Towards a More Transformative Community Economic Development

By Ian Adelman, Emily Earle, and Penn Loh
[Note: This article is based on Adelman and Earle’s 2012 Masters Thesis for the Tufts Urban & Environmental Policy and Planning. To download: Earle Thesis – FINAL  Adelman Thesis Final]

Why transformative?

At the global level, it is easy to see the excesses, if not the fatal flaws, of neoliberal capitalism. Mega-corporations like Walmart funnel profits to the 1% at the expense of workers, the environment, and even national governments. But zoom in to a city or a neighborhood, and the picture gets much more blurry. Could Walmart’s urban grocery be the solution for a local food desert? Would it be worth it to negotiate a good wage and other community benefits for Walmart development as opposed to no development at all?

For lower income communities (predominantly communities of color) who never enjoyed trickle down, even in boom times, real community economic development remains an enigma. Whether it is Walmart or some other national chain, our cities are repeatedly being sold one model or another of extractive and exploitative development. Worse yet, our cities are asked, cajoled, or coerced into giving up parts of their surplus and commons (through tax breaks, land giveaways, and other subsidies) in order to support private development.

If we believe in the need for deep transformation of the global economic system, then how does that transformation translate down to the local level? We believe there are choices to be made in local development that can lead to true benefits for local people and communities, while leading to transformation of the broader system. But how do we assess the transformative potential of various community development approaches?

This question was taken up by Emily Earle and Ian Adelman, two recent graduates of Tufts Urban & Environmental Policy and Planning’s masters program and alumni of the Practical Visionaries Workshop. This article[1] lays out a framework that we believe will be useful to those pursuing transformative community economic development. This framework can serve as a comprehensive gauge of progress towards transformation. Too often, a development model is sold on the potential of a single outcome: creating jobs, removing blight, increasing tax base, cleaning up a toxic site, etc. But how does it add up to long-term transformation in all the dimensions that matter? We also sometimes get caught up in our own naysaying – every local development seems to be compromised in some critical way. Either transform everything or do nothing at all. But local reality is much more complex. We need ways to discern degrees of difference along all the dimensions of transformation.

Transform from what and towards what?

Before laying out the framework, we want to be clear about what we want transformation from and towards. The current political-economic paradigm of neoliberalism is what needs to be transformed. Neoliberalism “values market exchange as ‘an ethic in itself, capable of acting as a guide to all human action’”[2]. Conventional community economic development perpetuates the idea that, “reliance on the market is the way to develop inner cities for the benefit of those living in them”[3].

In practice, the neoliberal framework narrows local development down to only strategies compatible with the profits demanded by real estate and finance markets. In this thinking, public subsidies are justified and demanded when there is not enough profit (or none at all). This market profit constraint is self evident when Walmart or any other big national chain comes to town; they would not invest in any project that is not projected to generate the profits necessary to satisfy their shareholders. But even local community development corporations are caught in this trap. Best practice in local economic development often relies on attracting a national chain store to anchor a mixed-use development[4].

We believe that it is well past time to think outside of the neoliberal box. Thus, we are looking for transformation that builds toward what some are calling a “solidarity economy”[5]. In these conceptions, “the economy is the sphere of social activity in which people interact to produce and distribute goods and services”[6]. It is the sum of all the diverse ways that people meet their material needs[7]. Economy is not just limited to money and market transactions.

It is also important to understand that in this broader view, the economy is the result of power relations (and struggles) between community, government, and profit-maximizing businesses. Thus, economic transformation necessarily involves building community capacity and power, and establishing more democratic control over government and businesses. In our cities, we have an opportunity to organize residents and workers, develop networks of production and exchange based on solidarity (not profit), and strengthen these systems to challenge and transform current neoliberalism. That means pursuing local development strategies that democratize ownership and control over the workplace, generate shared wealth, sustain the health of people and the planet, and strengthen local solidarity and communities.

At the local level, a solidarity economy will consist of a diverse range of enterprises, some operating in more conventional markets and others in the government and nonprofit arenas. These enterprises may include worker cooperatives, community land trusts, socially owned housing, consumer cooperatives (like food coops), mutual aid organizations, and many others. Many of these already exist, even if at a small scale or in nascent form. What we want to better understand is how these economic development activities can transform the political-economic system as we know it.

Framework for Assessing Transformative Potential

Our framework consists of five dimensions, each of which differs substantially across the range of approaches to community economic development:

1. Scale of Development
   What scale of government, business, and community are involved?
2. Flow and Allocation of Resources
   How do resources flow and where do they end up in terms of government, business, and community?
3. Decision Making
   Who determines the flow of economic resources, and what are the criteria that are used in the decision-making process?
4. Growth and Sustainability
   What are assumptions about growth and limits to growth and its linkage to human and ecosystem well being?
5. Conception of Community
   Are community members viewed as workers or owners, producers or consumers, active decision makers or passive recipients?

Applying the Framework

Conventional Market-Based Development

The story of market-based development should be familiar, for it has been the dominant story for the past several decades. The economy is global, meaning that financial capital is highly mobile and will flow to wherever returns are the highest. Meanwhile, the federal government is reducing and devolving social programs and support to the state and local level. Local governments, then, must compete and become more entrepreneurial to attract economic investment. Empowerment zones are set up. Local government offers tax breaks, subsidized loans, direct grants, and infrastructure improvements. Thus there is a primary flow of resources from government to business and from community to business through extraction of profits. The underlying assumption is that this rising tide will lift all boats through secondary flows by creating jobs, increasing property values, and local tax revenues. Ultimately, the decision makers in this approach are those who control capital and their key decision making criteria is return on investment.

