Thursday, February 8th, 2018
Today in Preston, England, The Democracy Collaborative's Ted Howard gave the keynote address at an event announcing the launch of a new Community Wealth Building Unit designed to help Labour councillors build more inclusive and democratic local economies (read Ted's full remarks below). The new initiative will be advised by The Democracy Collaborative and housed in the office of Jeremy Corbyn, Leader of the Labour Party. In launching the Community Wealth Building Unit, Shadow Chancellor of the Exchequer John McDonnell praised the ground-breaking work of Preston City Council, which, inspired by the work of The Democracy Collaborative in Cleveland, Ohio with the Evergreen Cooperatives, has returned almost £200 million to the Lancashire economy and supported more than 1,600 jobs by using the town’s anchor institutions and local government contracts to keep money in the local economy and develop worker-owned cooperatives.
Preston council's local economic development strategy includes:
- Becoming the first Living Wage employer in the North of England (in 2012)
- Setting up a credit union to compete with payday loans companies
- Persuading six large local public bodies (also known as “anchor institutions”) to commit to buying goods or services locally wherever possible
- Helping to set up worker cooperatives to provide goods and services to public bodies.
- In 2013, the six local public bodies spent £38m in Preston and £292m in all of Lancashire. By 2017 these had increased to £111m and £486m respectively, despite an overall reduction in the council’s budget.
Advisors to the Community Wealth Building Unit include:
- The Democracy Collaborative, an American-based organisation engaged in practical and intellectual work to connect community wealth building to system economic transformation, including more democratised forms of ownership, ecological sustainability, and community renewal.
- Councillor Matthew Brown, Preston City Council, one of the leading figures behind the Preston model.
- Unison, one of the UK’s largest unions, representing 1.3m members employed in providing public services, including at the local level.
- The Association of Public Service Excellence (APSE) is a not for profit local government body working with councils across the UK to promote excellence in local public service delivery. APSE will be providing independent advice to the Community Wealth Building Unit.
- The Centre for Local Economic Strategies (CLES), a think and do tank dedicated to social justice, good local economies, and effective public services. CLES will be providing independent advice to develop the work of the unit. CLES’ advice is informed by a 10 year local wealth building programme, which has included collaboration within a number of local areas and agencies across the UK – including Preston - and internationally.
- The Cooperative Party, the political party of the Cooperative movement, which promotes democratic, public ownership.
- The Centre for Urban Research on Austerity, based at DeMontfort University in Leicester. It looks at government, community and social movement responses to austerity across the world, and facilitates learning and knowledge exchange to develop alternatives.
Ted Howard's full keynote remarks:
Thank you. I’m delighted and honored to be here today in Preston.
Not too many years from now – I believe – we are all going to look back on this conference, and at all the work that has been done here in Preston, and see it as history in the making. What we are doing here is nothing less than laying the basis for a new economic model—one that will be of great significance in Britain and around the world. That may seem like a big claim. But I hope I can justify it to you today in the remainder of my remarks.
We all know that our current economic model is broken. Growing inequality, stagnant or falling wages, underinvestment, austerity in public budgets, the extraction of wealth from our communities, decreased social mobility, the looming threat of climate catastrophe. The question is what to do about it?
As you will hear throughout today’s discussions, there are already very real and very practical solutions to these pressing economic, social and ecological problems. Building from the ground up, from our communities. Solutions that are democratic, equitable and green by design. These solutions start where all fundamental change comes from—which is in communities and from the bottom up.
This has been the case with large order change in both the UK and in my own country, the United States. Back home, we call it the laboratories of democracy. As the Great Depression took hold in America in 1929, the levels of pain across the country grew. But the ideology of the then federal government was that the government should do nothing to address the growing depression, that the market would correct itself.
And so, in community after community people took history into their own hands and began to address their problems themselves. New approaches were devised that could eventually be lifted up and scaled. America’s primary social safety net, the Social Security System, began in small Alaska and California communities as people grappled with their challenges. When the politics changed nationally, when the Roosevelt administration came into power, and the New Deal began, these small models were lifted up into a comprehensive system of national support. Here in Britain there is a similar experience. When Bevan launched the NHS in 1948, he drew his inspiration from the Tredegar Medical Aid Society, a community based model in South Wales that began in 1890. This small Welsh experiment was scaled up into one of the great health systems of the world. Despite what Donald Trump may think and say!
