Wealth Supremacy: How the Extractive Economy and the Biased Rules of Capitalism Drive Today's Crises
Marjorie Kelly
256 pages, Berrett-Koehler Publishers, 2023
Amid the chaos and breakdown of our time, imagining such a thing as economic system change can seem daunting, overwhelming, impossible. It’s not clear what it entails. And if we glimpse some idea of it, we don’t believe it could ever happen.
The truth is, system change is already emerging, all around us. It’s beginning in our own backyards, in the form of Community Wealth Building (CWB), a form of local economic development that transforms local economies through communities having direct ownership and control of their assets. First articulated by The Democracy Collaborative in 2005, the concept has developed a momentum of its own, and it’s being aided now by a variety of organizations, like the Centre for Local Economic Strategies in the United Kingdom. CWB is catching on in cities like Preston, England, Amsterdam, and Copenhagen, as well as US areas like Cleveland, Chicago, Los Angeles, Baltimore, St. Louis, and Alameda County, California. New interest is coming from places as far-flung as Poland, South Korea, Germany, and Bordeaux in France.
As I explore in the following excerpt from Wealth Supremacy: How the Extractive Economy and the Biased Rules of Capitalism Drive Today’s Crises, community wealth building is where the next potential economic system—a democratic economy, built to serve the well-being of all of us on a flourishing earth—is growing from the ground up. This form of economic development works comprehensively across five pillars of impact: progressive procurement, just use of land and property, fair work, locally rooted finance, and inclusive and democratic enterprise. Through it all, it pursues the overarching aims of racial inclusion and ecological sustainability.
CWB begins most often in communities suffering from decades of disinvestment and disempowerment. These are the seedbed of what could come next in the project of bringing the economy back to earth, designing it to benefit ordinary people, rather than a distant and tiny financial elite.—Marjorie Kelly
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When I sat down not long ago to talk with my colleague Neil McInroy about community wealth building, his Scottish brogue was so thick that it was sometimes hard for me to understand him, but his enthusiasm was infectious. This is a man on fire. Neil was just back from a two-week-long barnstorming trip through Australia, meeting with officials from Sydney and Melbourne, attending an Australian Labor Party dinner, teaching master classes to economic development professionals, speaking with a large pension authority, and more. In his seemingly countless meetings, Neil’s topic was always and everywhere community wealth building.
Neil is global lead fellow at the Democracy Collaborative, working closely with Sarah McKinley, director of CWB programs—the two of them a formidable pair of Johnny Appleseeds spreading the story of building community wealth. As Sarah explains, this form of economic development takes the various models of the democratic economy—such as community land trusts, worker-owned firms, and public banks—and connects them in place, building infrastructures of support to scale and supercharge these efforts, so they work together as a system.
“This is not just a small pilot project here and there,” Neil says. “This is about rewiring the economy for social, economic, and ecological justice.”
For the communities Neil and Sarah work with, the necessity of system change is already a painful lived reality. What community wealth brings them is proven models demonstrated as effective, and the imaginative vision of an entire local economy functioning in a new way, keeping wealth recirculating locally.
“Globally, there’s a recognition that the economic system is not working properly. Capitalism is in disarray,” Neil told me. “Many state and local authorities are looking for alternatives.”
In Chicago—the third largest city in the US, where six in ten residents are Black and brown—a $15 million CWB pilot has been created. Among its goals are narrowing the wealth gap and stabilizing neighborhoods.
A Nation Takes on Community Wealth Building
On the largest scale, one country is taking a whole-nation approach—Scotland, where Neil serves as a CWB advisor. The Scottish government has named a Minister of Public Finance, Planning and Community Wealth Building, and it’s financially supporting CWB in a series of places, with additional supportive legislation in the works. At the forefront is North Ayrshire, an area of 130,000 and one of Scotland’s hardest-hit communities, which has made community wealth the central focus of all its economic development. Following its lead, all local councils across the country will be developing CWB plans.
The North Ayrshire council has designated a number of staff to work on CWB, advised by a Community Wealth Building Commission of local stakeholders. The council’s strategy embraces the various pillars of CWB: progressive procurement, just use of land and property, fair work, locally rooted finance, and inclusive and democratic enterprise. The city is investing in net-zero emissions by 2030, building two city-owned solar farms on former landfill sites, which will be operated as a municipal enterprise. These could potentially produce more than twice the energy needed for all municipal buildings, including schools, with excess energy sold to local anchor institutions. It’s an example of combining the just use of land, democratic enterprise, local investment, and anchor procurement.
Another example of land use is a large-scale woodland tree planting program aimed at providing carbon absorption and other community benefits. In terms of progressive procurement, local anchor institutions—the local council, college, police and fire services—have signed onto an anchor charter, pledging to buy and invest locally. This has enabled an organic farm in East Ayrshire, Mossgiel Farm, to supply local organic milk to schools. And, as the farmer says, the children “can visit my farm and see where their food comes from.” The city council has also worked with local employers to adopt fair work practices and to create a program of forty apprenticeships for youth. As larger infrastructure projects proceed, they’ll emphasize contracting with local businesses, including cooperatives, and providing quality jobs that pay a living wage.
