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What Is Community Wealth Building?

In this opening chapter we review the origins of the emerging movement for Community Wealth Building in the overlapping crises facing our communities, and the rising levels of social and economic pain that are compelling more and more people to take action themselves locally on the basis of resources and strategies that are readily at hand, even in some of our poorest communities and regions. We offer a working definition drawn from the leading organisations pursuing these strategies, highlighting the main principles of Community Wealth Building as it is being put into practice, and briefly survey the current state of the field, with attention to two flagship initiatives on either side of the Atlantic – the Cleveland and Preston Models.

Community Wealth Building is based upon economic interventions that seek to intervene not ‘after the fact’, in an attempt to redistribute the economic gains from a lopsided economic model, but by reconfiguring the core institutional relationships of the economy in order to produce better, more egalitarian outcomes as part of its routine operations and normal functioning. As such, it represents in microcosm a new approach to a more democratic economy. Such an approach offers a wider promise, not just delivering for local communities but also helping us all, as democratic citizens, to imagine, experience, and get involved with systemic economic transformation. Communities that are experimenting with Community Wealth Building strategies can thus be seen as ‘laboratories of democracy’, pointing the way towards future economic models that can have a broader range of application in recasting the terms of our political and economic life at the scale of the nation as a whole – and perhaps even beyond.

The rise of Community Wealth Building institutions, as a matter of practical experimentation in real places by ordinary people, shows that alternatives capable of moving us away from neoliberal austerity in the direction of democratised ownership of the economy do in fact exist. They are already being put into practice around the world, and are ripe for wider deployment. They provide a way to connect with the grassroots energy and organising potential of existing social movements and a newly emerging political radicalism reluctant to engage with the discredited business-as-usual official politics of recent decades. On both sides of the Atlantic, Community Wealth Building presents a potential basis for a new institutional underpinning for egalitarian politics, building local support for new economic models and approaches from the ground up in a way that is less daunting and more comprehensible than it can sometimes appear at the national level.

In their recent book, The Making of a Democratic Economy, Marjorie Kelly and Ted Howard of The Democracy Collaborative, two of the leading thinkers and practitioners of Community Wealth Building, argue that it is possible to detect in scattered experiments across the United States and around the world something that ‘many of us hunger for but can scarcely imagine is possible … an economy of, by, and for the people’. They go on to delineate the principles of an emerging ‘coherent paradigm for how to organise an economy’ that point to a possible next system beyond the current crisis-ridden neoliberal economic model:

The first moral principles of this system are community and sustainability, for as indigenous peoples have long known, the two are one and the same. Other principles are creating opportunities for those long excluded, and putting labor before capital; ensuring that assets are broadly held, and that investing is for people and place, with profit the result, not the primary aim; designing enterprises for a new era of equity and sustainability; and evolving ownership beyond a primitive notion of maximum extraction to an advanced concept of stewardship.1

This emerging democratic economy stands in stark contrast to the existing extractive economy that is designed to generate maximum financial returns and distribute them upwards to the tiny elite that currently owns and controls the lion’s share of productive assets. Far from being unattainable pie in the sky, this vision of a democratic economy and the principles that underpin it have been distilled from painstaking observation of the pattern of popular experimentation in a host of communities across the globe – the result of an explosion of local innovation in response to the ravages of decades of neoliberal extraction.

It is a central part of the argument of this book that the case for Community Wealth Building should be made through seeing such policies and approaches as part of the broader movement to create more democratic economies, and to move us beyond the depredations of the failed neoliberal experiment. But before taking up this broader agenda, we will first focus on the recent history of Community Wealth Building. In some central respects, it is a tale of two cities: Cleveland, Ohio; and Preston, Lancashire. It is to those two cities that we will now turn.

Two Models of Community Wealth Building: Cleveland and Preston

Community Wealth Building represents an alternative to the conventional economic development model. The term first emerged in the United States in 2005, and was coined by The Democracy Collaborative. The ideas behind Community Wealth Building are not new, although in some cases they have taken novel forms. In fact, they hearken back to longstanding traditions on the left of libertarian socialism and economic democracy. As Steve Dubb, Ted Howard, and Sarah McKinley have summarised it, the core idea of economic democracy involves extending democratic principles of popular sovereignty from the realm of governance and politics to the operations and institutions of the economy itself – and Community Wealth Building is one of the frameworks within which economic democracy is increasingly being applied:

Community wealth building emphasizes the importance of placing control of wealth in the hands of locally rooted forms of business enterprise, with ownership vested in community stakeholders, through a range of forms including cooperative, employee, public, or nonprofit ownership. Community ownership makes it possible to reinvest profits locally and thus reduces the financial leakage out of communities. Economically, it allows local publics to exert democratic control over local government; policy-wise, it allows them to achieve sustainability and equitable development goals.2

There are now two flagship models of Community Wealth Building – and a growing number of additional emerging experiments and innovations in cities across the United States and United Kingdom.

The original model of Community Wealth Building is the Evergreen Cooperatives in Cleveland, Ohio. Cleveland lost half its population and most of its Fortune 500 companies due to deindustrialisation, disinvestment, and capital flight. But it still had very large nonprofit and 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, themselves largely dependent on flows of public funds and favourable tax treatment, spent around $3 billion 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 in support of a network of purposely created green worker co-ops – the Evergreen Cooperatives – tied together in 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. Linked by a communityserving nonprofit corporation and a revolving fund, the Evergreen companies cannot easily be sold outside the network, and return a percentage of their profits to develop additional worker-owned firms and grow the local economy. Unlike conventional corporations, these democratic businesses will not pick up and move their jobs to another location. Through such strategies – the opposite of neoliberal extraction – money can be kept circulating, anchoring jobs and building community wealth, reversing long-term economic decline. Today the Evergreen companies are profitable and competing with the multinational corporations that had previously provided contract services to the big anchor institutions.

Meanwhile, Community Wealth Building approaches have crossed the Atlantic to the United Kingdom, where they are being taken up and developed with ever-growing sophistication and impact. Back in 2012 the example of Cleveland 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 sector investment – the ill-fated Tithebarn project – Preston had been left high and dry by its conventional economic development approach. With the help of others such as Neil McInroy of the Manchester-based Centre for Local Economic Strategies (CLES), Brown 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...