Here in Preston, we will be talking about models and ideas that point to the outlines of a powerful new approach in our own time. An approach that is eminently practical, pragmatic, and proven. Let me tell you about an example I know well—Cleveland, Ohio—which is where I live.
Cleveland in many ways looks a lot like Preston. It is a city where industry was once the basis of a thriving economy. It is also a city devastated by deindustrialization and the flight of jobs and capital. It’s hard to convey the full magnitude of the economic destruction visited upon places like Cleveland all across what was once America’s manufacturing heartland. Cleveland alone has lost half a million people since 1950—57 percent of its population. It’s as if half the city has been thrown away, at tremendous, human, capital and carbon costs. The disparities are stark. Of those people remaining, over a third live below the federal poverty line. Just driving from my neighborhood of Glenville, which is 98.5 percent African American and one of the poorest in the city, 8 miles due East to an affluent suburban neighborhood, we see a difference in average life expectancy of 24 years. These are the consequences of long-term, deep, place-based poverty.
Traditional neoliberal approaches to local economic development rely on attempting to reverse the exodus of big business and capital by luring them back in a publicly-subsidized race to the bottom. In Cleveland, this was simply not working, and we decided to play a different game.
Looking at our city, as “officially” poor as it may be, there were still enormous resources that could be mobilized in service of the community and economic recovery. Some of the premier medical institutions in the United States—like the Cleveland Clinic—still called the city home. Taken together these hospitals and universities—what we call place-based “anchor institutions”—were spending $3 billion a year on goods and services, but virtually none of it flowing into local neighborhoods. Turning this around is the basis of what has come to be known as the Cleveland Model.
My organization, The Democracy Collaborative, is an action-oriented think tank working to build the basis for the democratic economy in both theory and practice across areas from energy democracy to community development to public banking and beyond. In 2009, during the depths of the financial crisis, we partnered with the city of Cleveland and the Cleveland Foundation to launch the first of the Evergreen Cooperatives. Evergreen is a network of linked, ecologically conscious worker cooperatives tied to the community—an industrial-scale laundry, a large urban greenhouse, and a renewable energy and green construction company. The anchor institutions are shifting their purchasing dollars to these cooperatives, creating much needed local jobs. And because these are democratically-owned businesses, the wealth created is shared broadly and rooted in the community. This is the very opposite of outsourcing or absentee ownership of business. These are companies that are indigenous to Cleveland and deeply loyal to our community.
There is much to admire in what the Evergreen cooperatives have accomplished. Jobs at living wages for hundreds of Cleveland residents, many of them locked out of the traditional job market. Innovative new structures that help those workers gain access to affordable housing. Sharing in profits that the labor of the workers themselves produces. Achieving local multiplier effects in which money spent on Evergreen services and products recirculates rather than leaking out of our community. But the most important thing Evergreen has accomplished is creating a sense of hope. You can see this in the eyes of the Evergreen worker owners I have the privilege to know. I also see it when I talk to audiences around the country and—increasingly—around the world.
The good news is that the Cleveland model—and the underlying theory, which we named community wealth building more than a decade ago—is now being taken up and adapted to local circumstance in cities and communities across the United States. What is community wealth building? We define it as a framework for community and economic development that aims to create inclusive, equitable, sustainable economies built on locally rooted, broad-based ownership of place-based capital and assets. It is what a democratic economy looks like at community and city scale.
Community wealth building has now begun to spread. In Richmond, Virginia and Rochester NY, local mayors have established city government Offices of Community Wealth Building. New York City is now supporting a comprehensive strategy to build worker co-ops in marginalized communities across the city.
Elsewhere, cities from Oakland, California to Santa Fe New Mexico are looking to the creation of public banks modeled on the 100-year old state Bank of North Dakota. Public ownership is also on the rise. More than 750 communities have now set up some form of a municipally-owned broadband network rather than be beholden to the investment decisions of giant telecom companies—while providing high quality service to residents at vastly lower costs. Thus keeping money – wealth – in the community and in the pockets of consumers. There are now more than 200 community land trusts operating in cities and counties across the United States, and this form of preserving long-term affordability and community control is increasingly being adopted in areas facing a variety of housing pressures. With the grotesquely escalating housing costs many British cities are experiencing due to speculation, this mechanism becomes an essential wealth retention strategy.
