Building A Democratic Economy

Aditya: The political and economic model that we’ve had in Britain for 40 years or so, just isn’t working. It’s not delivering wages, it’s not delivering growth, it’s not delivering political power.

Jonathan: We don’t need buses, we share any cars. We don’t meet people in suits.

Aditya: What you’re seeing here, is people cutting across convention. And saying we’re gonna strike out on our own. Preston model is really an extraordinary representation of what can occur in a place when a full range of community wealth and democratic economy trolls are deployed.

Laura: It’s all coming up on the Laura Flanders show, the place where the people who say it can’t be done, take a back seat, for the people who are doing it. Two forms of government have dominated in the West over the last 100 years. In one big power is vested in the state, the Monarch or the government, in the other, policies dominated by the influence of big industry, big corporations, and big money. In the wake of the 2008 recession people all over the world started wondering aren’t there any alternatives? Especially as neither of those two models has delivered on a promise of shared prosperity. Recently, we traveled to Preston, Lancashire in England to investigate a new way of thinking about building democratic economies. The formerly industrial city, the birthplace of the industrial revolution in many ways, has seen decline and more than a decade of austerity, partly out of need, and partly out of aspiration. They’ve been experimenting with a new model.

Kayleigh: The Preston model.

Kay: The Preston model.

Corbyn: The Preston model.

Laura: They’re calling it the Preston model of community wealth building. And it’s inspired by a model in another formerly industrialized city, Cleveland, Ohio, the evergreen cooperative model. On today’s program, a transatlantic experiment in co-operative community wealth building. So what is the Preston model? In a nutshell, it’s a set of policies and priorities designed to keep and building the wealth within a designated area by emphasizing local investment and procurement. Anchor institutions, such as universities, housing associations, and hospitals, commit to purchase goods and services locally, including from worker-owned co-ops to spread wealth and provide more better employment. And local government supports those efforts by investing its budget and public pension funds in local financial institutions and credit unions. Additional revenue to pay for public services and housing and more investment, comes through public ownership of productive utilities like communications, or green energy.

Lorraine: Preston is a very old authority in terms of the local government in the UK. Preston was originally a cotton town, then into the 20th century, heavy engineering started to take over. We built trains, we built trucks and buses, and things like that in this area. And then by the late ’60s, the economy was starting to modernize again. The council was really active intervening in the economy, bringing modernity really to the city. If you fast forward to 2012, we were four years into the financial… Worldwide financial crash. The whole of the Western world was trying to figure out, how does it recover from, and of course the council was doing the same. But certainly the ideas about community wealth building, and Ted Howard coming over from America, started to formulate these ideas of what the politicians wanted to do.

Ted Howard: The 1950s and ’60s, Cleveland had been sort of systematically de-industrialized over those decades as manufacturing left the city. So the idea was, let us create new capital in the form of community-based broadly owned businesses rooted in place that could provide decent work and full employment opportunities for local residents. In order for people to really advance, there need to be additional ways to build assets, or we would say build wealth. And by allowing people and encouraging them to have an ownership stake in their business, as the company succeed, they share in the profits. The thing that intrigues me so much is how far beyond anything in the United States, including Cleveland, the people of Preston have gone, both in terms of the concept, the broad vision of it, but also in terms of the actual structure that’s being put in place. With evergreen in Cleveland, that I’ve been intimately involved in, I like to say, since we started evergreen, we probably have made literally every mistake you could make. The thought that well, evergreen had that problem and so therefore these models don’t make any sense. Well, there’s a much bigger history to look at. The Preston model is really an extraordinary representation of what can occur in a place when a full range of community wealth and democratic economy tools are deployed. They began this journey that they’re on to create a new model for the local economy. At the time the high street for shuttered, unemployment was high. There was really no future for the city. They’ve leveraged 100 million pounds of public employee pension funds, they’re creating cooperatives in the city through the university, they’re creating a public bank that will be capitalized by the reserves of the city council, they’ve changed purchasing so that 70 million pounds of purchasing is brought back to the city that used to go internationally or to the city in London. The end result is, when this all began, Preston was listed in the bottom 20% of the most deprived cities and communities in all of the United Kingdom. In assessment of the most improved communities in the United Kingdom, number one listed was Preston, which is extraordinary in such a short period of time. Now there’s a long way to go, but it shows what’s possible when people put their shoulder to the wheel and institutions start to work for local benefit. It’s supposed to testament to the sophistication of their vision and really their economic analysis of what’s needed, but also to adjust the commitment and almost bravery of individuals who go forward and will not be turned back.