This vision of development assumes growth over sustainability. Success is measured by continual growth in exchange of goods and services and profits. This approach also has a very narrow and dim view of the communities in need of development. It presumes a lack of assets, skills and knowledge in these communities – that they are an economic wasteland. Because cities are seen as being in direct competition with each other and local government policies must meet investment criteria, economic policies cannot be redistributive[8]. Another dominant idea is that the flight of the white middle-class during earlier decades is the major economic problem in cities. Thus, cities need to organize to attract the (white) “creative class” back to the city through local economic development that addresses the needs of this creative class[9]. Finally, underpinning these conceptions of urban communities is a persistent and pervasive narrative that defines, describes, and acts as if poverty is racial and behavioral rather than structural and historical.^[10]

Comprehensive Community Development

The community development industry, as represented by groups like Local Initiatives Support Corporation and Neighborworks, have been touting a model for comprehensive community development for more than a decade now. Today, it is embodied in LISC’s Sustainable Communities program, and it involves trying to solve all the challenges facing low-income neighborhoods in a coordinated way.

This approach represents an important shift in the decision making dimension, from private capital alone to nonprofit intermediaries and local community organizations. In this model, these groups direct targeted investment to improve both physical conditions and social service delivery through a greater inclusion of the community in the market. While this approach accepts the same view of scale and flow and allocation, the nonprofit decision makers seek return in ways that benefit the community, which are often overlooked or ignored by outside business investors. These groups recognize the deep-seated disparities in the communities that need investment.

Yet, comprehensive community development is still fundamentally about expanding the conditions for the private market to flourish. So, it adopts the same assumptions about scale, flow of public resources, and growth as the conventional market-based model. In fact, LISC’s Sustainable Communities program is targeted not towards neighborhoods in greatest need, but those viewed as having some “traditional” development potential, such as being located next to a transit line or another improving neighborhood.

Regional Equity

The regional equity approach is best known through the work of PolicyLink. Regional equity begins to shift several of the dimensions of community economic development. It begins with a focus on regional scale and also includes shifting economic flow from government directly to community. For example, regional investment in transit can provide not only jobs and meet transportation needs, but also spur economic growth. Regional equity links the growth of the region with the equitable distribution of resources and access within the region, “Equity is not only a matter of social justice or morality: It is an economic necessity…Equity matters to our economic recovery and our economic future. Equity is the superior growth model”[11]

Regional equity recognizes the historic economic, racial, and gender disparities in communities, and also sees community members as decision makers. Yet, regional equity advocates concede that, “ultimately, the private sector must take the lead in producing economic growth that is truly inclusive. But leaders in the public and community sectors need to set up the right framework of policies, investments, incentives and strategies to guide that growth”[12]. Regional equity still accepts a pro-growth approach to community development.

 

Worker/Community Ownership

With 2012 designated as the year of the cooperative by the United Nations, collective ownership has re-emerged as a strategy for community economic development. In the US, perhaps the Evergreen Cooperatives in Cleveland are the best-known experiment in developing a network of worker coops. Evergreen is modeled on the well-established Mondragon network in Spain. Similar start-up initiatives are being pursued in many other US cities[13].

Worker-owned cooperatives democratize resource allocation and decision-making. Their business decisions are based on one worker, one vote. Because workers are also community residents, they must factor in more than simply financial return on investment. Because the workers also reap the wealth generated by the business, cooperatives re-circulate economic resources within a community. In essence, worker-ownership shifts the scale of business from the global scale to the local (and regional when networks of cooperatives are established). Collective ownership anchors capital in place, allowing for increased stability and sustainability of the local economy[14]. Perhaps most important is that community assets, abilities and potential are more fully recognized. Community residents are not conceived of simply as individual consumers or as sources of labor, but as producers, owners, entrepreneurs, and interconnected, interdependent members of the local economy that have the capacity to lead, innovate and make economic decisions.

Conclusion

So, what happens when all the dimensions of this framework are shifted in ways fundamentally different from the conventional market model? This shift, perhaps, is the transformation that we are seeking. We believe it is best described by the solidarity economy concept. The solidarity economy is a social movement that identifies and connects all of the diverse way that human needs are met[15]. Solidarity economies are economies that meet human needs sustainably, mutually, equitably, democratically, cooperatively, and pluralistically.

Briefly, the five dimensions that we have been discussing look like this in the solidarity economy:

1. The domains of business, civil society and the state operate at the same scale through increased mutual accountability and interconnectedness, whether considering local or global economic activities.
2. The flow of resources is circular and re-circulating, while the allocation of resources is equitably distributed between individuals and communities.
3. Decision-making is democratic, engaging all three social domains – business, state, and civil society – and is based on principles of mutuality, cooperation, and equity in sustaining livelihoods.
4. Sustainability is prioritized over growth, with a focus on increasing economic equity and stability within recognized ecological limits.
5. Community is conceived as empowered, and community collectively determines the roles, functions and processes of government and business.

This framework for community economic development has allowed us to look more critically at economic development propositions and helped us to identify opportunities for more transformative approaches. For community-based organizations thinking about their engagement in community economic development, an evaluation of the dimensions of specific initiatives could help in:

• assessing where more work is needed;
• considering whether to pursue or support new community economy initiatives; and,
• aligning current economic development work with the work of other organizations.

The dimensional framework, too, is a way to understand the limitations of community economic development, especially in its current formation.

What then does transformative community economic development mean to us? We venture that it means shifting the power relations of community, government, and business, so that community has a stronger role in determining the goals and outcomes of community economic development. It also means strategies that are both local and global, that recognize the expertise and contributions of communities, that enable a more equitable allocation of resources, that promote sustainability, and that engage in decision-making that is democratic, pluralistic, and inclusive.