This blog is part of the ‘Voices of New Economies’ series within Cities for People – an experiment in advancing the movement toward urban resilience and livability through connecting innovation networks. This Voices series is collectively curated by One Earth and The Canadian CED Network. We are launching Voices of New Economies as part of New Economy Week 2014, hosted by the New Economy Coalition. Throughout this week, a series of 5 questions guide our exploration of what it would take to build the economy we need – one that works for people, place, and planet.
Today’s Voices story responds to the fifth and final question in the New Economy Week series: How can we support neighborhoods, cities, towns, and regions as the fertile ground for the kind of economy we need?
By Nabeel Ahmed
When Sean Geobey was in university, he helped start up a community capacity building nonprofit. It introduced him to the challenges of how social service organizations financed their work, a question he has grappled with in his doctoral research at the University of Waterloo and the Waterloo Institute of Social Innovation and Resilience. His work on social finance looks at alternative funding models and how they can transform the social sector, private markets, and governments that encourage more inclusive, democratic, and real-wealth creating activities.
For Sean, real wealth comes from the things that allow us to better express ourselves; things that allow for individual talents and interests to flourish in a way that doesn’t harm other people’s capacity to do the same. That wealth comes from our capacity to invest materially, socially, and intellectually in the creation of institutions and infrastructure that support collective efforts to try and make the world a better place
What are some key elements of new economies?
It’s important, here, to take stock of the new economies we are drifting into and guide them towards the new economies we desire (which may have elements of the ‘old’ economies as well).
Increasingly, real wealth is being diminished by the commodification of human inputs and creativity. This is a world of increased automation, designed more by bits and data rather than the creation of actual goods and services. It is a globalized world, not just economically but also socially and culturally. There has been a troubling shift towards institutions that are fundamentally unaccountable to the general public and community; corporate actors that act with impunity across borders present a real challenge for the remaining democratic institutions to channel productive capacity towards broader positive impacts rather than just shareholders.
Despite the discontents, more flexibility does hold an incredible amount of promise, and technological advances can increase material well-being and creative potential.
Ultimately, new, resilient economies that better serve people will require a revitalization of democratic people-controlled institutions, from governments, to finance, to worker organizations, to company ownership and control. It means a better understanding of local environments and the increasing variety of people in them, learning from past institutions while creating new ones, in ways that can leverage advances in technology.
How can we support neighborhoods, cities, towns, and regions as the fertile ground for the kind of economy we need?
At the local level, we have a real opportunity to revive and modernize this idea of a mutual aid driven society that was prevalent in the late 19th century. This includes the credit union sector, cooperatives, and craft unions, creating opportunities for people to support each other’s work around the world. Such organizations can maintain autonomy while working together at a global scale, which large multinational corporations and the financial sector do quite well, but older models of mutual aid have historically struggled with.
This is where social finance comes in. Just as the prevalence of sophisticated, globalized financial tools has helped the modern economy develop, a more human-oriented way of social, economic, and ecological prosperity can come from getting regular people engaged with finance to help develop their own communities and support the work of like-minded people wherever they may be.
The credit union sector, for example, has been pushing for innovation in local economic development through various means, including the creation of community bonds. These are small investments created by nonprofits and social sector organizations, mostly administered by credit unions, that allow organizations without traditional access to debt financing to convert erstwhile donors into more substantial supporters in the form of a loan. This allows social sector organizations with real capital and assets to leverage value in a way they have not been able to do so previously.
Crowdfunding is the most obvious technology-driven social finance innovation, emerging in the last decade to allow an unprecedented global flow of capital from ordinary people. It has been particularly transformative in turning retail consumers into financiers; in the entertainment, music, film and video game industries, the pre-purchase model has allowed new people to produce interesting ideas and tell new stories that were impossible a few decades ago. As a pre-purchaser, you effectively give a loan to a producer, which completely changes the relationship between consumers and producers.
Through tapping into both local and global social finance tools, individuals can transform institutions to be more inclusive of people’s creativity and fundamental dignity.