Matthew: So, yeah. So these–

Laura: Matthew Brown has been working on the city council since 2002 and became its leader in 2018. His public profile’s on the rides having become synonymous with the so-called Preston model. I mean, what drives your passion to be a public servant?

Matthew: Well, we still got huge inequality. And when you go up to the North of England, that is amplified. We’re heading towards an American situation in which you’ve got a small few 100 of people who tend to have about 30, 40% of the wealth of the economy. And I don’t believe you can have a democratic society, if there’s that wealth inequalities, ’cause it tend to have a lot of influence over politics. After the Preston model what’s happened, there’s been a real push and real culture change to actually buy from local suppliers, support local businesses especially, get a real living wage, get apprentices, get environmental benefits. And there’s this collect collaboration across the majority of the local public sector, which is really fascinating and it’s bringing about results.

Laura: So what does the Preston model look like in action? We headed over to the Gateway Housing Association, one of the committed anchor institutions here in Preston to talk to Community Empowerment Manager, Paul Kelly, and Kay Johnson of Sustainable Food, Lancashire.

Paul: Community Gateway Association, the model is about, rather than the organization just being set up as a business, it’s about creating a governance structure that enables the tenants of our properties to have ownership of the company, and to be able to choose a sense of direction of the company approve all the policies and procedures that the company develops, and have a stake in the organization. So it’s not just run by a faceless board. It’s run by themselves with professional support. We have 6,200 tenants properties in Preston. We have five of those tenants on our board, one of whom is the chair. And I think that keeps it very rooted in this place, in the importance of this place as Preston. We’re not an organization that wants to have properties in Liverpool or Manchester, this is about Preston and the greater Preston area. And I think the model that was established here, reflects the Preston model in terms of the people here saying, we want to do it this way, because we want to have ownership of it.

Kay: I can talk a little bit about what’s happening from a food perspective. We’ve got food grown nearby about 10 miles from here. The soil is so fertile that it is like some of the best growing land in the country. The produce there goes all over the country and probably further afield. And what we are trying to do is work with the farmers so it can be sold directly, first of all, to people in the communities who often don’t get access to fresh local produce. But also we’re looking to scale that up so that we can supply to some of the anchor institutions here.

Laura: Neil McInroy is Chief Executive of the UK Center For Local Economic Strategies. He worked with Brown to survey Preston’s assets and find out where their money was going.

Neil: It’s important that Preston is the reason why we were keen in working there. Is that it had 130,000 people, it was self contained, it had a university, it had a local authority, it had a housing association. Looking at economic system change, it had all the components there, but not too complex. It wasn’t like a big city or a very disparate rural area. So it had all the components right for the medium sized city to advance local wealth building. And so we looked across the range of ankles in Preston and measured, what they spend the money on? How much money is local, how much money is not local? For instance, only 5% of all of the 750 million pound of the six anchors, were spent in Preston. So a 20th. We’ve seen the change from 5% spend in Preston to 18%, which is equivalent of 17 million pounds.

Laura: Many of these ideas and principles draw from other forms of collective action. Historically, trade unions have fought a stereotype in the concentration of wealth and power. We talked to Jonathan Grisdale of Unite the Union, about what’s exciting him about what’s happening in his hometown.

