Market Innovations Worth Following

The thing about growing up in an economy is that it appears to you a thing of nature, something that has always existed, that will never change. Nature, in our terms, is an economy propelled by the privately-held firm existing to make wealth for owners, investors, and often top managers. This is the “profit motive” and, when elevated to the heights it has assumed in our contemporary economy, workers, sustainability, and community health often play second fiddle as corporate decision-makers prioritize private goods and benefits, social costs be damned.

Despite appearances, this “nature” has always been a product of culture and, slowly but increasingly, the culture seems to be changing. Critics are questioning the wisdom of an economy based on the principle of private gain. In some communities, innovators are coming up with alternative business models to “socialize” the profit motive, that is make gains for workers, consumers, and communities an explicit and deliberate motivation driving business practice. Taken to scale, this might really change the market.

Some of the main innovations supporting market change include:

1. Community Benefits Agreements. These are contracts  between developers and labor-community groups stipulating that new development projects include living wage and local hiring provisions, job training support, collective bargaining rights, affordable housing set asides, and sometimes other social welfare provisions.  According to the scholar Peter Dreier, there were community benefits agreements in effect in ten cities in 2009. While they do not eliminate privatist business principles entirely, they use extra-regulatory mechanisms to make privately-held firms commit to goods like job access, job quality, and corporate responsibility to social welfare.

2. Worker Cooperatives. Worker cooperatives are firms owned and self-managed by employees that share in decision-making, production, and profits. They are a sub-type of cooperative enterprise more generally and make workplace democracy central . A 2009 report by the University of Wisconsin Center for Cooperatives counted 223 such firms in the United States. While currently a very small presence in the United States, they offer great potential for promoting equality, shared prosperity, improvements in labor conditions, and healthier work/life balance than is typical from firms focused on growth and profits for owners and investors.

3. Consumer Cooperatives. Consumers sometimes band together to make products available under terms more favorable than what they encounter on the “regular” market. There are about 27,000 consumer cooperatives in the United States according to the University of Wisconsin Center for Cooperatives, including such entities as credit unions, retail stores, and energy providers to name a few. Like worker cooperatives, consumer cooperatives involve democratic governance structures that facilitate stakeholder control of business decisions. Often, they become ways for consumers to access products more cheaply and/or more sustainably.

Michael Bauwens describes an even more interesting innovation:  the “multi-stakeholder cooperative” that joins two or more stakeholder groups (such as workers with consumers, community members, or other supporters) into cooperative enterprises. Currently nonexistent in the United States, the main benefits are to expand the range of social goods cooperative businesses consider as they conduct business, as well as balance competing or conflicting interests (such as labor versus the environment) that may arise when accountability is so complex. Multi-stakeholder cooperatives are also called solidarity cooperatives since they are a way for cooperatives to think and act more globally and in ways that require numerous interests to support each other.

4. Land Banks. This is a way for communities to gain control of blighted, abandoned, or derelict properties for re-purposing. Rather than waiting for absentee owners to invest in the maintenance and improvement of their properties, communities can reclaim real estate for better uses, whether that is redevelopment, the creation of green space, community gardening, or other initiatives. Ultimately, land banks introduce an ethic challenging the rights of property owners to neglect property when that neglect has negative repercussions for surrounding property-owners or the community at large. They introduce a communal sensibility into a marketplace typically privileging private property rights.

At the end of the day, changing the economy means changing the principles underlying capitalism from gain for the few to security, consent, and opportunity for the many people that comprise the market.  Community benefits agreements, worker cooperatives, consumer cooperatives, multi-stakeholder cooperatives, and land banks may be what it takes to get us closer to that end goal.

 

For links to references mentioned above:

http://prospect.org/article/good-jobs-healthy-cities

http://reic.uwcc.wisc.edu/issues/

http://www.shareable.net/blog/michel-bauwens-on-the-rise-of-multi-stakeholder-cooperatives