What Does an Equitable Economy Look Like?
Capitalism is broken: Local leaders are fixing it.
We’ve said it before: capitalism is broken, especially for people of color. The systemic barriers that exacerbate wealth inequality, such as shareholder primacy and racialized lending practices, continue to maintain a harmful power imbalance. Despite a growing economy, wealth inequality continues to increase.
We live in a time of deep questioning. With Larry Kramer, President of the William and Flora Hewlett Foundation, offering criticism on neoliberal paradigms, and Anand Giridharadas, author of Winners Take All, setting off a tidal wave of concern around social impact investing, we are in desperate need of ideas. Moreover, we require solutions that will ensure the sustainability of our shared future, one that is equitable and inclusive of all of us.
Over the past ten years, we’ve been curating a network of leaders who are actively creating viable alternatives by democratizing finance, supporting rural entrepreneurial ecosystems, and closing the racial wealth gap. They’re tackling the most entrenched, systemic economic problems in North America.
By working alongside these individuals, we’ve come to believe that the solutions for a better future already exist. In fact, community leaders are already defining how a more equitable economy can work. To truly transform our economy, we believe those in power must then recognize, support and spread these solutions.
Take Tomás Durán, a 2016 Common Future Fellow and President of Concerned Capital. Tomás realized that manufacturing jobs in his Los Angeles community — primarily held by people of color — were disappearing as baby boomer business owners entered retirement. Businesses were rapidly closing, relocating, or merging — which proved to be a major disruption to the local economy.
While supporters of social innovation tend to prefer opportunities to build new businesses, Tomás didn’t see a need for that. Instead, he saw a missed opportunity: the transition of ownership to employees.
Tomás was not only mitigating job loss, he was developing a new paradigm for succession planning. He realized that most owners of manufacturing businesses were white baby boomers, while their employees were people of color. Without opportunities to build wealth, the racial wealth gap has persisted. By transitioning ownership, employees are able to build personal, and eventually intergenerational, wealth.
Tomás is not alone. Over the past several decades, a number of promising solutions to redress wealth inequality have cropped up: land trusts, public banks, and community benefit agreements are just a few. Some of these economic solutions have been more popularized than others. ESOPs (employee stock ownership plans), for example, have been recognized by Congress as a tax-advantaged retirement plan since 1974. Other solutions, like the transition of ownership, are less institutionalized. Still, through our work, we’ve found that community-led solutions consistently address these overlooked needs.
Take our rural economies. We’re suffering from systemic underinvestment in rural communities nation-wide, as job loss plagues towns across the United States. Still, as Laura Zabel, a 2018 Common Future Fellow and Executive Director at Springboard for the Arts in Minnesota writes, solutions to build rural economies are abundant:
“It’s illogical to assume that an Ivy League think tank is the best home for good thinking about rural America…the way forward for communities that have suffered from systemic neglect, underinvestment and extraction of resources comes from the people who understand the nuances, cultures and meaning of those places best…the good news is that people in those places are coming up with innovative ideas based on their unique cultures and contexts every day.”
Local leaders are pillars in supporting rural economies. Kimber Lanning, a 2011 Common FutureFellow and Executive Director of Local First Arizona, is exemplary of this. Over 2 million people in Arizona live outside of big cities in the state. Local First’s work is integral to the sustainable development of these rural communities.
One of the primary work areas of Local First Arizona Foundation is running the Arizona Rural Development Council (AZRDC), the state’s official federally-recognized State Rural Development Council, born of the National Rural Development Partnership. This federal program supports cross-partnership development of rural areas. Recently, however, the number of states who maintain such a council has dwindled dramatically; Arizona and others have failed to invest the resources needed to support these councils. If not for Local First’s support, Arizona would be without this integral body. Local First provides a wide variety of critical supports for equitable economies in the state, including their business accelerator, Fuerza Local, which provides small business development support to Spanish-speaking entrepreneurs, an essential and neglected service in the region, and provides local lending options to eight under banked counties in Arizona.
In order to recognize these solutions, we must fundamentally change how we identify and resource these ideas. Those most directly impacted by injustice have the greatest insight into opportunities for change. Trusting local leaders to define their own problems and develop solutions is the smartest way to build the economies we need, and beyond critical when working with distressed and marginalized communities.
There is no shortage of ideas, only an undervaluing of them. Economic innovations are varied, nuanced and often surprising. While many of the struggles that we face are shared, it is essential that our solutions are diverse.
Though applying these solutions to complex (and often deeply rooted) problems across varied communities may seem daunting, where will be if we continue down our current path?
The solutions are everywhere — let’s embrace them in all their forms.
