This week I'm heading to the Social Capital Market's annual conference, SOCAP14, where hundreds of impact investors and social entrepreneurs will flock to meet each other and get inspired. As a leader in the Localist Movement -- a community of entrepreneurs, business leaders, and investors committed to the health and wellbeing of the places where they live -- I believe that impact investing and social enterprise should not be about creating another asset class that funnels wealth into the same few hands. Rather it should be about democratizing opportunity, ownership and the economy to bring real prosperity to more people. Prosperity for all is at the heart of the Localist Movement and this is the message I'll be sharing at SOCAP14.
Back in May, a conference called "Inclusive Capitalism" took place in London. Prince Charles, Bill Clinton and Christine Lagarde from the International Monetary Fund were among the keynote speakers. About 250 people attended, representing 30 percent of all the financial stock on this planet. I was excited to hear about such a gathering until I read the report that accompanied it, which was shockingly bereft of ideas.
Which made me realize that BALLE (the Business Alliance for Local Living Economies), the organization I run that serves as the hub of the Localist Movement, is in a fairly unique position with a front row seat to what is actually working. Local communities are creating an emerging checkerboard of solutions, increasingly backed by data, and leading us down a path to creating real prosperity - or "inclusive capitalism" - for everyone.
For the past few decades, traditional mainstream economic development has chased the Boeings, Marriotts and Dells of the world, promising local government subsidies that essentially pay the wages of prospective employees for a few years. But when the subsidies dry up, these multinationals move. Meanwhile, Localists have been figuring out how to support community entrepreneurs working to solve economic, social and environmental challenges with their businesses.
If you think I'm taking about traditional mom-n-pop shops here, think again. The Sustainable Business Network in Philadelphia has mapped out which businesses have the most potential to solve environmental problems while bringing the most jobs to low-income people and are helping those businesses go after billions of dollars. Rather than trying to be the next high-tech alley or startup triangle in Northwest Washington State, Viva Farms is building out an infrastructure through the community college system to allow migrant farm workers to build their own farm businesses. Working in low-income communities across New York City, Detroit, Newark, Oakland and beyond, Urbane Development strengthens existing corner stores with an infusion of health food and even healthier relationships, rather than going after the new out-of-town grocery. Propeller in New Orleans incubates early-stage social ventures to help solve the city's most pressing issues. And these examples are just the tip of the iceberg. These innovations for good are happening in nearly every state and province in North America and it's BALLE's job to connect them to each other and the wider world so we can fundamentally fix our global economy from the ground up.
After decades of single bottom line decisions made in board rooms thousands of miles away from the people who are impacted by them, a grassroots upwelling of local businesses - manufacturers, family farmers, independent retailers, energy providers, community bankers and more - has taken matters into their own hands and they are building real prosperity at home, together. They are rallying around a shared vision of bringing economic responsibility - and power - back home. At a deeper level, they are also evolving from a mindset of every-man-for-himself to the understanding that real prosperity comes from helping each other.
Today, the Harvard Business Review, the Economic Development Quarterly and other leading journals all concur that a higher density and diversity of local ownership is the path to more jobs and more wealth to more people. Worker-owned businesses are more profitable, raising the minimum wage doesn't kill jobs, and investing in the places where we live makes our communities better. Dozens of economic multiplier studies have shown how much local governments lose when they purchase from non-local businesses and how many jobs would be created with even a 10 percent shift to local.
Finally, we cannot build a new economy by recycling old stock. We need to divest from the nameless faceless casino known as Wall Street and use our money to invest in our cities' entrepreneurs and their ability to innovate for the greater good. We need to move our money out of monolithic big banks and into human-scale community banks. Since the economic crisis of 2008 we have seen a 40 percent increase in the rate of small business closures largely because these businesses cannot access the credit they need to stay solvent. These small businesses are the job and value engines for our cities and towns, not Goldman Sachs, and they're only asking for loans, not bailouts.
Inclusive Capitalism isn't about the handful of people who currently manage the majority of the world's wealth talking amongst themselves. It's not about mandates on high. The only way to make capitalism truly inclusive is to get busy right where you are, investing in what works - good jobs, ownership opportunities for more people, and community entrepreneurship.