Jonathan: We represent workers right across the industrial spectrum. Initially the unions didn’t see community wealth building as their issue. But we’re all about people earning the right wage. We’re all about them having a good quality of life, supporting people to have ownership within their own community. When my union found out about it, we invited some of people along to a recent conference in Preston, and they went, wow. They couldn’t wait to get on board, so we’ve had meeting after meeting. As Labours picked this policy and made it part of the labor party policy. There is a community wealth building unit within Labour. Very much, the union is tied to that policy. The biggest challenge in this country at the moment is social care. Social care is from the most lowly paid workers, hardest working people, but absolutely key to society. We can’t move people out of hospitals into the community unless there’s somebody to keep them well within the community. The care model at the moment is so tightly funded, that it doesn’t take a genius to predict, the whole of social care could collapse on having to pay those workers what they owe them. We don’t need buses, we share any cars. We don’t need people in suits. We just need people who give care. If we can support those people to give that care, if we can put an architecture in place that allows them to deliver that care without being exploited by an employer, that’s union bred and bolted up one-on-one, isn’t it?

Laura: The Preston model’s generated a lot of excitement. What would this look like in other parts of the country? We put that question to Ornette Clennon, a researcher in Manchester.

Ornette: From our perspective in Manchester, one of the big things that we are learning is that, the people that you’re working with come with cultures and cultural expectations and various historical narratives, and all of that impacts on the participatory process itself. The question is, how do we embed culture and participation across the board? In terms of Preston, I’d be really interested in learning about the participation of their ethnic minorities. When we really get into the nitty gritty and speak to the people who are supposed to be benefiting from this, you will find that many people are still gonna be left behind, and they’re gonna be left behind because the hauls of the cultural narrative of who they are and where they are within their communities, and the relationships they have with the anchor institutions, they haven’t been dealt with. The model in Preston potentially is a sort of sticking plaster. So in the short term, it is really good and it is really positive, but at the same time, not instead of, but at the same time, there needs to be a concerted effort to look at government practice and look at funding allocations to local authorities.

Laura: Preston isn’t the only place that’s making noticeable moves at the municipal level. In Enfield, a primarily working claws borough on the outskirts of London, the local council has taken the areas housing problems into their own hands.

Aditya: I’m Aditya Chakrabortty, Senior Economics Commentator for The Guardian Newspaper, and we’re at Debbie’s Afro Hair Salon, . I grew up about 10 minutes walk from here. It used to be the kind of place where working people would aspire to move to, if they were on their way out of London. It to be a place of working prosperity, and now it’s a place of working poverty. People here may work two or three jobs a day to make ends meet, to put food on the table, keep a roof over their heads. I think a number of towns, cities, suburbs across Britain, are now really understanding that the political and economic model that we’ve had in Britain for 40 years or so, just isn’t working for them. It’s not delivering them wages, It’s not delivering them growth, it’s not delivering them political power. What’s interesting, and to my mind extraordinary about Preston, or indeed Enfield, is that they’re among the first to workout what their respond should be. They’re about active local government, doing things which are unconventional, perhaps not relying upon big businesses to come through, make a token investment, and maybe leave some small change on the counter for the people in the locality to share amongst themselves. Instead, they’re thinking about growing their own businesses or about using the public sector and public purse in a more active way.

Laura: This is the first new council housing in 30 years.

Ahmet: That’s correct. We were facing austerity because the government had financial difficulties, local authorities had to do their bit. Meaning giving us less money. That gave us problems, because statutory services that council had to provide increased as a result. And we had to quickly think outside the box. We said, first, we need to start building council housing again, I always say right from the beginning, housing is everything. Housing is health. Housing is mental health. Housing is children’s future. Housing is children’s achieving good results. And it goes on, and the list goes on. This is the beginning of the estate renewal scheme, which is right behind us. All big estates, four of them, tall tower blocks. They’re all coming down and tenants in these properties are moving from that to here. But we’re raising the bar of building council housing, which is quality. All this homes are now on electricity. They feed into the tariff. They have solar panels on top.

