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Alternative financial models have been gaining traction since the 2008 economic crisis exposed the fragility of Wall Street. A panel discussion at the New Economics ReRoute conference introduced ground-breaking alternative financial organisations that empower communities to regain control over their capital.
By Louisa Clarence-Smith
‘Ethics in finance is more than making finance ethical; it’s taking it and flipping it on its head’, said Steve Wong, a loan agent with The Working World.
Wong described the innovative co-operative finance organisation as ‘a zero debt, non-extractive model.’ The loans they give out do not resemble normal loans and investments: ‘They are not collateralized by personal property and they are only paid back with profits from the projects. As investors…we don’t get paid unless the project is profitable’, he explained.
‘The Working World invests primarily in worker-owned businesses, where all workers have an equal share of the equity inside the business and they all make decisions democratically through assemblies’, he expanded.
New Era Windows is one example cited as a successful investment. After the factory was closed down following the 2008 financial scandal, The Working World invested in the project when no-one else would, allowing skilled workers to re-occupy the factory and run a profitable co-operative.
While he concedes that the co-operatives inevitably have some stronger and weaker democratic practices, Wong pointed out that ‘when businesses are owned by the community they won’t close down.’
‘Finance is meant to be something that actually aids economic opportunities for people’, agreed Deyanira del Rio, co-director of the New Economy Project; an organisation that fights economic discrimination by building community-based credit unions and co-operative financial institutions.
Whereas the dominant global financial institutions are conditioned to maximise profits for investors and shareholders, del Rio explained that the alternative financial institutions she supports are not-for-profit so they are able to prioritise the interests of their members. This means that money is likely to be injected back into the community and into ecologically sustainable projects.
‘The institution itself is owned and controlled and democratically-operated by everyone who has money in the institution’, she explained.
‘Whereas in a bank you’re a customer; here you become a member or owner of that credit union’, she added; highlighting the potential for co-operative finance organisations to empower marginalised communities.
‘Public banking will rely upon a well-informed and empowered community in order to gain traction and actually form public banks’, concurred Leah Jeannesdaughter Kerr, Outreach Organizer for the Public Banking Coalition, underlining one of the challenges faced by organisers.
However, the success of around 20 existing public banks in the U.S.A. has made her optimistic about the future of co-operative banking. Citing the North Dakota public bank that suffered minimal impact from the 2008 economic crises, Jennesdaughter Kerr pointed out that ‘communities there did not struggle as others have because their assets were protected from the speculation of bankers on Wall Street.’
Rose Espinola, a national organizer for the Responsible Endowments Coalition, also fights financial discrimination. REC promotes community endowments and holds banks to account for practices that perpetuate inequality.
One progressive REC initiative is the student-led Go Fossil Free campaign that asks universities to pull investments out of organisations with big carbon footprints while investing in local energy and community projects.
‘Decisions need to be made more collectively, in community’, she argued. For Espinola, a New Economy would mean: ‘us having power over money and having power over the people who have power over our money’.
We need to re-capture bank profits if we want to reroute wealth from financiers and real estate towards communities and projects that serve the public interest. All well-versed in alternative economic policies, the panel came from activist rather than economic backgrounds, proving that the majority don’t need traditional economists to handle their money. Their initiatives make evident the significant role of small-scale alternative community organisations that, when mutually-dependent, could have the strength to support a New Economy.
You can enjoy the whole conference, recorded by The Extraenvironmentalist team:
Follow the Extraenvironmentalist live stream for more discussions at the conference this weekend.
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