth’s sake as ‘cancerous’ she called for a ‘prosperity agenda’ in which ‘growth betters everyone’.

Few council leaders in the UK are thinking beyond the growth mantra but examples of those pushing for change can be found in Enfield, where the council is holding its local corporates to account, in the Deep Place study in Tredegar in Wales, which argues for a more localised economic model for the area, and in work developing the civil economy in Manchester.

The New Economy Coalition has shifted its strategy in recent years, from report-writing to bringing together the activists creating change, as it recognises that the movement is beginning to crystallise.

‘The new economy is already happening’, said Bob Massie, who heads up the Coalition. ‘Especially in places where the status quo isn’t working. There are so many working on a shared vision.’

Cylvia Hayes, the first lady of Oregon: ‘We need economic reinvention.’

Changing the narrative

But while a handful of local leaders and communities understand the need for change, the power of the current narrative is such that overturning it often feels impossible. The current system is being maintained by the belief that ‘there is no alternative’ to the current system; part of the challenge of the new economics movement is to shift that narrative and combat the apathy and pessimism that has set in.

As Christine Cordero, programe director at the Center for Story-based Strategy, said: ‘We need to interrupt the story of what’s possible. People are used to a big sheet of steel that pushes people down.’

While corporate power controls the story and, often, government, the counter-narrative needs to be as forceful and persuasive.

Stacey Mitchell, director of the community-scaled economy initiative at the Institute for Local Self-Reliance, has some ideas for how to shift the narrative at the local level, through the creation of a ‘similarly bold and value -laden framework for a localist policy agenda’.

For local economies to thrive, the power of corporates – be they supermarkets, online retailers, property developers or banks – needs to be abated, and smaller locally based businesses and community and democratic institutions allowed to flourish.

The evidence that such local ecologies give rise to stronger more resilient local economies is growing. A 2008 study shows the loss of wealth in a neighbourhood when Walmart moves in, particularly from the impact of the closure of smaller businesses and their multiplier effect on local economies. In the UK the work of Localise West Midlands and the Transition Towns network has shown the benefit of localisation and greater levels of community economic development to local prosperity.

‘We need to pull back the curtain and show how

the game is rigged against local economies.’

Alternatives to corporate power at a local level are growing, with food markets and enterprises flourishing, smaller financial institutions gaining ground and independents on the rise. But Mitchell says that even consumer power is not enough to go against the ingrained structures of our current economy, which stack the odds against smaller players.

She cites the level of subsidies given to large agriculture, the bailing out of the big banks and tax rules that favour corporates; the current system is not the result of the force of the market, but the direct result of public policy favouring large corporates. Only by ‘pulling back the curtain and showing how the game is rigged against local economies’, she says, can the narrative be changed.

She calls on local areas to draw attention to the inequities that allow corporates to dominate – favourable tax breaks and subsidies – and to highlight the benefits of ‘community self-determination’, shifting to locally and co-operatively owned enterprises that are more accountable to their communities and operate at a sustainable scale.

‘The outcome of this is a more democratic distribution of wealth and income, more meaningful jobs, a more responsible approach to the environment and more resilient communities’, she said.

Policies that support corporates are being replaced with ones that allow independents to flourish. In Cape Cod, for example, a commission was set up in 1990 to review large development projects for their impact on the local economy. Larger stores are rejected if they undermine the ecology of local shops. In San Francisco, chains have to meet certain criteria and have the support of neighbours before setting up, maintaining independent shops and businesses. And community ownership of local assets is growing. In Dover, the People’s Port Community Trust has fought to protect the port from foreign ownership and protect its future.

One way to start the shift towards a new economy is for each area to create its own localist policy agenda, and begin telling a new story about what flourishing local economies need. The Commonbound conference was not short of ideas for changing entrenched policies that are holding areas back. Why not make community assets rather than corporates eligible for tax breaks so that the commons rather than shareholders make gains? Or help councils and other major contract holders understand the value of commissioning for local economies? Try to build up the capacity of local independents to campaign for change?

The launch of the Dover People’s Port Trust

Municipalisation, the Commons and a renewal of democracy

In public services too the narrative is shifting and the ‘alternative’ to privatised services is gaining ground. Re-nationalisation and municipalisation of public services are gathering pace. In the US, for example, a quarter of electricity is now supplied by locally owned public utilities and co-ops, and a fifth of all previously outsourced services have been brought back in-house.

In her pamphlet The Tragedy of the Private, the Potential of the Public, Hilary Wainwright cites Germany’s return to public ownership of energy distribution networks and the fact that, in 2011, in the UK over half of all councils were bringing back services from the private sector.

Rather than harking back to the centralised bureaucratic model of public ownership, however, what’s emerging is a variety of collective and democratic forms of public ownership. In many cases local services are now being run by new forms of collective endeavour, by groups of workers and service users, or unions and the public working together. In Newcastle Council for example, unions and workers fought back against privatisation with their own reform programme.

The idea of public amenities and services being held as ‘commons’ – over which the whole community has a say – is taking hold.

At the heart of the new economy – be it local public services or local businesses – is a shift in ownership from the few to the many, and with that, a renewal of local democracy.

Communities are taking back control of land and public spaces; creativity is being democratised through the launch of hacker and maker spaces; finance is returning to the local level.

At Commonbound Ed Whitfield introduced the idea of ‘wealth as commons’ and spoke of democracy as ‘creating opportunities to think together’, rather than a mechanical function every four years.

The new economy will move from vision to reality when local areas start to organise and challenge the current narrative, and when communities are inspired to take back control and create a new system built around democracy and equality.

There is no shortage of ideas and examples; what the movement needs now are the pioneers ready to stick their heads above the parapet, challenge the prevailing narrative, and create change.

To Gar Alperovitz the fight for a new economy is the greatest fight in history and one that will not be easily won. ‘If you want to play,’ he said, ‘the chips are decades of your life’.

The next crisis is just around the corner. When it happens will your local area be ready?