A Game Changer for Worker Ownership
In its work supporting democratic enterprise, North Ayrshire is encouraging family-owned businesses to consider converting to worker ownership. An impressive example was the sale of Auchrannie, a resort on the nearby Isle of Arran, to its employees. The complex, which includes two hotels and three restaurants, is valued at £4.3 million. Full ownership is now held in an employee ownership trust on behalf of the resort’s 160 employees. The former owners will be paid out of company profits over twenty-five years.
In Cleveland, CWB first began with the creation of three worker-owned Evergreen Cooperatives, which the Democracy Collaborative helped to develop with the Cleveland Foundation. The largest is the anchor-supported Evergreen Cooperative Laundry, which has some 200 worker-owners, most of them people of color from the inner city, enjoying profit-sharing bonuses at year-end that have in some years been $8,000 or $11,000. The network of initially three worker cooperatives has expanded into converting other local businesses to worker ownership through its Fund for Employee Ownership. Jessica Rose, a former colleague at the Democracy Collaborative and now the chief financial officer at the Global Impact Investing Network, and I aided in developing the concept of such a fund, and Jessica worked on the fund’s launch, which is now overseen by Evergreen’s chief investment officer, Jeanette Webster. At least a dozen similar funds are forming across the US.
One fund that is particularly exciting is Apis & Heritage Capital Partners, which has a targeted focus of using worker ownership to build wealth for BIPOC workers. It was incubated by the Democracy at Work Institute and launched by cofounders Todd Leverette, Philip Reeves, and Michael Brownrigg, beginning with an initial $30 million from investors such as the Ford, Skoll, and Rockefeller Foundations. When this fund converted Apex Plumbing of Denver and Accent Landscape Contractors of El Paso, Texas, to 100 percent employee ownership, it was majority Latino workforces of 150 workers that benefited—along with the exiting owners and the fund’s investors.
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Could expanding funds like this serve as an alternative to founders and families having to sell to big corporations or big capital? If these funds grew and caught on, could they form a substantial pathway toward a democratic economy?
Investment banker Dick May, with American Working Capital, believes they could. He and his colleague Chris Mackin conceived the original idea of the proposed policy of the Employee Equity Investment Act, designed to bring Small Business Administration–type backing for worker ownership conversion funds. They estimate that in a decade, an annual federal loan guarantee commitment of $100 billion could create thirteen million new worker owners—roughly double the number of worker owners today. To call this a game changer is a dramatic understatement. It would be transformative.
Clearly, a game changer is needed. The number of ESOP firms has been declining for two decades, down from 9,200 in 1995 to 6,500 today (though plan participants have increased). Only about two hundred firms a year now convert to an ESOP. That’s a drop in the ocean compared to the seventeen thousand traditional mergers and acquisitions made in 2020.
Turning this around would take the clout of the federal government. It might also take other financial innovations.
It doesn’t seem immediately likely. It would take time. But it could happen. As Neil said, communities are looking for alternatives. So are investors.
Improbable change happens all the time.
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One group of folks not waiting on federal action are the activists in Amarillo, Texas, who have replicated the Evergreen Cooperative Laundry concept in the Texas panhandle. It’s one of the reddest areas in the country, and an area also known for “the Panhandle spirit,” a spirit of caring and community that makes it a place many can’t imagine leaving. The worker-owned commercial laundry is up and running now, located on land from the city, with construction funding from the Amarillo Area Foundation and a consortium of locally owned banks, all with very generous repayment terms.
The Amarillo group is now working on a larger CWB initiative. When they hosted a lunch to explore the idea, thirty-eight people showed up, including fifteen members of the local chamber of commerce and a leader from Bank of America. Fully twenty-eight said they wanted to continue the conversation. “The timing is right,” said my friend Mary, a core member of the activist group.
She spoke excitedly about discovering that Amarillo had four worker-owned or cooperative companies, like Cactus Feeders with its eight hundred employee owners. It also has a community land trust, Mariposa Village (Mariposa.eco), which hosts the Mariposa Tech Co-op of aspiring technology creators. A community-owned grocery is in the works in the region. And there’s a woman interested in starting a fund to support women-owned businesses.
“Seeing what’s happening in Amarillo blew my mind,” Mary said. We talked about the “silver tsunami” of 3 million retiring baby boomer business owners in the US and how most of these could close, yet selling to workers could keep these businesses and their jobs going, recirculating local wealth. When she shared this idea with the pastor of a local Latino church, he said he had many such business owners in his congregation, like plumbers and electricians, whose children didn’t want to take over their companies; employees could be logical new owners. The Amarillo group is starting an employee ownership center; already the Employee Ownership Expansion Network has started 20 state centers across the country.
“This isn’t about pushing a boulder up a hill,” Mary said. “We’re at the top of the hill. We need to push the boulder down. There’s more happening than people know, and I suspect that’s true all over. We’re not starting from zero. This is the beginning.”