We are also beginning to explore what community wealth building would look like at truly large scale. This year, we launched the Healthcare Anchor Network which engages dozens of health systems to build community wealth. Together they employ more than 1 million people, represent 1/10th of all the hospitals in our country, purchase over $50 billion annually, and have over $150 billion in investment assets. These institutions have committed to what we call the “anchor mission”—using their vast economic power, in combination with their human and intellectual resources, to build community wealth and better the long-term welfare of the communities in their regions.
Community wealth building is part of the emerging new common sense—that the traditional “solutions” that promised trickledown prosperity are quite simply and objectively insufficient for the challenges we face today, and that the solutions we need have to start from cooperation, community, and place.
Armed with this understanding, the opportunity for significant scale, in sometimes surprising places, becomes clear. Over 100 million Americans are members of credit unions—one member one vote community based financial institutions, that, taken together now command more assets than Goldman Sachs on Wall Street. Giant state-level sovereign wealth funds now exist in a variety of states, many of them deeply conservative such as Alaska, Alabama, Texas, and Wyoming, where they are often used to fund social services such as education while keeping local taxes down. Lessons on scaling up democratic ownership can also be learned from experience elsewhere in the world from the famous Mondragón cooperatives In the Basque region of Spain to Italy’s Emilia Romagna region and the so-called ‘social economy’ (or solidarity economy) in Québec, Canada.
What we need to do is adapt them to local settings and begin to build a politics that allows us to move these innovations from the margins to the mainstream where they can come to dominate the whole system. Which brings us back to Preston, and to what we are all doing here today. You’ll hear from others about the extraordinary work of the Preston City Council supported by this city’s anchor institutions, and colleagues and friends at the Center for Local Economic Strategies in Manchester, and by others. I consider Preston to be one of the most important and advanced experiments in city-level community wealth building anywhere on the planet. What I hope you’ll take away from this conference, and from the examples of Cleveland and Preston, is that it is possible to pursue these approaches in any city and community in your country.
Knowing this is especially important at a time like the present, with the dislocations of Brexit looming and when the wheels are finally coming off the neoliberal model of the Private Finance Initiative, of outsourcing, of Carillion, and privatization and gentrification and displacement.
The message is that you don’t need to wait for salvation from some outside force. You already have everything you need, if you learn and adopt and adapt the community wealth building tools that can deliver quality goods and services on the basis of equity and inclusion. It’s a bonus that you’ll also be engaged in the creation of a new economic order for your nation—the next system we so desperately need to address our deep economic, social, and ecological challenges. Just think of what will be possible when twenty, a hundred Prestons are all busy at work re-localizing and democratizing their municipal economies. The example will be irresistible—a race to the top rather than a race to the bottom.
As I said at the outset, all of this is beginning to add up to the emergence of a new economic paradigm. Instead of footloose and extractive corporate capitalism and the inequality and ecological destruction it brings, community wealth building offers instead a place-based, inclusive, re-circulatory, and democratic economics. On both sides of the Atlantic, we’ve been told for far too long that there are no alternatives. What is happening today in Cleveland and Preston—and the communities following their lead and building on their success—shows that this is an outright lie. There are alternatives, and we are already building them. You are sitting today in the epicenter of the movement for the creation of a new economic model that could resonate far, far beyond Preston’s city limits, in part through actions that will be taken by those of us in this room. The challenge is to take these hopeful, practical new economic models to every city and every locality in the country, laying the groundwork for the next system and a truly democratic economy.
The great scientist Albert Einstein once said: “We cannot solve our problems with the same thinking we used when we created them.” Today, let us embark on bold, visionary, new thinking. Freed from the dead hand of the past and the neo-liberal, austerity agenda we have been laboring under.
I am deeply honored to be with you in this movement. Together we can ensure that the future is ours to create.
For the many, not the few. Thank you.