Laura: And who builds them?

Ahmet: We contract them out to a local house builders. So it’s local supply chain helping local house builders as well at the same time. We intervened in the market because market wasn’t working for the many. Market was working for individuals. So by us intervening, we have now kept public money in public hands. Some may call that municipal socialism. I wouldn’t mind calling it either because it’s intervening at the right time, and making the right decision to keep public money in public hands. So we could spend more on children services, schools. We could spend all that money that we’ve saved, health. We could spend that money, all the people looking after them, rather than just making few other people more rich.

Aditya: This isn’t a model. It’s not out of a text book People haven’t had like a whole Corpus and literally delivered to them and they’re following a kind of recipe. It’s experiments and it’s initiatives. And it’s things dreamt up in front of a laptop in a small house in the morning where people are thinking, well, what if I tried this idea? You’ve met Matthew Brown. Matthew Brown works all the hours God gives on what’s happening in Preston, coming up with new ideas for Preston. And for a long time, he will tell you that he was pretty much a lone voice. It’s much easier for a council or for a politician to say, let’s keep doing the same thing as we’ve done the last 10, 20, 30 years, even though it’s failed. So what you’re seeing here, is people cutting across convention and saying, we’re gonna strike out on our own.

Laura: The Preston model arguably got its biggest boost when the national Labour party embraced it. Since then, Matthew and many of the people we’ve been talking to, meet monthly at these community wealth building unit gatherings with officials from the Labour party. Kayleigh Walsh is a worker-owner at London’s tech co-ops, Outlandish.

Kayleigh: We usually attract quite a similar kind of persons come and work with outlandish. It actually works really well because we find that the ethos is very important. So at least an appreciation as a cooperative values, you don’t have to know exactly what they are, but be open to them, and people who just want to use technology to make the world a better place, worker co-ops are there. The model is to prevent exploitation and to facilitate self autonomy. And if you’re delivering skills on a daily basis to an organization, I think it’s alright that you own part of the business that you put your commitments and you… You spend a third of your time or more. Also organizations would see more productivity if they allowed their employees to become owners of their business. There’s a lot of work around awareness of worker co-ops in the UK. Not a lot of people know what they are. I think I meet a lot of people who are well within the co-op movement and can tell you everything, whereas my friends or kind of people on the fringes, think it’s a great idea but don’t know what it is. All of that knowledge is not shared enough. And I understand why such people put worker co-ops to their knees. She didn’t want any worker co-ops in the UK.

Corbyn: What we’re really talking about is an economy that works for all…

Kayleigh: It’s quite interesting because Jeremy Corbyn is our local MP. We supported the leadership campaign and we still take care of his website now. I think it’s extremely important what the Labour party did. But I think that the challenges will be the general public accepting it. And the main reason for me saying that is because anything that the Labour parties do is portrayed by the mainstream media as negative. But having said that, they’re also very good at dealing with that. This has been going on for a good couple of years now. They still, they carry on, which is the most important thing.

Laura: To hear from Labour directly, we headed to the state of the economy conference in London to speak with John McDonnell, head of economic policy for the Labour party, and Jeremy Corbyn, the party leader at the time, who would have become prime minister had Labour won the last elections. So you’ve got a big job on a national level. Why are you paying so much attention to a place like Preston?

McDonnell: The issue for us at the moment is we’re an opposition, so we’re not in government, but we are in control in certain local councils. So we can use those local councils to effect change at the local community level. And if we can affect change at a local community level sufficiently, that will enable us to build up to change at the national level as well. So Preston is an example of what you can do at the local level that we can translate into national policy.

Laura: And how does it translate into national policy?

