Multinational corporations have never done anything for my community

A lot has changed in our economies in the last fifty years, some for the better, much for the worse.

One of the driving forces behind this economic change is globalisation.

The cold-war argument over free trade vs protectionist economies has largely been won - most of the world’s economies now operate with minimal barriers to access or trade.

One serious negative impact of this change is that multinational corporations have become even more powerful and are leading to oligopolies all over the world.

Local, independent businesses can hardly compete with corporations that often have more political and economic power than national governments.

But why should we care? This means we get cheaper products, right?

Well, that might be true in some cases. But more often than not, multi-national corporations suck the wealth out of small communities.

Their profits don’t stay in the community, they destroy local businesses due to their ability to offer lower prices - eventually leading to lower wages as workers can’t look elsewhere.

But there are solutions to circumvent corporate power, backed by corrupt government’s, and bring prosperity back into the hands of local communities.

Cleveland

Believe it or not, one of the best solutions to protecting local communities from the destructive power of multi-national corporations has existed for quite some time.

Co-operatives (co-ops) are, officially, “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”

Co-op businesses are essentially the same as any business except that the members of the business have a say (democratically) over what happens to the profits of the business - as opposed to external shareholders.

More importantly, the fact that co-op businesses are owned by workers means they are usually tightly connected to the local community where they live and not managed from a different country.

A recent shining light for the success of co-ops emerges from Cleveland.

As a “rust-belt” city, Cleveland suffered the fallout from early globalisation when manufacturing left the city in the 1960’s and it became one of the poorer cities in the country.

Cleveland also suffered from “redlining”, the systematic practice of refusing mortgages to entire (usually African-American) neighbourhoods - excluding them from the greatest source of inter-generational wealth, housing.

This resulted in the segregation of people of colour and the white working class into poor neighbourhoods, who then lost work due to the exodus of manufacturing.

As such, Cleveland, like many rust-belt cities, was left with entire neighborhoods that rarely saw any public or private support.

Enter Evergreen Cooperatives, a pioneering model of how co-ops can breathe life back into communities.

Evergreen began as a partnership between universities and community foundations in Cleveland trying to revitalise a neighbourhood with 25% unemployment and a median household income of $18,500.

The initial plan centred around three “anchor institutions” - institutions that are deeply rooted in communities like hospitals and universities - and harnessing their financial power (approximately $3bn in purchasing power).

The plan was to engage the anchor institutions to undertake local procurement with new co-op businesses created by Evergreen, and for these businesses to be “greener” than competitors to help the institutions meet sustainability goals.

An Evergreen laundry, solar farm and hydroponic greenhouse were three of the first co-op businesses to be created by Evergreen.

The co-ops can only hire people from the area, they are trained on the job and some of their income goes back into the business as a capital investment.

The Evergreen businesses enter into contracts with the anchor institutions for services related to these businesses, meaning that money which was previously going to multinational corporations stays within the community.

Evergreen now employs more than 200 people with living wage jobs and even has a housing program for workers who would never have had a chance of getting a mortgage.

There are many more facets to Evergreen’s operation but the main model is simple - incentivise local wealth creators from pouring money out of the local community, help locals into jobs that support them and keep them connected to the community.

Preston

Another city - albeit a lot smaller - has followed this model in a slightly different way, but with similar success.

The city of Preston in England’s north faced similar inequality and poverty issues as Cleveland - one in three children lived in poverty and life expectancy varied by twenty years neighborhood to neighborhood.

The city was decimated by the GFC and the following austerity measures, losing half of its grant income from the central government as well as more than a billion dollars in private investment.

The city council led the “community wealth building” model in Preston.

The first major piece of the plan was figuring out how local businesses could potentially take up the procurement contracts of anchor institutions in the city, who could spend up to £1.2bn annually on services.

Research work by the council found that only 5% of the money spent by these institutions was on businesses in the city.

A major yet simple proposal to the anchor institutions was to break down their large contracts so that small to medium sized local businesses could fulfill them.

For example, the contracts for the £1.6m food budget of the council was broken down and awarded to farmers in the region rather than large multinationals who could fulfill the entire contract.

If the anchor institutions couldn’t find local businesses for their contracts, the council and the institutions worked to encourage new or existing businesses to fill these gaps.

In just three years, the spend of these institutions that was retained in Preston tripled - meaning an extra £200m poured into the local community.

The council has also been proactive in turning privately run community services back into public ownership, including markets, art galleries and museums, cinemas and leisure centres.

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We write this a lot in our substacks, but it is worth repeating again: we have the solutions we need to create a better world, we just need to keep in the fight.