McDonnell: Well, what we can do is use the model in Preston to translate that into other areas and build that up. And that’s what’s happening. Labor counselors, they’ve party counselors who have been elected this time around and looking at the Preston model. So I’ll do it in our town as well. And we can roll it out in that way, but can we share experiences? What works? What doesn’t work? We can encourage and give resources to local councils to do that. So we’ll spread it at the local level, but also we’ll learn some of the lessons that they’re learning at the moment about how you bring procurement together in particular. So government expenditure, how do you use that effectively to ensure change?

Laura: At the local level, we’re talking about local investment, community wealth building. If you take that national, does it not become protectionism?

McDonnell: Yep. Can do. At times it can do. And sometimes you might have to protect a particular sector. We’ve just had an experience in the UK where we were developing a thriving, alternative energy sector. The government decided not to protect it from external competition, undercutting, et cetera. So that industry has virtually been wiped out. So there are times when yes, you do have to protect them. And there’s a time for the state to get involved, maybe not so much in protection, but for investment to make sure you have the skills and the infrastructure to compete in the market.

Corbyn: Too many areas of our country are being held back by low investment, low quality jobs, low wages, and slow growth. Inequalities of class, race and gender are very stuck all across Britain. We promise to put economic power into the hands of the many to transform the economy from top to bottom, doubling the size of our cooperative sector, putting key sectors, water, energy, rail, and royal mail into new and democratic forms of public ownership.

Laura: So if you have such a huge national, personal and political problem, why are you looking so closely what’s happening at the local level?

Corbyn: Because it is about a feeling of community, and it is about a feeling of how people relate to each other. So you have to have a democracy in process at a local level, as well as a national level and within your party and within your movement that holds people to account. And so the localism is the Preston model that we’re using, but we got that model, I didn’t, but others got that model from Cleveland and other places in the USA where you’ve got post-industrial places that are basically regenerating themselves through local endeavor with national health.

Laura: You have never placed for co-ops in your manifesto.

Corbyn: Absolutely. Co-ops are something that’s intrinsic to the British Labour movement. And across the world, they’re massive. There’s a billion people. One in six of the world’s populations, are either users or members of a co-op of some form. So what we’re proposing is national investment, proper taxation for the very richest, and empowerment of communities through local spending, local investment and empowering people to determine their own lives, social justice, socialism.

Laura: When people ask you about the economic argument for all of this, what’s the evidence that you present, terms of statistics and data that is working?

Matthew: Within the Preston, there is 75 million pounds, we’ve redirect it to Preston best suppliers. Across Lancashire, there’s 200 million. But there’s also the cumulative effects, which we haven’t really measured. So we’ve been out this since 2012, ’13. So obviously we didn’t get to that amount straight away. We had to go bit by bit. So you’re probably talking about 150 million in Preston, it’s being redirected, but also job density, such that the amount of jobs available per work at each person. That is one of the best in Lancashire as well, and the Northwest. All these things put together, is putting Preston on the map.

Neil: We’re looking forward, we’ve got a big job in our hands. First we need more and more people to realize we are in a cathartic turbulent age of crisis. Not everybody accepts that or not everybody wants to accept because they’re doing quite well out of this. We need to feel confident and bolden that we can build a better world, that we can organize ourselves and policy terms and in community terms and as individuals, to actually see the alternative if its just not to build it. And that’s gain back to Preston, it’s what they’ve kind of thought, there was a hope, an enthusiasm to actually get through this mess.

Ted: The Preston model, the evergreen model in Cleveland, they’re not the easiest way to advance economic development, but they are the way to do it if you’re concerned about equity and inclusion, and really the long haul.

Laura: Could a transformation like we’ve been talking about here in the UK, happened elsewhere in the U.S for instance? We’ll continue this reporting in the weeks coming up. You’re watching the Laura Flanders show. Thanks. For more on this episode and other forward-thinking content, and to tune into our podcast, visit our website at Lauraflanders.org and follow us on social media, @TheLFshow.